Debt mutual fund is a product for investors whose major aspire is capital conservation joined with plunge returns that is superior to savings account and bank fixed deposits. They invest mainly in fixed income instruments. Debt fund proceeds are governed by movement in interest rates. Prices of debt securities and interest rates are inversely related and hence any alter in interest rate will have a crash on the NAV of the fund in the reverse direction. Debt fund returns is fundamentally a combination capital appreciation and regular income. Capital appreciation is where a debt mutual fund has a rim over a fixed deposit. Capital appreciation is achievable because the debt instruments that the mutual fund company invests in are able to trading. Based on the interest rate, the bond yields move. When interest rates move southwards, yields on bonds raise making it profitable for mutual fund companies to trade the bond.
What do you mean by debt mutual fund?
