Bond Fund refers to those mutual funds which invest money primarily in bonds and other debt securities. The fund manager is tasked with the responsibility of generating a steady stream of income for the investors by investing in categories such as GSecs(Government Securities), bonds, debentures, etc.

These funds generally pay dividends on a periodic basis in addition to some capital appreciation. Bond Funds are offered by Mutual Funds, ULIPs and other such investment firms. There are various types of bond funds such as short-term investments, medium to long-term investments, government securities, etc.

A bond fund has debt taxation and an investor gets indexation benefit for being invested for a period of minimum 3 years.