Floater funds: What they are and if you should invest?

The floater debt fund category officially came into existence after SEBI's reclassification exercise. These funds predominantly invest in floating-rate bonds (at least 65 per cent), including fixed-rate bonds converted into floating-rate exposures by using derivative strategies. Now since India has a limited market of floating-rate bonds, the majority of these funds use interest-rate swaps (exchange of interest rates between two parties) to artificially establish such exposures. Characteristics of floating-rate bonds and how they dif

This article was originally published on December 09, 2022.