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Accrual Mutual Funds

Updated on June 5, 2023 , 518 views

Accrual funds are a type of debt Mutual Funds which usually invest in short to medium maturity papers. These papers are of medium to high quality, while focusing on holding securities until the maturity. The fund ideally focuses to earn interest Income in terms of coupon offered by Bonds. Accrual funds adopt buy & hold strategy and emphases on delivering better returns compared to Bank FDs. These funds take a credit-risk and invest in slightly lower-rated securities, in order to generate higher yields. Moreover, accrual funds can make returns from the Capital gains too, but this tends to be a small portion of their total returns.

How Does Accrual Mutual Funds Work?

In the open-end Debt fund category, there are two types of long term bond funds —

1. Credit Opportunity Funds

Credit opportunities funds adopt the Accrual strategy in order to provide better returns. Typically, they invest across the credit spectrum, at times invest in bonds rated lower than “AA”. With investments in slightly lower rated securities (ensuring due-diligence is done) they are able to extract higher yields. Thereby, enabling a better return for the investors, in fact most times beating a bank FDs, in terms of returns. So, the lower the credit rate, the higher the return. They take the credit risk for the sake of generating high yields, due to which the risk of Default also increases.

Ideally, fund managers not only look for a current credit rating, but also at the fundamentals of a company. If the company has a huge opportunity to grow, then it can be the best choice for a fund manager.

2. Corporate Bond Funds

Corporate bond funds have a lower risk in comparison to credit opportunity funds. These funds invest only in the higher quality papers. Also, corporate bond funds don’t take any credit risks like credit opportunity funds. These funds can be an ideal investment at the end of the rate cut cycle or when a rate cut is expected.

Corporate bond funds are typically used for playing out a view in interest rates. Typically, the yield (ytm- Yield to Maturity) of corporate bond funds are lower than that of accrual funds. Investors who look for yield and would like to hold for long periods (i.e., 3 years or more) should go for an accrual fund. Investors who have a view on interest rates and can keenly monitor the fund’s performance can go for a corporate bond fund, taking the advantage of yield plus the returns made on Capital Gains (due to interest rate movements).

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Who should Invest?

These funds are suitable for investors who want to earn desire stable returns. But, an investor should have a view on interest rates. One should also keenly monitor the fund performances. It is advised to invest in accrual funds for least a 1-3-year horizon.

Accrual Debt Funds Taxation

Taxation for accrual funds is same like debt funds, which is computed in the following manner-

Short Term Capital Gains (STCG)

If the holding period of a debt investment is less than 36 months, then it is classified as a short-term investment and these are taxed as per individual's tax slab.

Long Term Capital Gains (LTCG)

If the holding period of debt investment is more than 36 months, then it is classified as a long-term investment and is taxed at 20% with an indexation benefit.

Capital Gains Investment Holding Gains Taxation
Short Term Capital Gains Less than 36 months As per individual's tax slab
Long Term Capital Gains More than 36 months 20% with indexation benefits

Top 5 Best Accrual Funds FY 23 - 24

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
IDFC Corporate Bond Fund Growth ₹16.4814
↑ 0.00
₹14,4642.23.56.45.22.67.38%9M 22D10M 13D
ICICI Prudential Corporate Bond Fund Growth ₹25.4245
↑ 0.01
₹20,8122.43.97.75.94.57.91%1Y 9M 18D4Y 8M 23D
BNP Paribas Corporate Bond Fund Growth ₹23.526
↑ 0.01
₹1413.34.57.54.41.67.51%4Y 9M 22D6Y 8M 16D
Franklin India Corporate Debt Fund Growth ₹84.8854
↑ 0.02
₹7662.43.66.45.63.27.31%1Y 7M 20D1Y 11M 17D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 7 Jun 23

1. IDFC Corporate Bond Fund

The Fund seeks to provide steady income and capital appreciation by investing primarily in corporate debt securities across maturities and ratings. There is no assurance or guarantee that the objectives of the scheme will be realised.

IDFC Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 12 Jan 16. It is a fund with Moderate risk and has given a CAGR/Annualized return of 7% since its launch.  Return for 2022 was 2.6% , 2021 was 3.7% and 2020 was 11.6% .

