Debt funds, also known as fixed income funds or bond funds, are investment vehicles that primarily invest in fixed income securities issued by governments, corporations, or other entities. These funds aim to generate income for investors by investing in various types of debt instruments.

Debt funds invest in a wide range of fixed income securities, including government bonds, corporate bonds, municipal bonds, treasury bills, and other debt instruments. The specific composition of a debt fund's portfolio may vary depending on its investment objective, risk tolerance, and the expertise of the fund manager.

One of the key features of debt funds is their focus on generating regular income for investors. Fixed income securities typically pay interest at a predetermined rate and maturity date. By investing in a diversified portfolio of such securities, debt funds provide investors with a steady stream of income in the form of interest payments.

Debt funds can offer a range of benefits to investors. They are generally considered less volatile than equity funds, as the value of fixed income securities tends to be more stable. This stability makes debt funds a popular choice for conservative investors seeking lower-risk investments or those looking to balance their investment portfolio with a more predictable income stream.

Another advantage of debt funds is their potential to provide capital preservation. Government and high-quality corporate bonds, in particular, are generally considered safer investments, offering a relatively low risk of default. This makes debt funds attractive to investors who prioritize the preservation of their capital.

Debt funds come in various types and categories, such as short-term bond funds, long-term bond funds, high-yield bond funds, and government bond funds, among others. Each type has its own risk profile, duration, and investment focus, allowing investors to choose the fund that aligns with their investment goals and risk tolerance.