Table of Contents
Accrual Mutual Funds
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
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity IDFC Corporate Bond Fund Growth ₹16.4814
↑ 0.00 ₹14,464 2.2 3.5 6.4 5.2 2.6 7.38% 9M 22D 10M 13D ICICI Prudential Corporate Bond Fund Growth ₹25.4245
↑ 0.01 ₹20,812 2.4 3.9 7.7 5.9 4.5 7.91% 1Y 9M 18D 4Y 8M 23D BNP Paribas Corporate Bond Fund Growth ₹23.526
↑ 0.01 ₹141 3.3 4.5 7.5 4.4 1.6 7.51% 4Y 9M 22D 6Y 8M 16D Franklin India Corporate Debt Fund Growth ₹84.8854
↑ 0.02 ₹766 2.4 3.6 6.4 5.6 3.2 7.31% 1Y 7M 20D 1Y 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
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 Below is the key information for IDFC Corporate Bond Fund Returns up to 1 year are on (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 Below is the key information for ICICI Prudential Corporate Bond Fund Returns up to 1 year are on 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 Below is the key information for BNP Paribas Corporate Bond Fund Returns up to 1 year are on (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 Below is the key information for Franklin India Corporate Debt Fund Returns up to 1 year are on 1. IDFC Corporate Bond Fund
CAGR/Annualized return of 7% since its launch. Return for 2022 was 2.6% , 2021 was 3.7% and 2020 was 11.6% . 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 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.
Date Value 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 Returns for IDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23 Duration Returns 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
Year Returns 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
Name Since Tenure Suyash Choudhary 28 Jul 21 1.76 Yr. Gautam Kaul 1 Dec 21 1.41 Yr. Data below for IDFC Corporate Bond Fund as on 30 Apr 23
Asset Allocation
Asset Class Value Cash 17.1% Debt 82.9% Debt Sector Allocation
Sector Value Corporate 54.87% Government 35.22% Cash Equivalent 9.91% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -5% ₹747 Cr 76,000,000 Housing Development Finance Corporation Limited
Debentures | -5% ₹722 Cr 72,500,000
↑ 9,000,000 Ultratech Cement Limited
Debentures | -5% ₹702 Cr 71,500,000 364 DTB 14032024
Sovereign Bonds | -4% ₹613 Cr 65,000,000
↑ 10,000,000 National Housing Bank
Debentures | -4% ₹551 Cr 56,000,000 National Bank For Agriculture And Rural Development
Debentures | -4% ₹512 Cr 52,000,000 National Housing Bank
Debentures | -3% ₹501 Cr 50,000,000 Power Finance Corporation Ltd.
Debentures | -3% ₹479 Cr 47,900,000
↓ -10,000,000 Oil And Natural Gas Corporation Limited
Debentures | -3% ₹444 Cr 45,000,000 Export Import Bank Of India
Debentures | -3% ₹432 Cr 44,000,000 2. ICICI Prudential Corporate Bond Fund
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% . 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.
Date Value 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 Returns for ICICI Prudential Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23 Duration Returns 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
Year Returns 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
Name Since Tenure Rahul Goswami 16 Oct 17 5.54 Yr. Anuj Tagra 2 Mar 20 3.16 Yr. Chandni Gupta 3 Aug 16 6.74 Yr. Data below for ICICI Prudential Corporate Bond Fund as on 30 Apr 23
Asset Allocation
Asset Class Value Cash 5.72% Debt 94.28% Debt Sector Allocation
Sector Value Corporate 52.15% Government 42.02% Cash Equivalent 5.72% Securitized 0.12% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.51% Govt Stock 2033
Sovereign Bonds | -13% ₹2,778 Cr 278,071,700 Reliance Industries Limited
Debentures | -6% ₹1,332 Cr 13,250 7.879999999999999% Govt Stock 2028
Sovereign Bonds | -5% ₹992 Cr 100,354,723 National Bank For Agriculture And Rural Development
Debentures | -4% ₹804 Cr 80,000 7.93% Govt Stock 2034
Sovereign Bonds | -3% ₹706 Cr 72,217,650 Housing Development Finance Corporation Ltd
Debentures | -3% ₹696 Cr 7,000 Larsen And Toubro Limited
Debentures | -3% ₹659 Cr 65,000 Small Industries Development Bank Of India
Debentures | -3% ₹637 Cr 6,400 Small Industries Development Bank Of India
Debentures | -3% ₹604 Cr 6,000 Bharat Petroleum Corporation Limited
Debentures | -3% ₹599 Cr 59,500 3. BNP Paribas Corporate Bond Fund
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% . 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.
Date Value 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 Returns for BNP Paribas Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23 Duration Returns 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
Year Returns 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
Name Since Tenure Mayank Prakash 23 Aug 17 5.69 Yr. Shreekiran Rao 1 Dec 22 0.41 Yr. Data below for BNP Paribas Corporate Bond Fund as on 15 May 23
Asset Allocation
Asset Class Value Cash 5.02% Debt 94.98% Debt Sector Allocation
Sector Value Corporate 49.15% Government 45.83% Cash Equivalent 5.02% Credit Quality
Rating Value AA 0.75% AAA 99.25% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2029
Sovereign Bonds | -11% ₹15 Cr 1,500,000 Tata Capital Financial Services Limited
Debentures | -8% ₹11 Cr 1,130 Indian Railway Finance Corporation Limited
Debentures | -8% ₹11 Cr 110 Export Import Bank Of India
Debentures | -8% ₹11 Cr 100 Hindustan Petroleum Corporation Limited
Debentures | -7% ₹10 Cr 100 Power Finance Corporation Ltd.
Debentures | -7% ₹10 Cr 1,000 Power Grid Corporation Of India Limited
Debentures | -7% ₹10 Cr 1,000 Sundaram Bnp Paribas Home Finance Limited
Debentures | -7% ₹10 Cr 1,000 GAil (India) Limited
Debentures | -7% ₹10 Cr 100 LIC Housing Finance Limited
Debentures | -6% ₹8 Cr 80 4. Franklin India Corporate Debt Fund
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% . 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.
Date Value 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 Returns for Franklin India Corporate Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Jun 23 Duration Returns 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
Year Returns 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
Name Since Tenure Sachin Padwal-Desai 4 Jun 21 1.91 Yr. Santosh Kamath 23 Jun 97 25.87 Yr. Umesh Sharma 4 Jun 21 1.91 Yr. Data below for Franklin India Corporate Debt Fund as on 15 May 23
Asset Allocation
Asset Class Value Cash 29.39% Debt 70.61% Debt Sector Allocation
Sector Value Government 38.17% Corporate 32.44% Cash Equivalent 29.39% Credit Quality
Rating Value AA 2.69% AAA 97.31% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.38% Govt Stock 2027
Sovereign Bonds | -18% ₹136 Cr 13,000,000 Sikka Ports & Terminals Limited
Debentures | -7% ₹54 Cr 500 Small Industries Development Bank Of India
Debentures | -7% ₹52 Cr 500 Kotak Mahindra Prime Limited
Debentures | -7% ₹52 Cr 500 Nuclear Power Corporation Of India Limited
Debentures | -7% ₹51 Cr 5,000 Housing Development Finance Corporation Ltd
Debentures | -7% ₹51 Cr 500 National Bank For Agriculture And Rural Development
Debentures | -7% ₹50 Cr 500 LIC Housing Finance Limited
Debentures | -3% ₹26 Cr 250 Rec Limited
Debentures | -3% ₹25 Cr 250 Mahindra & Mahindra Financial Services Ltd
Debentures | -3% ₹25 Cr 2,500
↑ 2,500
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