Definition: Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Gilt fund, monthly income plans (MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs) are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds.

Debt funds are preferred by individuals who are not willing to invest in a highly volatile equity market. A debt fund provides a steady but low income relative to equity. It is comparatively less volatile.

Type of debt funds displayed in sequence of least risky to most risky (volatility)

Liquid Funds  |  Ultra Short Term Debt Funds  |  Short Term Debt Funds  |  Dynamic Bond  |  Income Funds  |  GILT Funds or Govt Securities Funds  |  Monthly Income Plans

Other debt options are Fixed Maturity Plans (Have No Liquidity Before Maturity With Minimum Volatility)

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