Debt Funds: Better Than FDs, Safer Than Stocks

Debt mutual funds invest in fixed-income instruments such as government bonds, corporate bonds, and money market securities. They focus on providing stable and relatively safer returns compared to equities. These funds are generally preferred by investors seeking lower risk and regular income.

Key Benefits

Types of Debt Funds

By Short Investment duration

Overnight Fund

For 1 day to 1 week

Liquid

For 1 week to 4 weeks

Ultra Short Duration

For 1 month to 3 months

Low Duration Funds

6 to 12 months

Short Duration

1 to 3 years

By Medium to Long duration

Medium Duration

Invest in stocks across market cap

Medium to Long Duration

Invest across large, mid & small-cap stocks

Long Duration

Invest in World’s Top stocks

Dynamic Bond

Invest in debt & arbitrage funds

Fixed Maturity Plans

Invest in debt & arbitrage funds

ETFs

Invest in debt & arbitrage funds

By Others

Banking and PSU Fund

Invest in stocks across market cap

Corporate Bond

Invest in stocks across market cap

Credit Risk Fund

Invest in stocks across market cap

Gilt

Invest in stocks across market cap

Floating Rate

Invest in stocks across market cap

Debt -Interval Funds

Invest in stocks across market cap

Top Performing Debt Funds

Discover equity funds that have consistently delivered strong returns and outperformed market benchmarks over multiple years.

Fund Size (In Cr.)
1,824
3Y Return
7.55%
Fund Size (In Cr.)
28,170
3Y Return
7.53%
Fund Size (In Cr.)
7,136
3Y Return
7.52%
Fund Size (In Cr.)
573
3Y Return
7.47%
Fund Size (In Cr.)
303
3Y Return
7.39%

FAQ’s

Frequently Asked Questions about Equity Funds

Who should invest in debt funds?

They are suitable for conservative investors or those looking for short- to medium-term investment options with relatively lower risk than equity funds.

No, but they are generally less risky than equity funds. Risks include interest rate changes, credit risk (default by issuers), and liquidity risk.

After the latest tax changes, all gains from debt funds are added to your income and taxed as per your slab rate, regardless of the holding period.

There’s no mandatory lock-in. You can invest for a few months to a few years, depending on the type of debt fund you choose

Yes, SIPs are possible in debt funds too, though many investors prefer lumpsum since they are often used for short-term goals.