5 Benefits of Investing in Debt Funds

Debt funds are low risk mutual funds that offer opportunity to earn interest as well as capital gains. Let’s know about some of the benefits for investors.

Debt funds add stability to your portfolio as these funds are professionally managed and are exposed to fixed-income instruments such government bonds & money market instruments.

Debt funds spread investments across various debt securities, and this diversification reduces overall risk.

Debt funds offer high liquidity as funds can be redeemed within one or two working days of placing the request.

You can invest in a range of debt funds with varying maturity & credit risk. For example: ultra-short duration funds, short duration funds, long duration funds, overnight funds, liquid funds, corporate bond funds etc.

As per SEBI, the total expense ratio of a debt fund cannot exceed 2% of AUM and thus these are fairly low cost investment instruments