Investing
Debt fund
A mutual fund that invests in bonds and other loans instead of stocks, aiming for steadier returns.
A debt fund lends money by buying bonds from governments and companies. In return it earns interest, which flows to you.
Returns are lower than equity but usually far smoother, making debt funds useful for short-to-medium goals or to balance a risky portfolio.
They are not risk-free. Interest rate moves and the chance of a borrower defaulting can both dent returns.
For example
Saving for a car in 3 years? A debt fund is a saner home for that money than an equity fund that could drop 20% right before you buy.