Hybrid Mutual Funds
One fund that combines equity and debt — and sometimes gold — to balance growth potential with stability.
Debt Mutual Funds
Funds that invest in bonds, government securities and money-market instruments — typically steadier than equity funds, and useful for short to medium-term money.
- Risk level
- Moderate risk
- Minimum investment
- From ₹500 (varies by scheme)
What are debt mutual funds?
Debt mutual funds lend money rather than buy ownership. They invest in fixed-income instruments such as government securities, treasury bills, corporate bonds, commercial paper and certificates of deposit. The fund earns interest on these instruments, and its NAV also moves as bond prices change in the market.
Main categories
- Overnight and liquid funds — invest in instruments maturing within a day to 91 days. Often used to park money for the very short term.
- Ultra short, low duration and money market funds — for horizons of a few months to a year.
- Short duration and corporate bond funds — for horizons of one to three years.
- Banking & PSU funds — invest mainly in bonds of banks and public-sector companies.
- Gilt funds — invest in government securities; no credit risk, but sensitive to interest-rate changes.
- Target maturity funds — hold bonds until a set maturity date, giving more visibility if you stay invested until then.
The two risks to understand
Interest-rate risk: when interest rates rise, the prices of existing bonds fall. Funds holding longer-maturity bonds are affected more.
Credit risk: the chance that a borrower does not pay on time. Funds holding lower-rated bonds may offer higher yields but carry more of this risk.
SEBI requires every debt scheme to show where it sits on a potential risk class matrix, which makes these two risks easy to see at a glance.
How GTDIS helps
We help you match the category of fund to how long you plan to stay invested, explain the risks in plain language, and handle the paperwork and transactions online or at your doorstep. You can track your holdings at any time through your investor login.
Debt Mutual Funds: common questions
Are debt mutual funds risk-free?
No. Debt funds carry interest-rate risk (prices fall when interest rates rise) and credit risk (an issuer may delay or default on payments). The level of risk varies widely between categories, so check the scheme's riskometer and potential risk class matrix.
How are debt funds different from fixed deposits?
A fixed deposit pays a fixed rate for a fixed term. A debt fund's return is not fixed — it depends on the interest earned and price changes of the bonds it holds. Debt funds are usually easier to withdraw from, but returns can vary and are not assured.
How are debt mutual fund gains taxed?
For units bought on or after 1 April 2023, gains are added to your income and taxed at your slab rate regardless of how long you hold them. Please confirm with your tax adviser.
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Sovereign Gold Bonds
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Mutual Funds
Professionally managed, diversified portfolios across equity, debt and hybrid categories, matched to your goals, risk tolerance and time horizon.
Want to know more about Debt Mutual Funds?
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