Is debt Fund good for investment?

Debt funds are also often considered safer as opposed to the volatility that the equity market brings since debt funds come with lower risk albeit lower returns. Debt funds are one of the best investment options for investors with low risk tolerance since they aren’t as volatile as equity investments.

How do debt funds make money?

How do debt funds work? Debt funds aim to generate returns for investors by investing their money in avenues like bonds and other fixed-income securities. This means that these funds buy the bonds and earn interest income on the money. The yields that mutual fund investors receive is based on this.

Are debt funds linked to market?

Debt schemes aim to generate returns for investors by investing their money in avenues like bonds and other fixed-income securities basis asset allocation stated in the scheme information document. Debt funds also do not offer assured returns but have market linked returns which can fluctuate.

Which category of debt fund gives highest return?

Liquid debt funds can be converted into cash easily and have a very low maturity period of 91 days. The low maturity period makes them risk-free, but they also provide the most stable returns.

Which type of debt fund is good?

For a medium-term investor, debt funds like dynamic bond funds are ideal for riding the interest rate volatility. When compared to 5-year bank FDs, debt bond funds offer higher returns. If you are looking to earn a regular income from your investments, then Monthly Income Plans may be a good option.

Which one is best debt mutual fund?

The table below shows the best-performing debt funds based on the last 5-year returns:

Can I lose money in debt funds?

Long-term debt funds may give negative returns when interest rates are rising. Short-term debt funds offer a lower return when interest rates fall. Credit risk funds invest your money in bonds of a lower rating. You may lose money if the bond-issuer defaults on principal and interest repayments.