While equities represent participation in the success of enterprises, bonds represent debt owed by enterprises and governments to bond holders. The risk involved in investing in debt funds depends on the creditworthiness of the issuers of bonds in which the fund invests.
Debt funds are generally considered to be more secure investment instruments than equities-based funds because as long as bond issuers remain solvent, yields are guaranteed. Equities-based funds, on the other hand, depend on growth in companies and markets to generate capital gains.
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