Types of Debt Mutual Funds


Debt mutual funds come in a variety of forms, each of which caters to a different set of investing objectives and risk tolerances. Typical types include:

Liquid Funds 

Liquid Funds are low-risk debt funds that make investments in assets with a maximum 91-day maturity. They have high liquidity, which makes them appropriate for storing extra money and meeting urgent needs.

Income Funds 

Income Funds engage in a variety of financial instruments with varied maturities with the goal of producing consistent income for investors. These funds are better suited for investments with medium- to long-term time horizons.

Gilt Funds 

Gilt Funds only invest in government assets, which are free from credit risk because the government backs them. For risk-averse investors looking for protection, these funds are perfect.

 Funds for Credit Opportunities

Credit Opportunities Funds, which have the potential for larger returns but also slightly higher risk, invest in corporate bonds and debentures.

Funds for dynamic bonds

Depending on the interest rate environment, Dynamic Bond Funds have the freedom to invest in debt instruments with a range of maturities. To maximize returns, the fund manager actively manages the portfolio.

(FMPs) Fixed Maturity Plans

FMPs invest in debt securities that match their maturity period and have a defined duration. They provide predictable returns and are appropriate for investors with particular time horizons for their investments.


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