Have three-year horizon? Hold on to a corporate bond fund, say experts

Consider investing in target maturity funds and corporate FDs

Corporate bond funds have given a meagre category average return of 2.5 per cent over the past year. From a 12-month peak of Rs 1.61 trillion in August 2021, the assets under management of these funds has come down to Rs 1.27 trillion (April 2022 figure).

What do they offer?

Corporate bond funds carry a relatively low credit risk as they invest a minimum 80 per cent of their corpus in ‘AAA’- and ‘AA+’-rated bonds. The fund manager has the freedom to decide on the duration of the bonds he buys for the portfolio.

“As they invest 80 per cent of their corpus