Diversification with fixed-income investments is a major thumb-rule of investing. Despite its importance, investors - often under the allure of equity-linked high returns - ignore this thumb rule when investing in mutual funds. Debt funds are low-risk mutual funds that invest primarily in fixed-income assets like corporate and government bonds, treasury bills, and commercial papers. While they may offer lower returns than equity funds, they offer more stable earnings and protect your portfolio from intense market volatility and losses. In this article, we explore the reasons to invest in debt funds and how these funds can help balance your returns and risk.
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