Features

• Debt funds utilize a variety of debt instruments to maintain a steady income, including corporate and government bonds, securitized debt products and money market investments.
  
  

Advantages

• The products held by debt funds offer a more reliable return than equity-based investment. Since the securities are held to maturity rather than traded, the fund is less likely to experience negative fluctuations in asset valuation.
  
  

Disadvantages

• The investment products favored by debt funds are somewhat limited in their earnings potential. These funds are unlikely to beat the market in annual returns, and are not likely to hold a potential for increases in asset valuation.
  
  

Investor Benefits

• According to Investopedia, debt funds are beneficial to investors looking to protect their existing capital and earn a modest but reliable return. These funds are not the product of choice for day traders or profit seekers.
  
  

The Future

• As investors around the world strive to avoid the types of equity-based losses incurred in years recent to 2010, it stands to reason that debt funds, with their conservative profile, will continue to gain popularity in the financial marketplace.