Debt investments or fixed-income investments are inherently less risky than equity investments through the behaviour of the fixed income asset class in the past eighteen months is contrary to popular belief. Most investors are accustomed to investing in bank fixed deposits, wherein they know upfront what rate of interest or return they are likely to receive on their investment. It is easy to comprehend. In case of investments in debt mutual funds, investors tend to rely on portfolio yield, which is an indication of likely return, ceteris paribus, and past returns, which may not be the right indicator of future returns. While debt funds invest in securities or bonds, which offer mostly fixed coupons or interest payments, the prices of the securities fluctuate, altering the investment return over the holding period of the investor. The price of the bond may fluctuate due to changes in interest rate levels in the economy, or the credit profile of the issuer. Bond markets can become illiquid at times as well, which leads to lower prices for bonds in general. Investors should be aware that if things do not change much during their investment horizon, the bond fund will give them returns close to their portfolio yield adjusted for expenses. But as things seldom remain the same, the realised return is higher or lower than the portfolio yield.