Do TMFs deserve a spot in your portfolio?

Summary: Fixed income investing often comes with a trade-off between returns, risk and predictability. But there’s a fast-growing category that offers a refreshing middle ground. This article breaks down what makes these funds tick and whether they deserve a slot in your portfolio. Target maturity funds (TMFs) have quickly risen to prominence in the debt fund space. In 2020, just one TMF was launched. But by 2022, the category saw a sharp uptick with 52 new launches that year alone. The momentum has continued, with another 53 TMFs entering the market since then. Clearly, TMFs are on a roll. But does that mean they deserve a place in your portfolio? Before we answer that, let’s get to know these funds a little better. What are TMFs? Target maturity funds are a type of debt funds that come with a fixed maturity date. Basically, these invest in bonds that mature around the same time. Stay invested till the end, and you get your capital back along with the returns earned. Simple, predictable and low on surprises (as long as you don’t bail early). TMFs are passively managed, meaning they track a bond index and don’t rely on star fund managers making active calls. They’re the debt cousins of passive equity funds: quiet, rule-following and refreshingly low-maintenance. Being open-ended, TMFs do offer the flexibility to

This article was originally published on August 20, 2025.