Debt Funds are categorized into different types based on the kind of securities they invest in and the maturity (time horizon) of these securities. Debt securities include bonds issued by corporates, banks and Government, debentures issued by big corporates, money market instruments like commercial papers and certificate of deposits (CDs) issued by banks.
Debt Funds are categorized as follows:
- Overnight Funds – invest in 1-day maturity papers (securities)
- Liquid Funds – invest in money market instruments maturing within 90 days Floating Rate Funds - invest in floating rate debt securities
- Ultra-Short Duration Funds – invest in debt securities maturing in 3-6 months
- Low Duration Fund – invest in securities maturing within 6-12 months
- Money Market Funds – invest in money market instruments with maturity up to 1 year
- Short Duration Funds
