Debt Funds are funds that invests in fixed income securities like bonds, treasury bills and government papers. Basically they lend money to corporates or government to earn interest. These are for investors wanting stable returns and lower risk than equity. However, debt funds are not risk free. There is interest rate risk and credit risk where companies might default on payment. Returns are moderate and depends on interest rates. Good for conservative investors to park money but don't expect high returns or complete safety against inflation.
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