5 Basic Things To Know About Debt Funds

5 Basic Things To Know
About Debt Funds

BY INVESTMENTZ

 Debt funds refer to an investment pool such as
mutual funds and ETFs with fixed income
investments forming their core holding.

 Following are 5 basic things to know about debt
funds:

 Debt funds generally invest in short-term or long-term assets
 Debt funds protect and preserve investors’ capital
 Debt funds give prominence to absolute returns over various

performance benchmarks
 Money invested in debt funds is not affected as much by

market volatility
 Debt funds invest in debt securities only

Invest in short-term or long-term assets

 Debt funds generally invest in short-term or long-
term assets such as money market instruments,
securitized debt instruments, bonds, and floating
rate debt.

Debt funds protect and preserve investors’
capital

 The major goals of any debt fund include protecting
investors’ capital, preserving investors’ capital, and
generation of regular fixed income through your
invested corpus.

Prominence to absolute returns over various
performance benchmarks

 The major characteristic that makes debt funds
stand out for cautious and moderate investors is that
they give prominence to absolute returns over
various performance benchmarks. Thus, debt funds
become a safer investment option.

Money invested in debt funds is not affected as
much by market volatility

 In fact, debt funds make your overall investment
portfolio stable while providing you with the freedom
to withdraw your money when you require it the
most. Debt funds invest your money in different
securities based on a well-planned investment
strategy. When you invest your money in debt funds,
it will earn you interest. Moreover, the value of the
investment securities will appreciate due to changing
market dynamics.

Invest in debt securities only

 The factor that sets debt funds apart from other
investment instruments is that they invest in debt
securities only. Therefore, as an investor, you will
know the credit rating such as AAA and A+ assigned
by top independent rating agencies such as Crisil,
Fitch, ICRA, and Care.

 This will help you largely in assessing the repayment
or redemption capability of the issuer of debt
securities at the maturity date. Ratings provide debt
funds with a potent tool to analyze payment
potential of the issuers of various fixed income
securities. Debt funds have different baskets of fixed
income

For more information, click
here!

THANK YOU