02 — Preservation
Debt Funds
Purchasing power, protected across cycles.
Debt mutual funds engineered to defend capital, generate stable accrual, and provide liquidity — the ballast that lets equity portfolios stay invested.
Debt funds invest in a curated ladder of government securities, corporate bonds, PSU paper, and money-market instruments. They price risk in basis points, not moods.
- Horizon
- 1 – 5 years
- Risk
- Low – Moderate
- Liquidity
- T+1 to T+2
- Ticket size
- ₹5,000+
How it works
A four-step processMap liabilities
We align debt allocation to your near-term goals — tax outflows, school fees, capex, or bridge funding.
Choose duration
Liquid, ultra-short, short, corporate bond, or dynamic — matched to horizon and rate view.
Diversify credit
Only AAA/AA+ mandates for core; opportunistic sleeves reviewed manager-by-manager.
Rebalance
Regular top-ups from equity gains keep the debt sleeve at target weight.
Chapter — Fit
Who this is for.
Debt Funds is not for every investor — and that is the point. We choose it deliberately, when the mandate calls for it.
- 01Emergency corpus and near-term goals
- 02Retirees drawing regular income
- 03Business owners parking surplus working capital
- 04Balanced portfolios needing ballast
Why it works
Structural advantagesStability
Volatility a fraction of equity, with returns typically above savings and FDs.
Liquidity
Most schemes redeem in one to two working days without exit loads.
Diversification
One fund often holds 40–80 issuers across sectors and maturities.
Tax efficiency
Structured to your slab and holding period for optimal after-tax yield.
Reference — SEBI Categories
Regulatory frameworkDebt funds classified by portfolio duration and issuer profile under SEBI's scheme categorization framework.
01
Overnight Fund
Overnight securities with maturity of 1 day.
02
Liquid Fund
Debt and money-market securities with maturity up to 91 days.
03
Ultra Short Duration Fund
Macaulay duration of the portfolio between 3 – 6 months.
04
Low Duration Fund
Macaulay duration between 6 – 12 months.
05
Money Market Fund
Money-market instruments with maturity up to 1 year.
06
Short Duration Fund
Macaulay duration between 1 – 3 years.
07
Medium Duration Fund
Macaulay duration between 3 – 4 years.
08
Medium to Long Duration Fund
Macaulay duration between 4 – 7 years.
09
Long Duration Fund
Macaulay duration greater than 7 years.
10
Dynamic Bond Fund
Invests across the duration spectrum based on the manager's view.
11
Corporate Bond Fund
Minimum 80% in AA+ and above rated corporate bonds.
12
Credit Risk Fund
Minimum 65% in AA and below rated corporate bonds.
13
Banking & PSU Fund
Minimum 80% in debt of banks, PSUs, and public financial institutions.
14
Gilt Fund
Minimum 80% in government securities across maturities.
15
Floater Fund
Minimum 65% in floating-rate instruments.
- 01
Debt funds invest across government securities, corporate bonds, T-bills, commercial paper, and certificates of deposit.
- 02
Structures like Fixed Maturity Plans (FMPs) and Infrastructure Debt Funds sit alongside these open-ended categories.
Considerations
What we tell you before you commit.
- 01
Credit risk in lower-rated paper — screened out of core allocations.
- 02
Duration risk when rates rise unexpectedly.
- 03
Reinvestment risk in falling-rate environments.
Frequently asked
Answered plainlyDifferent, not safer. Debt funds offer liquidity and diversification; FDs offer principal certainty. We use both, deliberately.
Post-2023, gains on most debt funds are taxed at slab rate irrespective of holding period. Structure matters — we optimise accordingly.
Sensitivity of a fund's NAV to interest-rate moves. Shorter duration = less rate risk = smoother ride.
Ready to explore this route for your portfolio?
A private, no-obligation conversation with one of our advisers — begin with your mandate, not a product.