Debt Fund is an investment pool such as a mutual fund or exchange-traded fund, in which main investments are made in fixed income instruments. Debt funds can invest in short-term or long-term bonds, secured products, money market instruments or floating rate loans. Duties on debt funds are usually lower than the equity funds because their total management cost is low.
Advantages of Debt Fund:

  • To balance the investment: Debt funds come under the fixed income asset category and are usually used as strategic investments for low-risk portfolios. This is the ideal fund for those who want the protection of capital or want less risk in investment. If a large part of your investment is invested in the equity market in the stock market, you can include a debt fund in your portfolio to reduce its risk.
  • It has a Low risk: Within a fixed income category, debt funds can invest in different risk categories, with varying levels of risk. This form of mutual funds is generally considered to be as low risk.
  • The Number of Options: There is a wide range of debt funds for investors looking for fixed income and investors seeking lower income risk. Similar to other property categories, investors typically can invest in many of these options.
  • Return: Like any fund before investing in a debt fund, these funds should also see and understand the past returns. Because these funds invest in fixed income products, their returns can remain the same at all.
  • Income distribution: Generally this fund can announce monthly, quarter or annual dividend. Because these are considered short-term investments, their frequency of distribution is much higher.
  • Who can invest: Any investor can invest in them to balance their portfolio. Apart from this, investors who invest in fixed deposits can also view debt funds as an option.
  • Author's Bio: 

    I'm Mansi Dandekar, I am sharing an article about Debt Fund and It's Advantages. Here is more information on the Free Trading Tips and Free Nifty Trading Tips.