Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Debt fund is a mutual fund investing primarily in fixed-income securities such as government bonds, corporate bonds, and money market instruments.
Debt funds pool money to buy bonds and similar instruments — aiming for steadier returns than equity funds.
Categories span liquid, overnight, ultra-short, short, medium, long duration, and credit risk funds. Returns affected by interest rate moves, credit spreads, and expense ratio. Post-2023 tax rules changed attractiveness versus FDs for many investors.
Parking ₹3 lakh in a short-duration debt fund for a 2-year goal may yield 7–8% with moderate NAV fluctuation versus 7% FD with full taxation at slab.
Yes. Rate hikes and credit downgrades can cause negative returns over months. Liquid and gilt funds carry lower credit risk but still have rate risk.
FD gives guaranteed nominal return. Debt fund may offer indexation or better post-tax returns historically but lacks guarantee.
Risk that bond issuers default. Credit risk funds chase higher yield by holding lower-rated corporate bonds.