Which Type of Debt Fund will Suit Your Profile?

Companies run on investors’ money. They issue different types of securities, engage in various public offers to raise money from the masses. This can be cited as a “borrowing and lending “situation, where the issuing companies are the debtors and the public is the creditor. In return for the credit allowed, the public (or the contributors) are paid a steady and regular sum. This is the working philosophy of Debt Funds. If you buy a stake in a top-performing Debt Mutual Fund, you’re actually helping the borrowing company to raise more funds to finance its future operations.

The Types of Debt Funds and Who Should Invest in them

Debt Funds are available in plenty different versions in India. These funds dwell different properties on the basis of which you could select the best for yourself. The easiest and most convenient way to invest in any mutual fund online is through MySIPonline. This website hosts a horde of options, and you can choose the best fit for yourself in no time. Let us now learn about the types of Debt Mutual Funds that are available in the market: -

• Dynamic Bond Funds : True to its name, a dynamic bond fund holds a dynamic nature since its portfolio is subject to frequent changes, which is triggered by a change in the market interest rates. Also, these funds do not have a fixed maturity period, since they invest in instruments having different shelf lives. Since they tend to be more fluctuating, you should be comfortable with an uncertain pay to invest in them. 
• Income Funds : The working philosophy followed by income funds is more or less same as that followed by dynamic funds. Income funds take a call on interest rates and park its funds in debt securities having different shelf lives. However, most income funds tend to buy larger stakes in those debt securities that enjoy longer maturity period. Hence, these funds are a safer haven than dynamic funds, and you could choose this fund if you desire steadiness in income. 
• Liquid Funds : Liquid funds are an excellent alternative resorts to bank and post office accounts. They serve far better returns than these conventional methods, and have rarely produced unsatisfactory returns. They are short-lived investments, hence are perfect for those who are looking forward to make short-term investments. Also, there’s a flexibility to redeem your funds upon your will, as no exit load is charged on redemption. 
• Short-Term and Ultra Short-Term Funds : These funds invest in securities having maturities in the range of 1-3 years. They are an ideal option for conservative investors who do not like being exposed to high risks and desire steady returns.  
• Guilt Funds : Guilt funds are the safest debt funds available in the market. This is because they only invest in government owned securities that have least credit risk, and also government seldom defaults in repaying its debt. Hence, these funds are perfect fit for those kind of investors who’d like to enjoy steady returns with bare minimum risk. 
• Credit Opportunities Funds : Unlike other debt funds, credit opportunities fund do not make investments on the basis of maturity period. Instead, they try to earn high returns by pinning a call on high credit risk options or investing in low-rated bonds that dwell high interest rates. As a result, these funds tend to be riskier than other debt options. 

So, if you have a big appetite for risk, you can proceed with a credit opportunities fund.
If you are looking forward to make a safe investment that pays regularly, then you just select the best performing Debt Funds to achieve your goals. Pick from the various debt options available at MySIPonline and start investing promptly.