Debt mutual funds returns fluctuate despite investing in fixed income securities: Here’s why

The key to understanding debt fund returns lies in their management and the nature of their instruments. Unlike fixed deposits, debt funds’ returns depend on NAV fluctuations—rising when the NAV increases and falling when it declines. Kunal Gupta may be surprised to learn that debt instruments in a fund are traded, giving them market-driven prices. Bond prices fluctuate with interest rate changes—when the RBI lowers rates, new bonds offer lower interest, making existing bonds with higher rates m .. 

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