What is a Debt Funds and how it works ?
What is a Debt Funds and how it works ? Debt Funds are referred as Bond Funds, it is a Mutual Fund Scheme which invests the money in Fixed Income Securities like Government and Corporate Bonds, Treasury Bills. Generally, it comes with Short term and Long term Bonds. Those who do not wish to invest in Equity related Funds which is said as High Risk (Volatility), can choose these Debt Funds, which is seen as Low Risk Investment Avenue. This means in the Medium to Long term, one can get better returns than Bank Deposits and benefited to Tax Indexation. Debt Funds is a Duration based Schemes, there is a maturity on every purchase of Bonds, so that an investor can get the varied returns in a period. There are Seven Duration based Schemes available in Debt Funds through Mutual Funds route. Overnight Fund: It comes with a maturity period of one or Less than One day. The money will be invested in Overnight Securities, it is an open ended scheme in Mutual Funds. So, there is less impact on I...