Debt fund terms
What is YTM?
Yield to maturity is the yearly return a bond, or a debt fund's portfolio, would give if every bond were held until it matures and paid as promised.
How it works
A debt fund's YTM is a snapshot of its current holdings. It is not a promised return: bond prices change with interest rates, the manager buys and sells, and expenses are deducted.
Example
A portfolio of bonds bought at prices that give 7.2% a year if held to maturity has a YTM of 7.2%. If rates fall next month, prices rise and the YTM of the same holdings falls.
Keep in mind
- Higher YTM often means lower credit quality or longer duration.
- Look at YTM together with duration and credit quality.
Questions people ask
Will I earn the fund's YTM?
Not necessarily. YTM changes daily and the fund's return also depends on price changes and expenses.
Why does a credit risk fund show a higher YTM?
Lower-rated bonds pay more to compensate for a higher chance of default.
Related terms
General information for education, not investment advice or a recommendation of any scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future. Last reviewed 25 October 2026.