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Debt Funds

 
Regular
Direct

Bajaj Finserv Banking and PSU Fund

Debt Fund ellipse-img Regular Growth
 
NAV
---
as of
 
Risk Type
Moderate
 
Min. SIP Amount
₹1000
 
Min. Lumpsum Amount
₹1000
 

Bajaj Finserv Money Market

Debt Fund ellipse-img Regular Growth
 
NAV
---
as of
 
Risk Type
Low to Moderate
 
Min. SIP Amount
₹1000
 
Min. Lumpsum Amount
₹1000
 

Bajaj Finserv Overnight Fund

Debt Fund ellipse-img Regular Growth
 
NAV
---
as of
 
Risk Type
Low
 
Min. SIP Amount
₹1000
 
Min. Lumpsum Amount
₹100
 

Bajaj Finserv Liquid Fund

Debt Fund ellipse-img Regular Growth
 
NAV
---
as of
 
Risk Type
Low to Moderate
 
Min. SIP Amount
₹1000
 
Min. Lumpsum Amount
₹100
 
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Debt mutual funds: What they are and how they work

 
Debt funds or debt mutual funds invest primarily in fixed-income securities such as government bonds, corporate bonds, treasury bills and commercial papers. Such funds typically offer stable returns with low-to-moderate risk and may be suitable for conservative investors seeking potentially modest returns or those looking to diversify their portfolio across debt and equity to balance return risk and return potential.

 

How do debt funds work?

Governments or corporations can borrow money from investors via debt instruments such as bonds. Investors earn on these debt instruments through interest payouts and principal repayment at the end of the tenure. The returns tend to be relatively stable if the borrower has a high credit rating or is a government institution. However, returns are linked to market movements, including interest rate movements.

Debt mutual funds invest in a diversified portfolio of debt or fixed-income instruments. Such funds may invest in short-term, medium-term, long-term fixed income instruments or a combination of these, depending on the scheme category and investment objective.

 

Who should invest in debt funds?

Debt funds are suitable for a wide range of investors, including those with a conservative risk appetite, retirees, or individuals looking for steady income streams. Most debt funds are also usually liquid, so they can be a good avenue for an emergency corpus. The relative stability and modest return potential also make them suitable for short-term investments as compared to equity, which has a higher return potential but is recommended for longer investment horizons.


Before choosing a debt fund, investors should consider the credit quality of the underlying bonds within the fund's portfolio. Higher-rated bonds typically offer lower yields but come with lower credit risk, while lower-rated bonds may provide higher yields but carry increased credit risk. Additionally, investors should evaluate the fund's average maturity and duration, as these factors influence sensitivity to interest rate fluctuations.
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Frequently Asked Questions

 

A debt fund is a type of mutual fund that primarily invests in fixed-income securities such as government or corporate bonds. These funds generate returns through interest income and are typically less volatile than equities.

No, despite their relative stability, debt funds do not guarantee returns or capital safety. Among others, debt funds face credit risk, interest rate risk – which is the risk of the value of a bond falling when interest rates in the economy rise – and other market volatilities.

Open-ended debt funds do not have a lock-in period, but some may have exit loads for withdrawals before a specified period. However, close-ended funds such as fixed maturity plan funds have can only be redeemed at maturity.

To choose a debt fund, consider your investment horizon, risk tolerance, and investment goals. Debt funds that invest in money market instruments may be more suited to short-term goals than medium- or long-duration funds. Assess factors such as the credit quality and duration of the underlying assets. You can also diversify across different types of debt securities for risk management.

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