Apart from liquidity and tax benefit there a wrong notion built up for debt funds that they cannot make losses. Based on several parameters the interest rates also keep moving but not so often like the stock market, currency or commodity price movements.
If you are entering a debt fund at the top of the cycle chances are there could be a sign of loss owing to the fall in the interest rates.
Below is the chart which shows the interest rate movement in India.
If you had invested in the year 2010 in debt funds where the continuous upcycle had given bumper returns in the debt funds while same is not the case in the year 2013 to current could have led to below average returns.
The interest rates are available to public in the RBI website which one can access and get the historical rates movements and then decide when is the right time to invest in the debt funds.