Below is the key information for IDFC Corporate Bond Fund

IDFC Corporate Bond Fund
Growth
Launch Date 12 Jan 16
NAV (07 Jun 23) ₹16.4814 ↑ 0.00   (0.02 %)
Net Assets (Cr) ₹14,464 on 30 Apr 23
Category Debt - Corporate Bond
AMC IDFC Asset Management Company Limited
Rating Not Rated
Risk Moderate
Expense Ratio 0.58
Sharpe Ratio -1.02
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 1,000
Exit Load NIL
Yield to Maturity 7.38%
Effective Maturity 10 Months 13 Days
Modified Duration 9 Months 22 Days

Growth of 10,000 investment over the years.

DateValue
31 May 18₹10,000
31 May 19₹10,874
31 May 20₹11,926
31 May 21₹12,852
31 May 22₹13,089
31 May 23₹13,872

IDFC Corporate Bond Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132
Invest Now

Returns for IDFC Corporate Bond Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23

DurationReturns
1 Month 0.7%
3 Month 2.2%
6 Month 3.5%
1 Year 6.4%
3 Year 5.2%
5 Year 6.8%
10 Year
15 Year
Since launch 7%
Historical performance (Yearly) on absolute basis
YearReturns
2022 2.6%
2021 3.7%
2020 11.6%
2019 8.5%
2018 6.3%
2017 6.2%
2016
2015
2014
2013
Fund Manager information for IDFC Corporate Bond Fund
NameSinceTenure
Suyash Choudhary28 Jul 211.76 Yr.
Gautam Kaul1 Dec 211.41 Yr.

Data below for IDFC Corporate Bond Fund as on 30 Apr 23

Asset Allocation
Asset ClassValue
Cash17.1%
Debt82.9%
Debt Sector Allocation
SectorValue
Corporate54.87%
Government35.22%
Cash Equivalent9.91%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
National Bank For Agriculture And Rural Development
Debentures | -
5%₹747 Cr76,000,000
Housing Development Finance Corporation Limited
Debentures | -
5%₹722 Cr72,500,000
↑ 9,000,000
Ultratech Cement Limited
Debentures | -
5%₹702 Cr71,500,000
364 DTB 14032024
Sovereign Bonds | -
4%₹613 Cr65,000,000
↑ 10,000,000
National Housing Bank
Debentures | -
4%₹551 Cr56,000,000
National Bank For Agriculture And Rural Development
Debentures | -
4%₹512 Cr52,000,000
National Housing Bank
Debentures | -
3%₹501 Cr50,000,000
Power Finance Corporation Ltd.
Debentures | -
3%₹479 Cr47,900,000
↓ -10,000,000
Oil And Natural Gas Corporation Limited
Debentures | -
3%₹444 Cr45,000,000
Export Import Bank Of India
Debentures | -
3%₹432 Cr44,000,000

2. ICICI Prudential Corporate Bond Fund

(Erstwhile ICICI Prudential Ultra Short Term Plan)

ICICI Prudential Ultra Short Term Plan is an open-ended income fund that intends to generate regular income through investments in a basket of debt and money market instruments of very short maturities with a view to providing reasonable returns, while maintaining an optimum balance of safety, liquidity and yield. However, there can be no assurance that the investment objective of the scheme will be realized.

ICICI Prudential Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 11 Aug 09. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of 7% since its launch.  Ranked 7 in Corporate Bond category.  Return for 2022 was 4.5% , 2021 was 4.1% and 2020 was 10.4% .

Below is the key information for ICICI Prudential Corporate Bond Fund

ICICI Prudential Corporate Bond Fund
Growth
Launch Date 11 Aug 09
NAV (07 Jun 23) ₹25.4245 ↑ 0.01   (0.04 %)
Net Assets (Cr) ₹20,812 on 30 Apr 23
Category Debt - Corporate Bond
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.58
Sharpe Ratio 0.42
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 100
Exit Load NIL
Yield to Maturity 7.91%
Effective Maturity 4 Years 8 Months 23 Days
Modified Duration 1 Year 9 Months 18 Days

Growth of 10,000 investment over the years.

DateValue
31 May 18₹10,000
31 May 19₹10,904
31 May 20₹12,018
31 May 21₹12,877
31 May 22₹13,295
31 May 23₹14,264

ICICI Prudential Corporate Bond Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125
Invest Now

Returns for ICICI Prudential Corporate Bond Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23

DurationReturns
1 Month 0.7%
3 Month 2.4%
6 Month 3.9%
1 Year 7.7%
3 Year 5.9%
5 Year 7.4%
10 Year
15 Year
Since launch 7%
Historical performance (Yearly) on absolute basis
YearReturns
2022 4.5%
2021 4.1%
2020 10.4%
2019 9.9%
2018 6.4%
2017 6.3%
2016 9.8%
2015 8.8%
2014 9.4%
2013 8.5%
Fund Manager information for ICICI Prudential Corporate Bond Fund
NameSinceTenure
Rahul Goswami16 Oct 175.54 Yr.
Anuj Tagra2 Mar 203.16 Yr.
Chandni Gupta3 Aug 166.74 Yr.

