large scale image
LCP Image

Back to Blogs

Floater funds Vs Inverse Funds: Explained

October 24, 2022

Floater funds Vs Inverse Funds: Explained

Many people often get confused between Floater Funds and Inverse Funds!!

However, both terminologies are essential.

Let us help you understand what floater and Inverse mean and the mechanism of both.

– Floater Funds:

Government entities, business entities, and individuals use debt instruments to obtain capital. It has two forms; long-term and short-term.

Debt Instruments have different types. For instance,

  • long-term debt instruments include; debentures, bonds, Mortgages, and long-term loans.
  • Short-term debt instruments include short-term loans, treasury bills, and working capital loans.

These debt instruments offer returns to investors in the form of periodical Interest. These interests can be fixed or floating.

Since their benchmark is subject to change in floating funds, the interest rate is not pre-fixed.

– Inverse Funds:

The inverse is interestingly contracting from a floater.

In inverse funds, the coupon rates go exactly opposite to the standard/benchmark interest rates. It has interest rate risk.

The inverse funds use by Government bodies and Corporates to raise capital.

If you are seeking complete knowledge about Banking, Financial Services, and Insurance (BFSI) sector, choose the Professional Diploma in Banking, Financial Services, and Insurance (PDBFSI).

Quality learning requires the top and best institute, and it can be no other than ‘Thadomal Shahani Centre for Management (TSCFM). It provides quality education, PDFSI certification, and guaranteed job assistance.

Learn more if you are interested in choosing TSCFM’s PDBFSI Course.

Important Links:

Related Post

Top Career Opportunities After PGDM in Finance
Top Career Opportunities After PGDM in Finance

February 14, 2024

Commercial Banks: What you need to know?
Commercial Banks: What you need to know?

February 05, 2024

What is Cross-selling and Upselling in Banking?
What is Cross-selling and Upselling in Banking?

January 30, 2024

Enquire Now
REQUEST A CALLBACK
Chat on WhatsApp