What are Debt Mutual Funds?

  Author: Kundan Kishore

Contrary to the misconception many investors have, mutual funds are not just all about investing in equities through equity funds. You also have other mutual funds which invest your money in lower risk investments and consequently provide a lower return. Debt mutual fund is one such category.

Lower risk, steady return Debt mutual funds invest the money of investors in debt investments. These include corporate and government debt securities including debentures and government securities (G-secs). They typically generate a steady return over different periods of time.

Debt mutual funds typically carry comparatively lower risk and their returns are also lower than other mutual funds like equity mutual funds. This is the reason they are great options when it comes to making investments that generate regular income like the income needed for the retired and securing gains made from long term growth investments like equity funds for needs like children’s higher education and retirement.

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