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Accrual Mutual Funds

Updated on April 10, 2024 , 684 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 24 - 25

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2023 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
IDFC Corporate Bond Fund Growth ₹17.3706
↓ -0.02
₹13,7441.43.16.64.86.87.21%1M 2D1M 6D
ICICI Prudential Corporate Bond Fund Growth ₹26.9701
↓ -0.02
₹26,0511.93.77.65.97.68.02%1Y 11M 23D3Y 11M 12D
BNP Paribas Corporate Bond Fund Growth ₹24.7118
↓ -0.04
₹1442.247.14.477.55%3Y 10M 10D5Y 5M 16D
Franklin India Corporate Debt Fund Growth ₹89.2791
↓ -0.03
₹7391.73.46.44.96.57.63%1Y 2M 1D1Y 4M 13D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 12 Apr 24

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 6.9% since its launch.  Return for 2023 was 6.8% , 2022 was 2.6% and 2021 was 3.7% .

Below is the key information for IDFC Corporate Bond Fund

IDFC Corporate Bond Fund
Growth
Launch Date 12 Jan 16
NAV (12 Apr 24) ₹17.3706 ↓ -0.02   (-0.10 %)
Net Assets (Cr) ₹13,744 on 29 Feb 24
Category Debt - Corporate Bond
AMC IDFC Asset Management Company Limited
Rating Not Rated
Risk Moderate
Expense Ratio 0.6
Sharpe Ratio 0.38
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 1,000
Exit Load NIL
Yield to Maturity 7.21%
Effective Maturity 1 Month 6 Days
Modified Duration 1 Month 2 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,828
31 Mar 21₹11,804
31 Mar 22₹12,363
31 Mar 23₹12,757
31 Mar 24₹13,652

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 12 Apr 24

DurationReturns
1 Month 0.3%
3 Month 1.4%
6 Month 3.1%
1 Year 6.6%
3 Year 4.8%
5 Year 6.4%
10 Year
15 Year
Since launch 6.9%
Historical performance (Yearly) on absolute basis
YearReturns
2023 6.8%
2022 2.6%
2021 3.7%
2020 11.6%
2019 8.5%
2018 6.3%
2017 6.2%
2016
2015
2014
Fund Manager information for IDFC Corporate Bond Fund
NameSinceTenure
Suyash Choudhary28 Jul 212.68 Yr.
Gautam Kaul1 Dec 212.33 Yr.
Sreejith Balasubramanian31 Aug 230.59 Yr.

Data below for IDFC Corporate Bond Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash13.58%
Debt86.13%
Other0.29%
Debt Sector Allocation
SectorValue
Government46.25%
Corporate39.88%
Cash Equivalent13.58%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
6.54% Govt Stock 2032
Sovereign Bonds | -
14%₹1,944 Cr201,000,000
↑ 201,000,000
7.26% Govt Stock 2033
Sovereign Bonds | -
10%₹1,329 Cr131,500,000
↑ 131,500,000
Export-Import Bank of India 7.4%
Domestic Bonds | -
8%₹1,149 Cr114,850,000
↑ 114,850,000
National Housing Bank
Debentures | -
6%₹818 Cr81,500,000
↑ 15,000,000
National Bank for Agriculture and Rural Development 7.68%
Domestic Bonds | -
5%₹627 Cr62,500,000
↑ 62,500,000
Small Industries Development Bank Of India
Debentures | -
4%₹525 Cr52,500,000
Rural Electrification Corporation Limited
Debentures | -
4%₹507 Cr51,000,000
Bajaj Housing Finance Ltd. 7.78%
Debentures | -
4%₹498 Cr50,000,000
↑ 50,000,000
HDFC Bank Limited
Debentures | -
3%₹360 Cr37,500,000
↑ 37,500,000
National Bank For Agriculture And Rural Development
Debentures | -
2%₹342 Cr34,200,000
↓ -20,000,000

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 2023 was 7.6% , 2022 was 4.5% and 2021 was 4.1% .

