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What Are Floater Funds?

Read this blog to know all about floater funds, how it works, the benefits & risks, and the bottom line. Find out how Cube Wealth helps you invest in the best debt funds like liquid funds and overnight funds.
November 8, 2024
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Debt funds invest in various debt and money market instruments like Treasury Bills, Bonds, Commercial Paper, Reverse Repo, etc. Some of these debt instruments provide a fixed interest rate while others do not. 

In this case, the “others” generate floating returns, which means that the interest rate may fluctuate according to the market conditions. Floater funds invest in such debt securities.

Important: This blog is meant to educate readers and the information furnished here is not to be construed as investment advice from Cube Wealth. 

How Does A Floater Fund Work?

A floater fund is a type of debt fund that primarily invests in debt securities with a floating interest rate. At least 65% of a floater fund's portfolio consists of assets with a floating interest rate.  

Types Of Floater Funds

1. Short Term Floater Fund

A short term floater fund invests in floating interest debt securities with a short maturity tenure like government securities.

2. Long Term Floater Fund  

A long term floater fund invests in long term debt securities. However, longer the term, greater the interest rate. Thus, these funds balance their remaining portfolio with fixed interest and money market securities.

Impact Of Interest Rates

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