Data below for ICICI Prudential Corporate Bond Fund as on 30 Apr 23

Asset Allocation
Asset ClassValue
Cash5.72%
Debt94.28%
Debt Sector Allocation
SectorValue
Corporate52.15%
Government42.02%
Cash Equivalent5.72%
Securitized0.12%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
8.51% Govt Stock 2033
Sovereign Bonds | -
13%₹2,778 Cr278,071,700
Reliance Industries Limited
Debentures | -
6%₹1,332 Cr13,250
7.879999999999999% Govt Stock 2028
Sovereign Bonds | -
5%₹992 Cr100,354,723
National Bank For Agriculture And Rural Development
Debentures | -
4%₹804 Cr80,000
7.93% Govt Stock 2034
Sovereign Bonds | -
3%₹706 Cr72,217,650
Housing Development Finance Corporation Ltd
Debentures | -
3%₹696 Cr7,000
Larsen And Toubro Limited
Debentures | -
3%₹659 Cr65,000
Small Industries Development Bank Of India
Debentures | -
3%₹637 Cr6,400
Small Industries Development Bank Of India
Debentures | -
3%₹604 Cr6,000
Bharat Petroleum Corporation Limited
Debentures | -
3%₹599 Cr59,500

3. BNP Paribas Corporate Bond Fund

The investment objective of the Scheme is to generate income and capital gains through investments in a portfolio of debt and money market instruments. However, there can be no assurance that the investment objectives of the Scheme will be realized. The Scheme launched hereunder does not guarantee/indicate any returns.

BNP Paribas Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 8 Nov 08. It is a fund with Moderate risk and has given a CAGR/Annualized return of 6% since its launch.  Ranked 24 in Corporate Bond category.  Return for 2022 was 1.6% , 2021 was 2.2% and 2020 was 9.9% .

Below is the key information for BNP Paribas Corporate Bond Fund

BNP Paribas Corporate Bond Fund
Growth
Launch Date 8 Nov 08
NAV (07 Jun 23) ₹23.526 ↑ 0.01   (0.03 %)
Net Assets (Cr) ₹141 on 15 May 23
Category Debt - Corporate Bond
AMC BNP Paribas Asset Mgmt India Pvt. Ltd
Rating
Risk Moderate
Expense Ratio 0.89
Sharpe Ratio -0.65
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 300
Exit Load 0-12 Months (1%),12-24 Months (0.5%),24-36 Months (0.25%),36 Months and above(NIL)
Yield to Maturity 7.51%
Effective Maturity 6 Years 8 Months 16 Days
Modified Duration 4 Years 9 Months 22 Days

Growth of 10,000 investment over the years.

DateValue
31 May 18₹10,000
31 May 19₹10,737
31 May 20₹10,989
31 May 21₹11,640
31 May 22₹11,694
31 May 23₹12,504

BNP Paribas Corporate Bond Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹194,235.
Net Profit of ₹14,235
Invest Now

Returns for BNP Paribas Corporate Bond Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23

DurationReturns
1 Month 0.9%
3 Month 3.3%
6 Month 4.5%
1 Year 7.5%
3 Year 4.4%
5 Year 4.7%
10 Year
15 Year
Since launch 6%
Historical performance (Yearly) on absolute basis
YearReturns
2022 1.6%
2021 2.2%
2020 9.9%
2019 0.9%
2018 5.2%
2017 6.7%
2016 10.8%
2015 7.2%
2014 10.8%
2013 7.1%
Fund Manager information for BNP Paribas Corporate Bond Fund
NameSinceTenure
Mayank Prakash23 Aug 175.69 Yr.
Shreekiran Rao1 Dec 220.41 Yr.

