Top 10 Debt Mutual Funds of FY 2022

Top 10 Debt Mutual Funds of FY 2022 Debt Funds are a kind of Mutual Funds that generate returns by lending your money to the government and companies. The lending duration and the kind of borrower, determine the risk level of a Debt Fund.

• Debt Funds can be considered for an investment horizon of 1 day to up to 3 years
• They offer better post-tax returns compared to FDs if you stay invested for at least 3 years
• Liquid Debt Funds are a great option to park your emergency funds. You can earn better returns than savings bank account without taking too much risk

The main intention of these funds is to generate wealth in the form of interest income and steady appreciation of the capital invested in the long run. The underlying assets generate a fixed rate of interest over the tenure for which investors stay invested in the fund. A few major advantages of investing in debt funds are low cost structure, relatively stable returns, relatively high liquidity and reasonable safety. Debt funds are ideal for investors who aim for regular income, but are risk-averse. Debt funds are less volatile and, hence, are less risky than equity funds. If you have been saving in traditional fixed income products like Bank Deposits, and looking for steady returns with low volatility, debt Mutual Funds could be a better option, as they help you achieve your financial goals in a more tax efficient manner and therefore earn better returns. The table below shows the best-performing debt funds based on the last 5-year returns: