BAJAJ ASSET MANAGEMENT LIMITED.
BAJAJ ASSET MANAGEMENT LIMITED.
Looking to park surplus funds or plan short-term goals? Explore Bajaj Finserv AMC debt funds across liquid, overnight, money market and other fixed-income categories.
Our schemes follow diverse investment strategies like megatrend investing, moat investing and more
AdvantageAll investments are driven by our in-house investment philosophy, InQuBe, a combination of the Information Edge, Quantitative Edge and Behavioural Edge.
Through our unique investment approach, we aim for market-beating returns in the long term.
SIP and lumpsum options in many schemes start with as little as Rs. 500
A debt fund is a type of mutual fund that primarily invests in fixed-income securities such as government bonds, corporate bonds, treasury bills, commercial papers, certificates of deposit and other money market instruments. These securities typically have a defined maturity period and may generate returns through interest payments.
Also known as fixed income funds or bond funds, debt mutual funds are generally less volatile than equity funds and may be suitable for investors seeking relatively stable return potential, regular income potential, capital preservation or portfolio diversification. However, they are not risk-free.
The performance of debt funds can be affected by factors such as interest rate movements, credit ratings, liquidity conditions and the creditworthiness of the issuer. The suitability of a debt fund depends on an investor’s financial goals, risk appetite, investment horizon and liquidity requirements.
A debt mutual fund pools money from investors and invests it in fixed-income securities such as government securities, corporate bonds, treasury bills, commercial papers and other money market instruments. Debt funds generate return potential from two sources:
• Interest income (coupon or accrual income): Interest earned from the securities held in the portfolio.
• Capital appreciation or loss: Changes in bond prices due to interest rate movements.
Bond prices and interest rates generally move in opposite directions. When interest rates fall, bond prices may rise, which can increase the fund’s NAV. When interest rates rise, bond prices may fall, which can reduce the NAV.
The performance of a debt fund also depends on the maturity and credit quality of its holdings. Longer-duration funds are generally more sensitive to interest rate changes, while lower-rated securities may offer higher yield potential but carry higher credit risk.
In simple terms, debt mutual funds seek to generate returns through interest income and changes in bond prices while managing interest rate and credit risks.
Understanding the different types of debt funds can help you choose a category that aligns with your investment horizon, risk appetite and financial goals:
• Overnight funds: Overnight funds invest in debt and money market securities with a maturity of 1 business day and may be suitable for investors looking to park funds for a very short period.
• Liquid funds: Liquid funds invest in debt and money market instruments with maturities of up to 91 days and may be considered for short-term surplus cash or emergency corpus planning.
• Money market funds: Money market funds invest in money market instruments such as treasury bills, commercial papers and certificates of deposit with maturities of up to 1 year.
• Ultra-short duration funds: Ultra-short duration funds invest in debt and money market instruments in a way that the Macaulay duration of the portfolio is generally between 3 and 6 months.
• Low duration funds: Low duration funds invest in debt and money market securities with a Macaulay duration generally between 6 and 12 months.
• Short duration funds: Short duration funds invest in debt and money market instruments with a Macaulay duration generally between 1 and 3 years.
• Medium duration funds: Medium duration funds invest in debt and money market securities with a Macaulay duration generally between 3 and 4 years.
• Medium to long duration funds: Medium to long duration funds invest in debt and money market instruments with a Macaulay duration generally between 4 and 7 years.
• Long duration funds: Long duration funds invest in debt and money market securities with a Macaulay duration of more than 7 years and may be more sensitive to interest rate movements.
• Dynamic bond funds: Dynamic bond funds invest across debt securities of varying maturities and allow the fund manager to adjust the portfolio based on the interest rate outlook.
• Floater funds: Floater funds invest primarily in floating rate instruments where interest payments may change based on market-linked benchmarks.
• Corporate bond funds: Corporate bond funds primarily invest in high-rated corporate bonds and may be suitable for investors looking for exposure to corporate debt securities.
• Banking and PSU funds: Banking and PSU funds invest mainly in debt securities issued by banks, public sector undertakings and public financial institutions.
• Gilt funds: Gilt funds invest primarily in government securities, which carry minimal credit risk but can be sensitive to interest rate movements.
• Gilt funds with 10-year constant duration: Gilt funds with 10-year constant duration invest in government securities while maintaining a portfolio duration close to 10 years.