Data below for BNP Paribas Corporate Bond Fund as on 15 May 23

Asset Allocation
Asset ClassValue
Cash5.02%
Debt94.98%
Debt Sector Allocation
SectorValue
Corporate49.15%
Government45.83%
Cash Equivalent5.02%
Credit Quality
RatingValue
AA0.75%
AAA99.25%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.1% Govt Stock 2029
Sovereign Bonds | -
11%₹15 Cr1,500,000
Tata Capital Financial Services Limited
Debentures | -
8%₹11 Cr1,130
Indian Railway Finance Corporation Limited
Debentures | -
8%₹11 Cr110
Export Import Bank Of India
Debentures | -
8%₹11 Cr100
Hindustan Petroleum Corporation Limited
Debentures | -
7%₹10 Cr100
Power Finance Corporation Ltd.
Debentures | -
7%₹10 Cr1,000
Power Grid Corporation Of India Limited
Debentures | -
7%₹10 Cr1,000
Sundaram Bnp Paribas Home Finance Limited
Debentures | -
7%₹10 Cr1,000
GAil (India) Limited
Debentures | -
7%₹10 Cr100
LIC Housing Finance Limited
Debentures | -
6%₹8 Cr80

4. Franklin India Corporate Debt Fund

(Erstwhile Franklin India Income Builder Account - Plan A)

The investment objective of the Scheme is primarily to provide investors Regular income under the Dividend Plan and Capital appreciation under the Growth Plan.

Franklin India Corporate Debt Fund is a Debt - Corporate Bond fund was launched on 23 Jun 97. It is a fund with Moderate risk and has given a CAGR/Annualized return of 8.6% since its launch.  Ranked 22 in Corporate Bond category.  Return for 2022 was 3.2% , 2021 was 3.8% and 2020 was 9% .

Below is the key information for Franklin India Corporate Debt Fund

Franklin India Corporate Debt Fund
Growth
Launch Date 23 Jun 97
NAV (07 Jun 23) ₹84.8854 ↑ 0.02   (0.02 %)
Net Assets (Cr) ₹766 on 15 May 23
Category Debt - Corporate Bond
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderate
Expense Ratio 0.85
Sharpe Ratio -0.89
Information Ratio 0
Alpha Ratio 0
Min Investment 10,000
Min SIP Investment 500
Exit Load 0-1 Years (0.5%),1 Years and above(NIL)
Yield to Maturity 7.31%
Effective Maturity 1 Year 11 Months 17 Days
Modified Duration 1 Year 7 Months 20 Days

Growth of 10,000 investment over the years.

DateValue
31 May 18₹10,000
31 May 19₹10,892
31 May 20₹11,784
31 May 21₹12,755
31 May 22₹13,054
31 May 23₹13,854

Franklin India Corporate Debt Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132
Invest Now

Returns for Franklin India Corporate Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23

DurationReturns
1 Month 0.7%
3 Month 2.4%
6 Month 3.6%
1 Year 6.4%
3 Year 5.6%
5 Year 6.8%
10 Year
15 Year
Since launch 8.6%
Historical performance (Yearly) on absolute basis
YearReturns
2022 3.2%
2021 3.8%
2020 9%
2019 9.2%
2018 7.5%
2017 7.7%
2016 9%
2015 8.4%
2014 13%
2013 7.5%
Fund Manager information for Franklin India Corporate Debt Fund
NameSinceTenure
Sachin Padwal-Desai4 Jun 211.91 Yr.
Santosh Kamath23 Jun 9725.87 Yr.
Umesh Sharma4 Jun 211.91 Yr.

Data below for Franklin India Corporate Debt Fund as on 15 May 23

Asset Allocation
Asset ClassValue
Cash29.39%
Debt70.61%
Debt Sector Allocation
SectorValue
Government38.17%
Corporate32.44%
Cash Equivalent29.39%
Credit Quality
RatingValue
AA2.69%
AAA97.31%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.38% Govt Stock 2027
Sovereign Bonds | -
18%₹136 Cr13,000,000
Sikka Ports & Terminals Limited
Debentures | -
7%₹54 Cr500
Small Industries Development Bank Of India
Debentures | -
7%₹52 Cr500
Kotak Mahindra Prime Limited
Debentures | -
7%₹52 Cr500
Nuclear Power Corporation Of India Limited
Debentures | -
7%₹51 Cr5,000
Housing Development Finance Corporation Ltd
Debentures | -
7%₹51 Cr500
National Bank For Agriculture And Rural Development
Debentures | -
7%₹50 Cr500
LIC Housing Finance Limited
Debentures | -
3%₹26 Cr250
Rec Limited
Debentures | -
3%₹25 Cr250
Mahindra & Mahindra Financial Services Ltd
Debentures | -
3%₹25 Cr2,500
↑ 2,500

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Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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