There are two ways in which an investment in a debt mutual fund grows: (1) by buying bonds with high coupon rates and holding them until maturity. The growth in this case is by accrual of interest. (2) by choosing long-term bonds issued by the government and aim for capital gains when the bond price increases due to decrease in interest rates.
Higher the coupon rate, lower the credit rating. Therefore the accrual strategy is subject to risk of default. Most investors do not recognize that the accrual strategy is also subject to interest rate risk. That is, the value of the high coupon rate bonds can also change value depending on interest rate movements.