• Credit risk funds: Credit risk funds invest a significant portion of their portfolio in lower-rated corporate bonds, which may offer higher yield potential but also carry higher credit risk.
• Fixed maturity plans: Fixed maturity plans, or FMPs, are close-ended debt mutual fund schemes that invest in fixed-income securities maturing around a specific date.
• Target maturity funds: Target maturity funds are passive debt funds that invest in a defined bond index and have a stated maturity period.
• Debt index funds: Debt index funds are passive funds that aim to replicate a debt index by investing in similar fixed-income securities.
• International debt funds: International debt funds invest in global bonds or overseas fixed-income opportunities and may carry currency and international market-related risks.
Before choosing a debt fund, investors may review the fund’s Macaulay duration, average maturity, credit quality, issuer profile, liquidity and interest rate risk. Shorter-duration funds generally have lower sensitivity to interest rate changes, while longer-duration funds may see higher NAV movement when interest rates rise or fall. Similarly, higher-rated securities may carry lower credit risk, while lower-rated securities may offer higher yield potential along with higher credit risk.
Debt mutual funds are often considered by investors seeking exposure to fixed-income securities through a professionally managed and diversified portfolio. Depending on the category, they may be used for short-term liquidity needs, portfolio diversification or medium-term financial goals.
Relatively lower volatility
Debt funds invest in fixed-income securities such as government securities, corporate bonds, treasury bills and money market instruments, which are generally less volatile than equity funds.
Liquidity
Many debt mutual funds offer high liquidity and allow investors to redeem their investments relatively quickly, subject to applicable scheme terms and exit loads.
Professional fund management
Debt funds are managed by professional fund managers who actively evaluate credit quality, maturity profile, interest rate risk and market conditions.
Access to debt and money markets
Debt mutual funds provide retail investors access to money market instruments and wholesale debt market securities that may not be easily accessible directly.
Wide range of investment options
Investors can choose from categories such as overnight funds, liquid funds, short duration funds, corporate bond funds, gilt funds, dynamic bond funds and credit risk funds based on their requirements.
Portfolio diversification
Debt funds can help diversify an investment portfolio by adding exposure to fixed-income securities alongside equity and other asset classes.
Support for asset allocation
Debt mutual funds may help create a balanced asset allocation strategy by complementing higher-risk investments within a portfolio.
Suitability for short-term and medium-term goals
Certain debt fund categories may be suitable for short-term and medium-term financial goals where liquidity and relatively lower volatility are important.
Emergency corpus planning
Overnight funds, liquid funds and ultra-short duration funds may be considered for parking emergency funds or temporary surplus cash.
Return potential
Debt mutual funds can generate return potential through interest income and, in some cases, capital appreciation arising from changes in bond prices and interest rates.
Debt mutual funds may be suitable for investors seeking relatively stable returns, regular income potential, liquidity and portfolio diversification. The suitability of a debt fund depends on an investor’s risk appetite, investment horizon and financial goals. Debt funds may be considered by:
Debt funds may be suitable for investors who prefer relatively lower volatility than equity funds while seeking exposure to fixed-income securities such as government securities, corporate bonds and money market instruments. They can also help investors pursue their financial goals without taking on the higher market risk typically associated with equities.
Debt funds can serve as an entry point for investors who are new to mutual funds and want to understand how professionally managed investments work. Categories such as short duration funds, liquid funds and corporate bond funds may offer relatively stable investment experiences compared to equity-oriented schemes.
Debt funds that invest in high-quality debt securities may appeal to investors looking for regular income potential through interest-generating instruments. This can be particularly relevant for retirees and senior citizens seeking a balance between income generation and capital preservation.
Investors with short-term goals or surplus cash
Liquid funds, overnight funds and ultra-short duration funds may be considered for parking emergency funds or temporary surplus cash. These categories generally focus on maintaining liquidity while offering return potential that may be higher than keeping funds idle in a savings account.
Debt funds can help diversify an investment portfolio by adding exposure to a different asset class with distinct risk-return characteristics. They may also be used as part of a Systematic Transfer Plan (STP) to gradually move investments into equity funds over time.
Investors approaching goals such as retirement, higher education expenses or major purchases may consider increasing their allocation to debt funds. Doing so may help reduce the impact of equity market volatility on funds earmarked for near-term financial needs.
Before investing, evaluate the fund’s credit quality, duration, liquidity profile, interest rate risk and alignment with your financial goals.
