A mutual fund that allocates the majority of its assets in debt instruments with floating interest rates (floating rate instruments) are known as Floater Funds. These funds are categorized under debt mutual funds. They take advantage of the fluctuation in interest rates to generate quality returns for investors.
Floating rate securities have variable interest rates unlike other debt instruments such as bonds which have a fixed coupon rate. Every floating rate instrument has a specific benchmark, wherein the interest rate of the instrument changes in accordance to the change in its benchmark rate.
It is ideal for investors looking for secure investment avenues with decent returns.
The minimum investment varies from scheme to scheme. It could range between Rs.100/ – to Rs.5,000/ -.
> If an investor has made an investment in a debt mutual fund and withdraws the amount before 3 years of investment, Short Term Capital Gains Tax would be levied, as per the income tax slab of the investor.
> If an investor withdraws the investment including capital gains post 3 years of investment, 20% Long Term Capital Gains Tax of 20% is levied, with the benefit of indexation.