INSUBCONTINENT EXCLUSIVE:
The main goal of debt funds is to give investors a steady income throughout the investment tenureDebt funds are mutual funds that invest in
fixed income securities like bonds and treasury bills, corporate bonds, commercial papers, government securities, and other market
These funds have a fixed date for maturity
Even their interest rate is fixed
Because of these 2 reasons, debt funds are also known as fixed-income securities
Market fluctuations usually don't affect the returns on these tools
So, debt funds are considered to be low-risk investment options
Individuals who do not want to invest in a highly volatile equity market prefer to invest in debt funds
A debt fund provides a steady income and is comparatively less volatile.Investors who want to secure their portfolio against inflation,
fund schemes through an asset management company or an online platform.GoalThe main goal is to give investors steady income throughout the
So, investors can choose from various debt funds and check whether their investment horizon matches the duration of the scheme
This will help investors understand a fund's performance and make informed decisions when the market is volatile.Types Of Debt FundsThe
Securities and Exchange Board of India (SEBI) has categorised debt funds into sixteen categories such as overnight funds, liquid funds,
money market funds, short-duration funds, medium duration funds, long-duration funds, long-duration funds, etc.Short-term debt funds: These
funds have a duration of 1-3 years and moderate interest risk.Medium-term funds: These funds have a duration of 3-4 years and moderate
interest risk.Long-duration funds: These funds offer higher returns but at a higher interest rate risk.TaxationShort-term gains on debt
funds are taxable as per your tax slab rate
diversifying their portfolios to protect themselves from volatility in the stock market
Investors sometimes also look towards debt funds to achieve short-term financial goals.
