What are debt-oriented schemes in mutual funds?
Debt-oriented mutual fund schemes—also called income funds—primarily invest in fixed-income instruments such as government securities, corporate bonds, debentures, commercial papers, and treasury bills. These schemes aim to generate regular income while preserving capital.
Unlike equity funds, debt schemes are relatively less volatile and are suited for conservative investors looking for short- to medium-term financial goals.
Key features of debt-oriented schemes
- Invest predominantly in debt and money market instruments
- Offer more predictable returns compared to equity-based funds
- Lower risk but also potentially lower returns
- Categorised based on maturity profile (short duration, liquid, gilt, etc.)
What if...
| Scenario | Explanation |
|---|
| You want stable returns | Debt funds aim to offer steady income without equity market volatility. |
| You’re investing for < 3 years | Short- and medium-duration debt schemes may suit your horizon. |
| You’re unsure about fund safety | Look at credit quality, duration risk, and fund category (e.g., Gilt vs. Credit Risk). |
| You want liquidity | Most debt funds allow easy redemption with 1–3 business day settlement. |
Suitable for risk-averse investors aiming for stability and regular income over market-linked growth.
Last updated: 16 Jun 2025
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