Taking a bet on debt funds: The risks you should know of as an investor

Losing investments is if companies default on their debt obligations

Debt funds were not perceived to be as risky as equity funds. But as recent episodes of sudden downgrades have shown, debt investments are risky, and it is possible for investors to lose their capital if companies default on their debt obligations. The turmoil in the past few months perhaps is a wake-up call for investors who prioritise returns over safety and liquidity.  Here is a look at the key categories and the risks associated with them:

Liquid funds

These funds invest in debt and money market securities with maturity of up to 91 days. These funds are among the