What are debt funds?
Debt funds invest in bonds, government securities and money-market instruments that pay interest. They are generally less volatile than equity funds but not risk-free: bond prices change with interest rates and the borrower's credit quality.
Liquid and overnight funds are for parking money for days or weeks. Short-duration, corporate bond and banking & PSU funds suit 1 to 3 years. Gilt funds invest in government bonds and move more with interest rates.
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