A fixed income ETF might be a wise choice if you want consistent returns without running too much risk. For Indian investors who like consistent returns, these funds provide a blend of safety, income, and ease.
Let’s define a fixed income ETF and discuss why your portfolio can benefit from one.
Define a fixed income ETF.
Investing in bonds or other debt instruments such government securities, corporate bonds, or treasury bills, a fixed income ETF is an exchange traded fund. Through one investment, it allows you access to a portfolio of fixed income instruments.
Like any other ETF, a fixed income one exchanges on the stock market. More flexible than conventional bond investments, you may purchase or sell it during market hours.
Why should one buy a fixed income ETF?
Here’s the reason many Indian investors are including fixed income ETFs into their portfolios:
- Regular interest from ETF bonds generates steady income.
- Low risk; better for capital protection than equities funds
- High liquidity allows one to trade any moment inside market hours.
- Diversification—investments in several bonds help to lower risk.
- Low cost—lower expense ratio than that of actively managed funds
Best Fixed Income ETF choices available in India
Though this area is still developing in India, these are some accessible and interesting choices:
- Bharat Bond ETF (Edelweiss)
- supported by public sector enterprises
- accessible in several maturities (such as 2030, 2033)
- One of the most often used fixed income ETFs available in India
- supported by public sector enterprises
- Prudential Gilt ETF by ICICI
- invests in bonds controlled by governments.
- Very little credit risk
- Appropriate for those that lean conservative
- invests in bonds controlled by governments.
- 10-Year Gilt SBI ETF
- follows government securities with a ten-year term.
- Excellent for people seeking steady long-term profits
- follows government securities with a ten-year term.
Who ought to think about a fixed income ETF?
- If you are almost or already retired, you might choose to invest in a fixed income ETF.
- You seek consistent income with little risk.
- You are saving either for medium-term or short-term objectives.
- One must strike a mix between a high-risk strategy and safer investments.
Invest:
- open a trading and demat account.
- Based on your risk and objective, select your ideal fixed income ETF.
- Purchase it on your trading platform, such as with a stock
- Track returns and base your holding on your timeframe.
In conclusion
For Indian investors seeking safety, liquidity, and consistent income in unpredictable times, a fixed income ETF makes sense. It combines the conveniences of bonds with the freedom of stock trading. Start small, keep steady, and savor consistent returns free from restless nights.