INVESTING FOR A STEADY INCOME

Investing in debt funds could provide a regular income stream and stability to portfolio returns

- Narayan Krishnamurthy

When it comes to mutual fund (MF) investing, most people assume equity is the only way to go. But there is a range of debt funds with varying degree of risks and time frames to invest. Debt funds work on the principal of traditional debt instruments such as bank fixed deposits, small savings schemes and other bonds that provide a fixed interest payout. Debt funds invest in debt or fixed income securities of various corporate institutions and the government and are also known as income funds. But this doesn’t mean that debt funds are immune to ups and downs or guarantee fixed returns like, say, FDs.