What is Debt Fund?

A debt fund, also known as a fixed-income fund, A debt fund is a type of investment fund that primarily invests in fixed income securities, such as government bonds, corporate bonds, debentures, and other debt instruments. These funds aim to generate regular income for investors by investing in interest-bearing debt securities.

Debt funds pool money from multiple investors and use that money to purchase debt securities of various companies or governments. The income generated from these investments is distributed to investors in the form of dividends or interest payments.

Debt funds can have different investment strategies, such as investing in short-term or long-term debt securities, high-yield or investment-grade bonds, or bonds of a particular sector or industry.

Investors in debt funds can benefit from professional management, diversification, and relatively lower risk compared to equity funds. However, debt funds are subject to credit risk, interest rate risk, and other market risks.

Debt funds are suitable for investors looking for regular income and relatively lower risk compared to equity funds. It's important for investors to understand the investment objectives, risk profile, and past performance of a debt fund before investing in it.