Chapter 02

Seven curated routes — public markets, private markets, and global access, architected by mandate.

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.

Repeating stone columns in soft ivory — the ballast that keeps a portfolio invested.
Fig. 02 — Debt FundsPreservation
Horizon
1 – 5 years
Risk
Low – Moderate
Liquidity
T+1 to T+2
Ticket size
₹5,000+

How it works

A four-step process
01

Map liabilities

We align debt allocation to your near-term goals — tax outflows, school fees, capex, or bridge funding.

02

Choose duration

Liquid, ultra-short, short, corporate bond, or dynamic — matched to horizon and rate view.

03

Diversify credit

Only AAA/AA+ mandates for core; opportunistic sleeves reviewed manager-by-manager.

04

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 advantages
01 / 04

Stability

Volatility a fraction of equity, with returns typically above savings and FDs.

02 / 04

Liquidity

Most schemes redeem in one to two working days without exit loads.

03 / 04

Diversification

One fund often holds 40–80 issuers across sectors and maturities.

04 / 04

Tax efficiency

Structured to your slab and holding period for optimal after-tax yield.

Reference — SEBI Categories

Regulatory framework

Debt 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 plainly
  • Different, 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.