Debt funds mostly invest in government securities, PSU bonds, deposit bank certificates, commercial paper and corporate debt paper. “Investments in debt funds are made in line with the investment mandate of the respective scheme. For instance, gilt fund can invest only in central or state sovereign credit, while corporate bond funds largely seek to invest in corporate debt of private or public sector undertakings. Commercial papers and company deposits are short term issuances of residual maturity of up to one year," said Lakshmi Iyer, chief investment officer of debt at Kotak Mahindra Asset Management Co. Ltd.
Nine big financial changes that you must watch out for in October
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