- Corporate debt a rated mutual funds offer relatively safe and conservative investment options which minimize the risks of capital loss
- Corporate debt is rated from aaa to caa, and includes both investment quality securities and junk securities
- Corporate debt a rated mutual funds only invest in securities rated a or higher
Corporate debt a rated no load funds can be a terrific investment for many people. These mutual funds use the investment pool to invest in corporate debt, and the definition most brokers and advisors use for these funds are funds which have at least sixty five percent of their assets invested into government and corporate debt securities which have at least an a rating, or higher. The ratings for corporate debt ranges from aaa, aa, a, bbb, bb, b, caa, ca, all the way to c. Corporate debt a rated funds only invest in securities which are rated a or above. This means securities which are rated aaa, aa, or a, but not any investments in corporate debt that is rated bbb or lower. A rated and above securities are considered high quality, or even better, and they are investment grade bonds instead of junk bonds. These mutual funds minimize the chances of default on the securities invested in, so there is a smaller chance that there are losses of investment capital.
No load corporate debt a rated funds are mutual funds which do not charge load fees. Load fees can be charged in a variety of ways, including front end load fees, back end load fees, and combinations of these two. Load funds may charge a load fee of around eight percent of your investment capital, and this deducts from both your investment and return. Load fees are basically commissions on sales charged by brokers and financial advisors to direct you on which funds you should invest in. Some investors choose load funds because they are not comfortable choosing the right investments and want professional help in this are. The problem is that some brokers and advisors may receive a load fee from you, and then receive a commission from the fund that they direct you to invest your capital in as well. This may lead to a conflict of interest, where the broker or advisor chooses a fund that has a higher commission paid to them versus what is in your best interests concerning investments. Some funds may try to hide load fees and then declare they are true no load funds, but a look at the 12b-1 marketing fee and the net assets of the fund will allow you to weed out these deceptive and expensive choices. Look at the percentage for the marketing fee compared to the net fund assets. If the 12b-1 fee exceeds one fourth of one percent of the net assets of the corporate debt fund, it is not really a no load fund but is a load fund trying to pass off the load fees as something else.
Corporate debt a rated mutual funds hold investments which are considered high quality, and face a default risk of one hundredth of one percent, at the very most. This may make them conservative in nature, because more than half of the investments used by these funds protect capital at the expense of a higher return. This may be ideal for a large number of investors, because it may be preferred to receive smaller returns in exchange for no devastating capital losses. Do the research before investing in any mutual fund, whether you are choosing no load funds or paying a load fee in exchange for advice. Doing thorough research and comparing possible funds will help you find the right fund, the one which meets your investment goals, strategies, and acceptable risk levels. Corporate debt can offer terrific investment opportunities for a lot of investors, but that does not mean it is right for you unless it meets your specific investment goals.
