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What are Debt Mutual funds?

Debt mutual funds are a type of mutual fund that primarily invests in fixed-income securities such as government bonds, corporate bonds, money market instruments, and other debt securities. These funds aim to generate steady income for investors through interest payments and capital appreciation.

Debt mutual funds are generally considered to be less risky than equity mutual funds, as they are invested in relatively low-risk fixed-income securities. However, the risk level can vary depending on the type of debt securities that the fund invests in, with some securities carrying higher levels of credit risk than others.

Debt mutual funds can be categorized based on the maturity of the securities they invest in, with short-term debt funds investing in securities with maturities of up to one year, medium-term debt funds investing in securities with maturities of one to three years, and long-term debt funds investing in securities with maturities of over three years.

Investors can choose debt mutual funds based on their investment objectives, risk appetite, and investment horizon. They can also benefit from the professional management and diversification offered by these funds, which can help mitigate the risks associated with investing in individual debt securities.