Lock in period for debt fund

[Bhuvan]

@Shiv_Katira

So, is there any specific reason people prefer liquid funds over other long term debt funds for very short duration investment? In most of the debt fund exit load is nil (as far as I know), and long-term debt funds are giving better returns with almost the same risk profile.

I’m assuming you aren’t aware of debt funds and how they work. Please read this:

The Debt funds (Part 1) – Varsity by Zerodha

A quick explainer on the basics of investing in debt mutual funds

Debt funds play an important role in your asset allocation. Since debt funds are relatively less risky than equities, they help reduce the volatility in your portfolio by providing stability. They are less risky, but not riskless. There are a few key risks you need to understand. The first key risk you need to know is interest rate risk. Bonds and, by extension, debt funds have an inverse relationship with interest rates. When interest rates rise, bond prices fall. The reason is that if intere…