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Kotak Banking and PSU Debt fund is a top quartile fund within the category.
As per SEBI's mandate, funds in this category are required to invest at least 80% in debt instruments issued by banks and public sector undertakings (PSUs) and in government bands.
Kotak Banking and PSU Debt mitigates credit risk further by investing fully in such bonds. Some funds in this category have investment in non-PSU bonds too.
Currently around 25% of the fund's assets are held in AA-rated debt papers issued by PSUs and banks which help spice up returns. The fund delivers better returns than bank recurring deposits.
Investors with low-to-medium risk profile can consider SIPs in the fund. A minimum time horizon of three years is advisable.
Compiled by: Dhuraivel Gunasekaran
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