Debt mutual funds are fixed-income financial instruments which work on the classic concept of lending and collecting. In effect, you are lending your money to institutions and getting it back along with the interest.
Instruments of debt investments include corporate bonds, Government securities, treasury bills, commercial paper etc.
Low Volatility
Investors enjoy steady returns without facing the effects of market fluctuations.
Good alternative to equity markets
Investors can achieve their financial goals without the risks of the stock market.
Understanding Credit Rating
Debt mutual funds use credit rating as their yardstick while deciding the instrument to invest in. A security’s credit rating indicates the risk of them defaulting on debt reimbursement.
Fund managers of a debt investment fund ensure that they pick high-rated credit instruments.
A higher credit rating means that the entity is trustworthy enough not to default. Moreover, investors can trust that such securities will pay the interest regularly, and also return the principal amount upon maturity.
A debt mutual fund manager ensures they do their due diligence in researching the credit scores and pick the right securities for their fund.
Investment horizons
Debt investments are ideal for investors looking to get returns by investing for the short term (3 months to 1 year) or medium term (3 years to 5 years).
Advantages of debt investing
- Low-cost structure
- Stable returns
- High liquidity
- Reasonable safety
Disclaimer
Pickle-Jar Investments Private Limited (CIN. U67100PN2021PTC201233) is a NISM Certified / AMFI Registered Mutual Fund Distributor registered with the Association of Mutual Funds in India (AMFI), holding ARN No. 184140 valid upto 12 Aug 2027. We are not Registered Investment Advisors (RIA) as defined by the SEBI (Investment Advisers) Regulations, 2013 and do not provide investment advice on any SEBI regulated products. We do not charge any fees to our clients. We receive remuneration by way of commission / Brokerage from the Mutual Funds/ Asset Management Companies.
Mutual Funds investments are subject to market risks. Please read all Scheme related documents carefully before investing. Past performance of schemes may or may not be sustained in future. We advise investors to read data and risk factors of various mutual fund schemes available in the Scheme Information Document (SID), Statement of Additional Information (SAI), Key Information Memorandum (KIM) etc.