Benefits of investing in debt funds

The decline in the Indian and global equities market has finally brought us to the conclusion: what had began as a global liquidity glut four years ago has eventually ended as a liquidity crisis in 2008!

In the current recessionary scenario, opportunities for investments are limited and fraught with risk.

In such a backdrop, an investor’s choices with regard to alternative investment avenues are restricted and involve considerable uncertainty. It is no surprise that a majority of the investors choose to switch into a much-safer investment class — debt oriented funds.

A debt fund is a diversified portfolio of assorted debt and money market instruments managed by professional managers of a mutual fund.

A stake in this is available to the general investor at an equally apportioned price of the ‘total portfolio value per unit’ .

This is also known as NAV(net asset value). So for all practical purposes, a debt fund is a simple proxy to investment into debt as an asset class.

http://economictimes.indiatimes.com/quickiearticleshow/3868925.cms

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Benefits of investing in debt funds