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Debt Funds and Why You Should Invest in Them: Bajaj Finserv Mutual Fund | ||
Pune, Maharashtra, India Debt funds are a category of mutual funds that primarily invest in fixed-income securities like bonds, government securities, debentures, and money market instruments. Unlike equity funds, which invest majorly in stocks, debt funds aim to generate potentially stable returns by lending money to issuers (corporations, governments, banks, etc.) in exchange for periodic interest payments and the return of the principal amount at maturity.
Debt Mutual Funds
Gilt funds: Gilt funds exclusively invest in government securities (gilts), which are considered a relatively stable form of debt instruments in the market. They are suitable for risk-averse investors looking for stability of the corpus. However, they are subject to duration risk.
Fixed maturity plans (FMPs): FMPs have a predefined maturity date. They invest in debt instruments with matching maturities, thereby reducing interest rate risk.
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