Debt fund invests in interest bearing securities mainly government securities and corporate bonds. This fund earns returns for its investors from interest income on its investments and profits on trading securities. In terms of risk, this type of fund is the least risky. Various kinds of debt scheme are: These schemes invest in a basket of debt securities such as bonds, government securities, corporate debentures etc of various maturities. The objective is to maximize income while at the same time maintaining the optimum balance of yield, safety and liquidity. The Gilt Fund invests in a portfolio of bonds issued by the Government, which are essentially liquid and carry no credit risk. However, the fund is subject to interest rate risk. A fund comprising of bonds for which the interest rate is adjusted periodically according to a predetermined formula, usually linked to an index. FMPs are ideal choice for investors who like to buy a bond and hold it to maturity, without taking any market risk. The fund invests into bonds at the beginning of the plan, such that the maturity of the bonds matches the investing horizon of the plan.