How debt mutual funds work

Debt mutual are a type of mutual fund that generate returns from their investors' money by investing in bonds or deposits of various kinds. In short, they lend money and earn interest on the money they have lent. This interest that they earn forms the basis for the returns that debt funds generate for investors. What is a bond, one might wonder? A bond is like a certificate of deposit that is issued by the borrower to the lender. Even individual investors do something similar when they make a fixed deposit in a bank. When you make an FD with a bank, you are basically lending money to the bank and you earn i

This article was originally published on March 03, 2022, and last updated on September 23, 2022.