Debt Funds

Don’t Let Your Money Rot In A Fixed Deposit!

Is your money idle and earning just 3-4% in your savings account? Are you still leaving money locked in Fixed Deposits? Why not invest in debt mutual funds instead?

Debt funds are a thriving category of mutual funds that are favourites for investors who believe in the low risk, low reward investment ideology. That said, debt funds do have the potential to outperform the average bank savings account and Fixed Deposit.

However, choosing the right debt mutual fund is no easy task. You need to pick high-quality debt funds to ensure you reap healthy returns.

What Are Debt Mutual Funds?

Debt Funds invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper and other money market asset classes.

Debt Mutual Funds are all managed by professional fund managers that have strategies to diversify and align their fund activities. Debt fund returns are generally less volatile and predictable.

Debt funds are suitable for conservative investors to generate returns of 6-8% over 1-3 years with exposure to low-risk components of the Indian stock market.

Pros Of Debt Funds

  1. Low Risk
    A debt fund is not as risky as other mutual funds because it invests in debt and money market instruments that are usually backed by the government or creditworthy organizations.

    Read this blog to know how debt mutual funds benefit your portfolio.
  2. Predictable Returns
    Debt funds invest in low risk, low reward securities that are known to generate a fixed income/interest. Thus, the returns are predictable of 6-8% over the long term.

    Read this blog to know more about the best debt funds to invest in 2021

  3. Flexibility
    Debt funds don’t have a fixed lock-in period like an FD. Instead, you can choose debt funds for the short and long term based on the maturity period.

    Read this blog to compare equity funds versus debt funds

  4. Low Transaction Cost
    Debt funds do not levy upfront fees or charges. However, a debt fund may have a redemption charge (Exit Load) if you wish to exit within a particular time frame, this varies from fund to fund.

Cons Of Debt Funds

  1. Too many scheme options
    Debt funds are a broad category of mutual funds. There are many diverse funds within the category like Overnight funds, Banking & PSU funds, Dynamic Bond Fund, etc. Furthermore, each of these funds has a varying maturity tenure.

    Selecting the right debt fund that works for you can be a hassle. But Cube Wealth makes it easier for you to invest in the right debt fund by giving you access to curated debt funds based on your goals.
  2. Interest rate risk
    Debt funds are subject to interest rate fluctuations which cause some fluctuation during the lifecycle of the investment. However, Cube’s advisor, Wealth First, helps you buy and sell debt funds at the right time.
  3. Default risk
    Debt funds invest in debt and as you may know, every loan carries the risk of default.

Debt Funds At A Glance


Average Return




Minimum investment On Cube


Minimum reinvestment On Cube


Maximum investment


Suitable Investment duration

1-3 years 



About Cube's Mutual Fund Advisor

Wealth First was founded in 2000 and is an independent investment advisory firm focused on Treasury and Wealth solutions for corporates, family offices, provident funds, trusts and HNIs.

They have a track record that is 50% higher than NIFTY over the last decade and have achieved this by following the widely renowned Wealth First philosophy:

1. Consistency: Study the returns for over 20 years and see for consistent returns in at least 15 quarters.

2. Fund Manager: Background of the Fund manager, his statistics, performance and reputation.

3. Fund house:
Analyse the background of the fund house.

4. Risk: After following all criteria - they invest in a fund house with lower risk.

  • AUM: ₹7,000 crores
  • Clients: 3,000+

How To Buy The Best Debt Funds Using Cube?

Simply select how much you want to invest in this low-risk category of mutual funds on Cube Wealth and your investment will be split across a minimum of the top two performing funds in this category for risk diversification.

You can do this in two ways:

  • QuickSIP - Take a risk quiz; get curated debt fund recommendations; start a debt fund SIP for as low as ₹5,000
  • SuperSIP - Unique to Cube Wealth; start your debt fund SIP; adjust your SIP date; increase or decrease your SIP amount

Wealth First constantly analyses the market to ensure they are always aware of and recommending the highest performing low-risk debt mutual funds for Cube users.

In the event Wealth First updates a mutual fund recommendation on Cube Wealth, you will retain your existing investments and any new investments will be allocated to the new funds.

You will be able to see your previous and new investments with ease on the Cube Wealth app. Wealth First will provide clear instructions when it is time to sell any mutual fund investments.

Debt Funds Currently Being Recommended On Cube Wealth


Debt Fund Name

3-Year Returns

5-Year Returns

ICICI Prudential Corporate Bond Fund



Axis Banking and PSU Debt Fund



IDFC Dynamic Bond Fund



HDFC Money Market Fund



Mirae Asset Cash Management Fund



*Note: Facts & figures are as of 29-01-2021. While we update our blogs regularly, download the Cube Wealth app for the latest information on debt funds.

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