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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.
  • Seek stable income generation with lower volatility
  • Want better returns than traditional bank deposits
  • Need flexible investment durations from 1 day to 3 years

Key Benefits

  • Flexible Investment Horizons
  • Superior Tax Efficiency
  • Portfolio Management
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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

Money Market Funds

Upto 1 year

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.

Bandhan Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
1,592,920
3Y Return
7.72%
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UTI Corporate Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
576,075
3Y Return
7.95%
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Tata Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
398,590
3Y Return
7.86%
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SBI Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
2,530,140
3Y Return
7.87%
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Baroda BNP Paribas Corp Bond Fund(G)
Corporate Bond
Fund Size (In Cr.)
42,917
3Y Return
8.33%
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Franklin India Corp Debt Fund-A(G)
Corporate Bond
Fund Size (In Cr.)
107,146
3Y Return
8.07%
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Invesco India Corporate Bond Fund(G)
Corporate Bond
Fund Size (In Cr.)
716,383
3Y Return
7.87%
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Sundaram Corp Bond Fund(G)
Corporate Bond
Fund Size (In Cr.)
80,644
3Y Return
7.76%
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Axis Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
958,847
3Y Return
8.03%
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Nippon India Corp Bond Fund(G)
Corporate Bond
Fund Size (In Cr.)
1,004,160
3Y Return
8.42%
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PGIM India Corp Bond Fund(G)
Corporate Bond
Fund Size (In Cr.)
8,820
3Y Return
7.40%
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Mirae Asset Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
4,416
3Y Return
7.57%
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DSP Corp Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
274,555
3Y Return
7.60%
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TRUSTMF Corporate Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
3,911
3Y Return
NA
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Union Corporate Bond Fund-Reg(G)
Corporate Bond
Fund Size (In Cr.)
52,474
3Y Return
7.71%
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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.