What are the diverse types of debt funds?

A system of mutual debt fund invests in debt securities such as government bonds, fixed deposit, approved private deposits and so on. By investing in debt instruments to ensure that funds low risk and provides a stable income for investors. The different types of debt funds:

GOLD FUND:

They invest the corpus in securities issued by the government. These funds have a zero default risk, but are subject to interest rate risk. So it might be possible to lose money on the debt for a while 'Net Assets Value’ (NAV) as well. But these systems are safer because they invest in the documents supporting the government.

Fixed Income Funds:

Invest a significant portion of the various debt instruments such as bonds, corporate and government securities.

MONTHLY INCOME PLANS (MIP):

They invest most of their bodies in debt instruments and the minimum stock. They get the benefits of equity and debt market. These regimes ranks slightly above the risk-return matrix. They try to give you a monthly income as dividends, which of course is not guaranteed. These funds are intended for investors who have a large corpus in the first place and want to generate a monthly income for themselves with a low to moderate risk.

Short-term plans (STEP):

These funds are intended for those who have an investment horizon of three to six months. These funds invest primarily in short-term securities that the certificate of deposit (CDs) and commercial papers (CP). Part of the corpus is also invested in enterprises.

LIQUID FUNDS:

Also known as money market instruments. They provide easy liquidity and preservation of capital. These schemes invest in short-term instruments such as Treasury bills, the interbank call money, the CPS and CDs and is designed for an investment horizon of one day to three months.

Source: [business-standard]