Floater Funds
Last Updated on 22 Jun 2026
3 Year Average Returns
-0.43%
Funds on Anand Rathi
52
Floater Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| HDFC Floating Rate Debt Fund (IDCW-D) | 5.98% | 7.60% | 6.75% |
| HDFC Floating Rate Debt Fund (G) | 5.96% | 7.64% | 6.64% |
| ICICI Pru Floating Interest Fund-Regular (IDCW-D) | 6.18% | 7.58% | 6.52% |
| SBI Floating Rate Debt Fund - Regular (IDCW-M) | 5.96% | 7.59% | 6.52% |
| ICICI Pru Floating Interest Fund-Regular (G) | 6.18% | 7.59% | 6.51% |
| SBI Floating Rate Debt Fund - Regular (IDCW-Q) | 5.96% | 7.59% | 6.51% |
| SBI Floating Rate Debt Fund - Regular (G) | 5.96% | 7.59% | 6.51% |
| Aditya Birla SL Floating Rate Fund-Retail (G) | 5.92% | 7.33% | 6.47% |
| Aditya Birla SL Floating Rate Fund (G) | 5.91% | 7.33% | 6.47% |
| Aditya Birla SL Floating Rate Fund (IDCW-D) | 5.83% | 7.32% | 6.47% |
| DSP Floater Fund (G) | 5.32% | 7.74% | 6.41% |
| DSP Floater Fund (IDCW) | 5.32% | 7.74% | 6.41% |
| Kotak Floating Rate Fund - Regular (G) | 5.77% | 7.55% | 6.38% |
| Franklin India Floating Rate Fund - (G) | 5.44% | 7.52% | 6.37% |
| Franklin India Floating Rate Fund - (IDCW-D) | 5.37% | 7.47% | 6.30% |
Calculate Your Mutual Fund Returns
Returns Estimator
Estimation is based on the past performance
Expected Rate of Return
The value of your investment after 5 Years will be
₹4,12,432
Invested Amount
₹3,00,000
Est. Returns
₹1,12,432
What is Floater Fund?
A floater fund is a debt mutual fund type that primarily invests in debt instruments with floating or variable interest rates.
Unlike fixed-rate bonds (where the interest rate stays constant), floating-rate instruments reset their interest rates periodically. It helps the fund manager select them and enhance the portfolio value in return.
Because interest rates adjust over time, floater funds aim to reduce interest rate risk and potentially benefit when market rates rise.
As per SEBI regulations, a floater fund must invest at least 65% of its assets in floating-rate debt instruments. The remaining portion may be invested in fixed-rate debt, money market instruments, or cash equivalents.
How Does Floater Fund Work?
A floater fund works by investing in floating-rate debt instruments whose interest rates are periodically adjusted based on prevailing market rates or benchmark indices.
As per the SEBI mutual fund regulations, the fund manager must invest a minimum of 65% of the assets in these instruments. Likewise, the rest can be invested in fixed-income and cash and cash equivalents.
These rates are reset at regular intervals (monthly, quarterly, or semi-annually). So, when interest rates in the economy rise, the coupon income from these securities also rises and vice versa. The fund manager may adjust the portfolio likewise.
Moreover, some fund managers may also convert fixed-rate instruments into floating exposure using interest rate swaps, allowing flexibility in portfolio construction. This structure helps floater debt funds track interest rate cycles better than traditional debt funds.
Benefits Of A Floater Fund
Floater mutual funds offer several benefits to investors, including :
1. Lower Interest Rate Risk
Since interest rates are periodically reset, floater funds are less sensitive to rising interest rates compared to debt funds with fixed rates.
2. Suitable During Rising Rate Cycles
As the RBI increases repo rates, the interest income from floating-rate instruments generally increases, further influencing the fund returns.
3. Relatively Stable Capital
Floater rate funds invest mainly in debt instruments, making them less volatile than equity funds.
4. Flexible Investment Tenure
These funds can hold both short-term instruments (like treasury bills and certificates of deposit) and long-term instruments (like corporate bonds and government bonds) in the folio — giving the flexibility to adjust and redeem anytime.
5. Portfolio Diversification
Floater rate funds can add balance to a debt portfolio, especially when investors want protection against interest rate fluctuations.
Who Should Invest In Floater Fund?
However, floater funds may not suit investors seeking predictable or fixed returns, as interest income can fluctuate.
- Investors with low to moderate risk appetite.
- Those looking to protect their portfolio during rising interest rate scenarios.
- Individuals with short to medium-term investment horizons.
- Investors aiming for capital preservation with variable income.
How To Invest In Floater Fund With Anand Rathi?
Planning to invest in a floater mutual fund online?
With Anand Rathi, you can invest through a secure, paperless, and easy-to-use platform.
Here's how to get started:
Sign Up or Log In
Visit the Anand Rathi website or download the AR Invest app and log in securely.
Complete Your KYC
Finish the one-time paperless KYC process.
Explore Floater Mutual Funds
Compare floater funds based on portfolio quality, maturity profile, and risk level.
Track Your Investment
Monitor NAV, portfolio composition, and returns—all in one place.
Factors To Consider Before Investing In Floater Fund
Before investing in a floater rate fund, keep certain points in mind to make a wise decision:
Interest Rate Outlook
These funds generally invest in securities with floating interest rates. It is wise to understand the interest rate cycle to help select a suitable fund in return.
Credit Quality
Some floater funds invest in lower-rated corporate debt. Always review the credit profile of the portfolio holdings to understand the issuer's default risk.
Volatility & Liquidity
While principal risk is lower than equity, returns are not fixed and vary with rate movements. This makes them volatile to such fluctuations. Also, check how easily you can redeem units and whether exit loads apply in the short term to see its liquidity.
Expense Ratio
As they are actively managed funds, the expense ratio may be higher than ultra-short or liquid funds.
Investment Horizon
Floater funds are better suited for investors with short to medium-term goals. it may or may not suit those with long-term needs.
Fund Manager's Experience
The fund manager's ability to track interest rate cycles and adjust the folio plays a key role in the overall fund's performance. Likewise, a fund's ratings can help with the same.
Average Portfolio Duration
The fund's average bond maturity impacts sensitivity to interest rate changes and overall stability.
Taxation Rules On Floater Fund
Any person (or investor) who has invested or will invest in floater mutual funds falls into two categories:
Bought Before April 1, 2023, but:
Sold after July 23, 2024 - LTCG (12.5% - without indexation), STCG (slab rate).
Bought On or after April 1, 2023:
Irrespective of holding period - Taxed at the individual's slab rate.
Explore Debt Funds by Types
Explore Mutual Funds by Types
Open NFOs
Mutual Funds Calculators
Explore Popular AMCs
Disclaimer
The information provided on this page is for informational purposes only and should not be construed as investment advice, recommendation, or solicitation to buy or sell any securities or financial pr...
Frequently Asked Questions
Download the AR Invest App
- 5000+ Schemes
- Personalized Solutions
- Expert Insights
