Top Debt Funds

Top Debt Funds

8 min read

What are Top Debt Funds?

Fixed interest-earning assets like treasury bills and certificates of deposit are the primary investments of debt mutual funds. The primary goal of these funds is to produce long-term wealth via interest income and capital gain. Investing in a mutual fund for an extended period does not affect the underlying assets' interest rate.

The management of a debt fund invests primarily in the underlying assets depending on their credit ratings. A debt security with a better credit rating is more likely to pay interest regularly and return the principal at the end of the investment term. In addition, the fund manager adjusts his investing strategy in response to changes in interest rates.

Who Should Invest in Top Debt Funds?

It's best to avoid debt funds if you don't like risk or aren't ready to invest in inequities. There is minimal to no risk involved in investing in debt funds. In addition, these funds aim to provide a steady flow of revenue. In most cases, investors in debt funds hold their positions for a short to medium period.

You need to choose a debt fund that is suitable for your investing time horizon. If you are a short-term investor, liquid funds may be a good fit for your investment strategy. There is a range of 7-9 per cent for returns on liquid funds. They also allow for unlimited withdrawals, exactly like a traditional savings account.

Risks Associated with Top Debt Funds

Top Debts funds possess the following risks:

A. Credit Risk

When debt security matures, the issuer of the debt may not be able to pay back the principal or the interest that accrued on loan at the time of maturity.

B. Interest Rate Risk

To put it another way, if the underlying securities' interest rates change, so will their value.

C. Liquidity Risk

For example, the mutual fund firm may not have enough liquidity to handle the demand for withdrawals from its funds.

Top Debt Funds to Invest in December 2021

The following are some of the Top Debt Funds:

• Tata Liquid Fund (G)

• Axis Liquid Fund (G)

• Kotak Savings Fund (G)

• Axis Liquid Fund Retail (G)

• Aditya Birla Sun Life Liquid (G)

• Nippon India Liquid Fund Retail (G)

• ICICI Prudential Savings Fund (G)

• Nippon India Liquid Fund (G)

• SBI Magnum Ultra Short Duration Fund (G)

• Aditya Birla Sun Life Liquid Fund Retail (G)

• Aditya Birla Sun Life Liquid Discipline Advantage Plan (G)

• ICICI Prudential Savings Fund Retail Plan (G)

• Axis Liquid Fund Pyt of Inc Dis cum Cap Wdrl (PIDCW-M)

• Axis Liquid Fund Retail Pyt of Inc Dis cum Cap Wdrl (PIDCW-M)

• Axis Liquid Fund Retail Pyt of Inc Dis cum Cap Wdrl (D-W)


If you're looking for regular and reliable profits, debt investment is an excellent choice. It is evident from the information above that investing in debt funds is a better option for protecting your money. It is a good idea to start investing in debt funds at a younger age since everyone wants security when they become older. The debt fund proportion should be increased as one gets older. It's important to watch the market risk associated with debt funds, particularly if you're holding them for a lengthy period.

There is less risk and stable returns in debt mutual funds in India, so if you're just getting started with mutual funds, debt mutual funds are a suitable option. It's possible to get greater returns from debt mutual funds than from standard savings programmers like fixed and recurring deposits.

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