Debt market: AMFI reports ₹1.98 lakh crore outflow in March 2024. What are debt funds? All FAQs answered

livemint.com:

Debt funds witnessed a significant outflow in March 2024, amounting to around ₹1.98 lakh crore, as per data released by the Association of Mutual Funds in India (AMFI) on April 10. All debt funds categories witnessed outflow except for long-duration funds, banking, PSU, and Gilt funds with a 10-year constant duration.

Also read | Top mutual funds to invest in India: These 10 mid-cap MF schemes delivered the best return in five years. Check here

Debt funds are a type of mutual fund schemes through which investments are made in fixed-income instruments like corporate and government bonds, corporate debt securities, money market instruments, and more. Debt funds are also known as Income Funds or Bond Funds.

Also read | Mutual Funds: Net AUM declines marginally to ₹53 lakh crore in March, shows AMFI data

The investment made via debt funds goes into instruments like corporate bonds, government bonds, corporate debt securities, and money market instruments. It is relatively less volatile compared to the equity market and is seen as a regular income source. 

Additionally, debt funds also get periodic interest from the underlying debt instruments in which they invest, and this interest income gets added to a debt fund on a daily basis. The net asset value (NAV) of a debt fund depends on the interest rates of its underlying assets, and also on any upgrade or downgrade in the credit rating of these assets. 

Also Read | Smallcap funds see outflow for first time in 2.5 years

 The market price of debt funds vary with changes in interest rates.

Debt funds are divided into different types based on their investment strategies and the securities they invest in. Here are some common types of debt funds.

Short-term funds: Funds investing