One stop investment avenue 

Open Demat Account close-announcements
Online Trading Online Mutual Funds Back Office Global Investing Login Wealth Management Self Care

CALL US

+91 22 48934000

Contact Details Locate Branch
Debt-funds-investment_(1)_606ddc3b9ba5ey

What is a debt fund?

An investment pool of debt funds is like a mutual fund or a foreign exchange fund where fixed revenue assets are a primary holding. A debt fund investment may invest in short-term or long-term bonds, securitized products, financial market tools, or the floating debt rate. The debt fund fee levels on average are less than the equity funds because the total administration expense is lower.

The debt funds, also known as credit funds or fixed-income funds, fall into the category of fixed-income assets. The investors who want to maintain their resources and/or achieve low-risk earnings distributions usually search for these low-risk vehicles.

What are debt mutual funds?

A debt mutual fund (also known as a fixed-income fund) invests a substantial portion of the capital in assets for fixed income such as public securities, shares, corporate bonds, and other financial market instruments. Investing capital in these ways significantly reduces the risk to investors through debt mutual funds schemes. This is a relatively secure avenue for investment that can help create wealth.

Benefits of debt fund investment

Stable revenue

Debt funds can deliver an appreciation of capital over some time. While debt funds are less risky than equity funds, returns are not guaranteed and are subject to market risk.

Tax efficiency

Many people invest money so there annual tax expenses are reduced. Therefore, investments in debt mutual funds can lead to tax reduction. This means that debt funds are more fiscal efficient than conventional investment alternatives, such as fixed deposits (FDs).

High liquidity

Although debt mutual funds do not have any periods of lock-in, some of the funds have an exit load that is an early withdrawal fee at the source. The exit time varies from fund to fund, although some funds also have no exit charge. Debt mutual funds are liquid though, and on any business day, you can withdraw your money from the fund.

Stability

Debt investment will also improve your portfolio's balance. Equity funds can be volatile (with higher potential returns). The explanation is that the returns on equity funds are directly related to stock market results. You can properly diversify your portfolio and reduce the general risks by investing in debt funds (cushion the downside).

Flexibility 

Debt mutual funds also allow you to tractor your money into various funds. This can be done by a structural transition strategy (STP). Here, you can invest a lump sum in debt funds and systematically move a small part of the fund to shareholding regularly.

How to invest in debt funds?

Investor's financial goal

The debt fund should be chosen according to its financial objective. If you're looking for ways to invest idle cash for a short time, the best alternative is liquid funds.

The Horizon of Investment

Also, an important parameter in choosing the right debt fund for you is the maturity period of the portfolio.

 Appetite for risk

Debt funds are not completely free of risks. In these funds, credit risk and rate risk are primarily prevalent. Credit risk occurs if the portfolio is made up of low credit rating securities.

Ratio Expense and Load Exit

Returns from debt are fairly poor compared with equity mutual funds. Due to this, it is highly important to invest in a fund that has a low expense ratio.

Conclusion 

If you're looking for fairly steady income in comparison with shares and reduced market risk exposure, debt mutual funds can be explored. You can follow your investment expectations and time horizons with various forms of debt funds, such as liquid funds, ultra-short debt funds, fixed maturity plans, etc.

To invest in debt funds click here and to find more opportunities kindly visit here


Related Posts

BLOG

Dec 13 . Mon

Are you one of those people who want...

628dd67f9673c.1653462655.ncd-blog

BLOG

Dec 13 . Mon

Long-term capital gains (LTCG) are t...

61b7463ac2725.1639401018.Capital_Gain_Bonds_60579598cfcfc

BLOG

Dec 13 . Mon

March end is approaching fast, and t...

61b74b144961c.1639402260.Tax-Savings-2021_605786ef18792

BLOG

Dec 13 . Mon

In order to boost domestic manufactu...

61b74c2a01f3f.1639402538.PLI-Scheme_in-INDIA_(1)_(1)_6050e27e162d6

attention-icon Attention Investors

1) Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. 2) Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. 3) Pay 20% upfront margin of the transaction value to trade in cash market segment.  4)Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.5) Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. 6) For Stock Broking transaction : Prevent unauthorised transactions in your account 7) KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary  8) Update/ confirm your mobile number/email ID with us OR If you wish to change/ modify the current Mobile No. & E-mail ID, you are requested to provide MODIFICATION FORM duly filled in and signed OR If you do not want to provide Mobile No. & E-mail ID, you are requested to send DECLARATION FORM duly filled and signed.  9) Receive information of your transactions directly from exchange on your mobile/email at the end of the day...Issued in the interest of Investors 10) No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remain in investor's account. 11)As per SEBI Circular MIRSD/ SE /Cir-19/2009 dated December 3, 2009 Client transaction account shall be required to do the actual settlement of funds and securities at least once in a Quarter or month.