A debt fund is a type of fund that invests in debt securities offering fixed income. Debt securities such as bonds, treasury bills, debentures, fixed deposits, etc., are considered fixed-income securities.

Debt funds are comparatively less riskier than other categories of funds and fall under the low to moderate risk grade. They are usually recommended for short-term.

Debt funds are highly recommended to investors with lower risk tolerance. Debt funds usually diversify across various securities to ensure stable returns. While there are no guarantees, the returns are usually in an expected range. Hence, low risk investors find them ideal.