Best Debt Fund Categories Of 2021
What Is A Debt Fund?
AKA fixed income/bond funds, it is a kind of MF scheme that invests in fixed income instruments: corporate or govt bonds, corporate debt securities, money market instruments etc.
Debt funds generate returns for investors by investing their money in bonds and other fixed-income securities.
The fund buys the bonds, and earns interest income on the money invested.
These funds invest in debt instruments with a maturity period of not more than 91 days and are highly liquid in nature.
Short-term funds come with a maturity period of 1-2 years and are ideal for investors with a low risk appetite.
Medium & Long-Term Funds
um-term funds have a maturity of 3-5 years, while long-term funds go beyond 5.
They are riskier since they are more susceptible to the impact of interest rates over time.
Dynamic Bond Funds
Here, the fund manager can change the duration of the portfolio depending on the interest rate forecast. If rates are rising, maturity can be made shorter, etc.
These plans come with a lock-in period which varies from scheme to scheme, and you can invest in them only during the initial offer period - no further investments can be made after.
SBI Magnum Ultra Short Duration Fund
Best Debt Mutual Funds 2021
Axis Liquid Fund
IDFC Low Duration Fund
Aditya Birla Sun Life Liquid Fund
Tata Liquid Fund and Kotak Savings Fund
Nippon India Liquid Fund
ICICI Prudential Savings Fund
HDFC Short Term Debt Fund.
Advantages Of Debt Funds
They are ideal for conservative investors, because of the lower cost structure, more stable returns and lower risk involved, coupled with high liquidity.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.