Debt Fund Investment

• A debt fund invests in fixed-interest generating securities such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments.
• The fundamental reason for investing in debt funds is to earn a steady interest income and capital appreciation. 
• All these instruments have a pre-decided maturity date and interest rate that the buyer can earn on maturity hence the name fixed-income securities.

How do Debt Funds work?

• Debt security has a credit rating which allows investors to understand the possibility of default by the debt issuer in discharging the principal and interest.
• Debt fund managers use these ratings to select high-quality debt instruments. A higher rating implies that the issuer is less chance to default.

Who should invest in Debt Funds?

• Debt funds are highly recommended to investors with lower risk. Debt funds usually diversify across various securities to ensure stable returns.

What are types of Debt?

• Corporate Bond
• Debentures
• Government securities
• Treasury bills,
• Commercial paper, and
• Other money market instruments