Purpose of Corporate Bond Debt Funds
1. Functionality: Corporate bond mutual funds function on the stock market in the same way as other mutual funds.
2. Impact of NAV: Profits are realised when the NAV of a mutual fund increases due to an increase in the value of a corporate bond in the portfolio of the fund. A decrease in NAV value has the opposite impact on the mutual fund’s aggregate value.
3. Raise Capital: Corporate bond debt funds are used by businesses to raise capital. An investor and a company borrow money from one another through bonds. The investor agrees to loan money to the firm for a set length of time. In exchange, the investor receives monthly interest payments. The corporation repays the investor when the bond reaches maturity.