There is no single best debt fund for all investors. The right debt mutual fund depends on your investment horizon, risk appetite, liquidity requirements and financial goals.
You may consider different debt fund categories based on your investment period:
• Up to 1 month: Overnight funds or liquid funds may be considered for short-term parking of funds.
• 1 to 6 months: Ultra-short duration funds may be considered.
• 6 months to 1 year: Money market funds may be suitable for investors seeking exposure to short-term money market instruments.
• 1 to 3 years: Short duration funds, corporate bond funds and Banking & PSU funds may be considered.
• More than 3 years: Medium duration funds, dynamic bond funds and gilt funds may be considered, depending on the investor’s ability to handle interest rate risk.
When selecting a debt fund, investors may evaluate factors such as credit quality, Macaulay duration, liquidity, interest rate risk and how well the fund aligns with their investment objectives. Rather than focusing only on past returns, it may be useful to choose a debt fund that matches your time horizon and risk profile.
Debt mutual funds are market-linked investments, so it is important to assess several factors before investing:
• Choose a debt fund category that aligns with your investment horizon, as liquid and short-duration funds may suit shorter goals while dynamic bond funds and gilt funds may be considered for longer periods.
• Select a debt fund that matches your risk appetite, as different funds carry varying levels of interest rate risk, credit risk and liquidity risk.
• Changes in market interest rates can impact bond prices and, in turn, affect the NAV and returns of debt funds.
• Credit risk is the possibility that the issuer may default on interest or principal payments, which can affect the fund’s performance.
• Liquidity risk refers to the possibility of difficulties in selling underlying securities to meet redemption requests during adverse market conditions.
• Review the credit ratings of the securities held by the fund, as higher-rated instruments generally carry lower credit risk.
• Debt funds typically offer lower return potential than equity funds, and returns are influenced by interest rates, credit quality and market conditions.
• A lower expense ratio can help improve net returns, especially since debt fund returns are generally moderate.
• Evaluate the fund type and investment objective to ensure it aligns with your liquidity needs, income expectations and risk profile.
• Understand the tax implications, as debt mutual fund taxation depends on factors such as the purchase date, holding period and applicable tax rules.
Invest in a debt fund only if it supports your financial goals, liquidity requirements and overall asset allocation strategy.
Debt mutual fund taxation in 2026 depends primarily on the purchase date of the units. The tax rules changed from 1 April 2023, making this an important date for investors.
• Units purchased on or after 1 April 2023: Any gains arising on redemption, transfer or maturity are generally treated as short-term capital gains (STCG), irrespective of the holding period, and are taxed at the investor’s applicable income tax slab rate. No indexation benefit is available.
• Units purchased before 1 April 2023: Gains are generally taxed based on the holding period. If units are held for more than 24 months, gains may be taxed as long-term capital gains (LTCG) at 12.5% without indexation. If held for 24 months or less, gains are generally taxed as STCG at the investor’s applicable slab rate.
| Purchase date | Holding period | Tax treatment |
| On or after 1 April 2023 | Any holding period | STCG taxed at the applicable slab rate |
| Before 1 April 2023 | 24 months or less | STCG taxed at the applicable slab rate |
| Before 1 April 2023 | More than 24 months | LTCG taxed at 12.5% without indexation |
Tax laws may change over time, so investors should consult a tax advisor for guidance based on their individual circumstances.
Bajaj Finserv AMC offers a range of debt mutual fund schemes across different categories, including overnight funds, liquid funds, money market funds, low duration funds, banking and PSU funds, and gilt funds. These schemes invest in debt and money market instruments and may be considered by investors based on their investment horizon, liquidity needs, risk appetite, and financial goals.
| Fund Name | Category | Inception Date |
| Bajaj Finserv Low Duration Fund | Low Duration Fund | 20-Feb-26 |
| Bajaj Finserv Liquid Fund | Liquid Fund | 05-Jul-23 |
| Bajaj Finserv Overnight Fund | Overnight Fund | 05-Jul-23 |
| Bajaj Finserv Money Market Fund | Money Market Fund | 24-Jul-23 |
| Bajaj Finserv Banking and PSU Fund | Banking and PSU Fund | 13-Nov-23 |
| Bajaj Finserv Gilt Fund | Gilt Fund | 15-Jan-25 |
Before investing in any debt mutual fund, investors should review the scheme’s investment objective, riskometer, portfolio quality, Macaulay duration, average maturity, expense ratio, exit load, liquidity, and suitability for their financial goals. NAVs change based on market conditions and should be checked on the official Bajaj Finserv AMC website before making an investment decision.
