What is debt mutual funds?

Debt mutual funds are the fixed income mutual funds schemes that aims at investing in the fixed income instruments like Corporate Bond, G-Secs, CPs, CDs, Corporate Bond, T-Bills, etc.

Debt mutual funds generates income from the money of investors. It is one of the demanding options for investment. Also, it is preferred for the steady returns.

Who issues debt mutual funds?

Debt mutual funds are availed by government including state and central, small and big corporations and others.

Key Type of Debt Funds

There are many different types of debt funds in the Indian market. Depending on your risk appetite and interest, you can choose the debt fund for the investment. The returns on the best debt mutual funds also depends on duration, amount invested, type of debt fund chosen, and more.

The better understanding of debt fund meaning can help you make informed decisions.

  • Short-Term Debt funds
    These are suitable for the investors interested in short-term maturity and a low to moderate risk capacity. These debt funds have up to 3 years maturity period. The Government securities, debt, and money market instruments are among the popular Short-Term funds.
  • Liquid & Money Market Funds
    The investment in Liquid & Money Market Funds category is done in debt securities and highly liquid money market instruments. The tenure in these instruments is generally short and can be as short as one day also. For instance, Commercial Paper (CP), Treasury Bills, Certificates of Deposit (CD), etc. It is the best-suited for investors willing to park their excess cash for a short duration.
  • Floating Rate funds (FRF)
    As the name suggests, these funds primarily invest instruments that offer a floating interest rate. The primary objective of the fund is to minimize the volatility of investment returns. Generally, the Floating rate securities are benchmark rate linked for debt instruments where the rate of interest is periodically reset. It is based on the movement of interest rate movement resulting in varying returns.
  • Income funds
    These debt mutual funds make investment primarily in a range of debt instruments of different issuers having diverse maturity period. The income debt mutual funds are best suited for the investors having interest in long-term investments and also for those who have a higher risk appetite.

Features of Debt Mutual Funds

  • The Debt Mutual Funds are the right choice for investors having a higher risk appetite.
  • Debt Mutual Funds are known to offer steady returns and relatively safe instrument for investment.
  • Debt Mutual Funds provides the feature of high liquidity.

Why invest in Debt Mutual Funds?

Discover the advantages of investing in debt mutual funds over other financial market instruments, along with information on the different types, benefits, and returns of debt funds in India. It provides the advantage of higher liquidity, steady returns, lower transaction fees, and diversification in your portfolio.

It is good to invest in the short-term debt funds as per experts. You can take the advantage of our Expert Advice to take informed decisions.


Advantages of Debt Mutual Funds


Advantages of Debt Mutual Funds

Better Returns

Debt Mutual Funds are a relatively safe and high yielding instrument for many of the investors. In comparison to FDs, Debt Mutual Funds provides better post-tax returns if invested alteast for 3 years.

Stable Returns

Debt funds without dependence on market sentiments are more likely to provide a steady and stable return on your investments. For investors with a low appetite for risk, debt mutual funds are a safe investment instrument. The Debt fund returns are also a great attraction for many.

High Liquidity

Debt funds generally unlike FDs do not come with mandatory lock-in periods and so can be easily liquidated. In case of your investment in debt funds, you have the option to cash out of your investment much quickly in comparison to many other investing tools like FDs. You can consider investing in debt funds if you wish to park our fund for a short duration to meet your unexpected emergencies.

Who Should Invest in debt mutual funds?

Debt mutual funds are suitable for investors willing to park surplus fund for a short duration lesser than 3 years period. Also, it is a good option for individual seeking low-risk debt funds.

Investors ready to invest for a longer period can choose to invest in long-term debt funds.

There are several platforms online but not all are dependable and professional. BondsIndia is one of the most reputable online bond platforms.

Choose our dedicated online platform www.bondsindia.com for the secure and hassle-free transactions.

If you are not yet a member and would like to explore more about bonds,

Frequently Asked Questions - FAQs

High liquidity, stable returns, lower fees, and hedge against volatility are the key benefits of making investment in debt mutual funds.

Liquid & Money Market Funds, income funds, floating rate funds, and Short-Term Debt funds.

Investing in debt mutual funds is good for investors looking to invest in low-risk securities and primarily in the short-term debt funds.

Debt funds invest money in fixed income securities that are considered safe and secure. It is comparatively safe and a good instrument for many of the risk averse individuals.

Liquidity funds are known to offer the highest return. It invests in fixed income securities that is almost free from risks. It is known also to provide better yield in shorter duration.

BondsIndia with great features is the online platform secure for trade in bonds.

No, any form of income from debt funds are taxable in India according to the Income Tax Act 1963.

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