Debt mutual funds may be considered by investors seeking exposure to fixed-income securities with relatively lower volatility than equity funds. They can also help diversify a portfolio and provide access to professionally managed debt and money market investments.
• Professional management: Debt funds are managed by fund managers who monitor credit quality, interest rate movements, maturity profiles and liquidity conditions.
• Access to debt and money markets: They provide retail investors access to instruments such as government securities, corporate bonds, treasury bills, commercial papers and certificates of deposit that may not be easily accessible directly.
• Potential for interest income and capital gains: Returns may come from interest earned on underlying securities as well as capital appreciation when bond prices move favourably.
• Wide range of investment options: Investors can choose from categories such as overnight funds, liquid funds, ultra-short duration funds, money market funds, corporate bond funds, banking and PSU funds, dynamic bond funds and gilt funds based on their investment horizon and risk appetite.
• Liquidity and flexibility: Most open-ended debt funds offer high liquidity and can typically be redeemed without a lock-in period, subject to scheme-specific terms and exit loads.
• Portfolio diversification: Debt funds can help balance an investment portfolio by adding exposure to fixed-income assets alongside equity and other asset classes.
• Suitable for different investment horizons: Certain debt fund categories may be considered for short-term, medium-term or longer-term financial goals depending on their duration and risk profile.
While debt mutual funds generally carry lower portfolio risk than equity funds, they are still exposed to interest rate risk, credit risk and liquidity risk. Investors should evaluate the fund’s investment objective, credit quality, duration, expense ratio and suitability before investing.
You can invest in debt funds online by following a few simple steps on the Bajaj Finserv AMC website or investor portal:
1. Visit the Bajaj Finserv AMC website, browse the available debt mutual fund schemes and select the one that matches your investment horizon, risk appetite and financial goals.
2. Click on the Invest Now button from the scheme page or the website homepage to continue to the investor portal.
3. Log in if you are an existing investor, or sign up by entering basic details such as your name, date of birth, PAN and bank account information.
4. Complete your Know Your Customer (KYC) verification if your details are not already validated.
5. Select your preferred mode of investment, such as lumpsum or SIP, and enter the investment amount.
6. Choose your preferred payment method, review the investment details and confirm the transaction to complete your investment.
You can also invest in debt funds offline through a distributor or online through aggregator platforms, depending on your convenience.
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A debt fund is a type of mutual fund that primarily invests in fixed-income securities such as government securities, corporate bonds, treasury bills, commercial papers and other money market instruments.
Debt funds pool money from investors and invest in debt securities that may generate return potential through interest income and changes in bond prices.
The different types of debt funds include overnight funds, liquid funds, money market funds, ultra-short duration funds, short duration funds, corporate bond funds, banking and PSU funds, gilt funds, dynamic bond funds and credit risk funds.
No, debt funds are not risk-free because they are market-linked mutual fund schemes and can be affected by interest rate risk, credit risk and liquidity risk.
No, debt funds are not 100% safe because their NAV can fluctuate due to changes in interest rates, credit ratings, issuer repayment ability and market liquidity.
The main risks involved in debt funds are interest rate risk, credit risk and liquidity risk, along with possible NAV movement due to changes in bond prices or issuer credit quality.
Yes, debt funds can give negative returns in certain situations, especially when interest rates rise sharply, credit ratings are downgraded or the fund faces liquidity-related pressure.
A debt fund is not inherently better than an FD because both serve different purposes; FDs offer fixed returns, while debt funds are market-linked and may offer liquidity and return potential with associated risks.
Debt funds are not directly better than equity funds because debt funds may suit investors seeking relatively lower volatility, while equity funds may be considered for higher return potential over longer investment horizons with higher risk.
Most open-ended debt funds do not have a mandatory lock-in period, although some schemes may have exit loads or scheme-specific conditions for early redemption.
To choose a debt fund, investors may evaluate the fund’s investment objective, Macaulay duration, average maturity, credit quality, expense ratio, liquidity, risk level and alignment with their financial goals.
There is no single best debt fund for every investor because the suitable debt fund depends on the investor’s investment horizon, risk appetite, liquidity needs and financial goals.
Need help planning your investments?
Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