Below is the key information for ICICI Prudential Corporate Bond Fund

ICICI Prudential Corporate Bond Fund
Growth
Launch Date 11 Aug 09
NAV (12 Apr 24) ₹26.9701 ↓ -0.02   (-0.08 %)
Net Assets (Cr) ₹26,051 on 29 Feb 24
Category Debt - Corporate Bond
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.57
Sharpe Ratio 1.69
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 100
Exit Load NIL
Yield to Maturity 8.02%
Effective Maturity 3 Years 11 Months 12 Days
Modified Duration 1 Year 11 Months 23 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,908
31 Mar 21₹11,883
31 Mar 22₹12,390
31 Mar 23₹13,080
31 Mar 24₹14,114

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 12 Apr 24

DurationReturns
1 Month 0.5%
3 Month 1.9%
6 Month 3.7%
1 Year 7.6%
3 Year 5.9%
5 Year 7.1%
10 Year
15 Year
Since launch 7%
Historical performance (Yearly) on absolute basis
YearReturns
2023 7.6%
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%
Fund Manager information for ICICI Prudential Corporate Bond Fund
NameSinceTenure
Manish Banthia22 Jan 240.19 Yr.
Ritesh Lunawat22 Jan 240.19 Yr.

Data below for ICICI Prudential Corporate Bond Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash3.5%
Debt96.28%
Other0.23%
Debt Sector Allocation
SectorValue
Corporate59.29%
Government36.94%
Cash Equivalent3.5%
Securitized0.05%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.18% Govt Stock 2033
Sovereign Bonds | -
14%₹3,716 Cr368,652,050
↑ 20,000,000
8.25% Govt Stock 2033
Sovereign Bonds | -
10%₹2,501 Cr246,071,700
↓ -10,000,000
National Bank For Agriculture And Rural Development
Debentures | -
3%₹856 Cr86,000
Pipeline Infrastructure Ltd.
Debentures | -
3%₹813 Cr80,500
↑ 80,500
HDFC Bank Limited
Debentures | -
3%₹696 Cr7,000
HDFC Bank Limited
Debentures | -
2%₹647 Cr65,000
Small Industries Development Bank Of India
Debentures | -
2%₹635 Cr6,400
Small Industries Development Bank Of India
Debentures | -
2%₹624 Cr6,250
Bharat Petroleum Corporation Limited
Debentures | -
2%₹595 Cr59,500
LIC Housing Finance Ltd
Debentures | -
2%₹519 Cr5,000

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 2023 was 7% , 2022 was 1.6% and 2021 was 2.2% .

Below is the key information for BNP Paribas Corporate Bond Fund

BNP Paribas Corporate Bond Fund
Growth
Launch Date 8 Nov 08
NAV (12 Apr 24) ₹24.7118 ↓ -0.04   (-0.15 %)
Net Assets (Cr) ₹144 on 29 Feb 24
Category Debt - Corporate Bond
AMC BNP Paribas Asset Mgmt India Pvt. Ltd
Rating
Risk Moderate
Expense Ratio 0.87
Sharpe Ratio 0.64
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 7.55%
Effective Maturity 5 Years 5 Months 16 Days
Modified Duration 3 Years 10 Months 10 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,010
31 Mar 21₹10,740
31 Mar 22₹11,089
31 Mar 23₹11,377
31 Mar 24₹12,255

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 12 Apr 24

DurationReturns
1 Month 0.3%
3 Month 2.2%
6 Month 4%
1 Year 7.1%
3 Year 4.4%
5 Year 4.2%
10 Year
15 Year
Since launch 6%
Historical performance (Yearly) on absolute basis
YearReturns
2023 7%
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%
Fund Manager information for BNP Paribas Corporate Bond Fund
NameSinceTenure
Mayank Prakash23 Aug 176.61 Yr.
Jay Sheth1 Sep 230.58 Yr.

Data below for BNP Paribas Corporate Bond Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash5.93%
Debt93.83%
Other0.24%
Debt Sector Allocation
SectorValue
Government50.05%
Corporate43.78%
Cash Equivalent5.93%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.1% Govt Stock 2029
Sovereign Bonds | -
10%₹15 Cr1,500,000
Indian Railway Finance Corporation Limited
Debentures | -
8%₹11 Cr110
Export Import Bank Of India
Debentures | -
7%₹10 Cr100
Power Finance Corporation Ltd.
Debentures | -
7%₹10 Cr1,000
Hindustan Petroleum Corporation Limited
Debentures | -
7%₹10 Cr100
Sundaram Bnp Paribas Home Finance Limited
Debentures | -
7%₹10 Cr1,000
Tata Capital Limited
Debentures | -
7%₹10 Cr1,000
HDFC Bank Limited
Debentures | -
7%₹10 Cr100
GAil (India) Limited
Debentures | -
7%₹10 Cr100
Power Grid Corporation Of India Limited
Debentures | -
6%₹9 Cr1,000

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 8.5% since its launch.  Ranked 22 in Corporate Bond category.  Return for 2023 was 6.5% , 2022 was 3.2% and 2021 was 3.8% .

Below is the key information for Franklin India Corporate Debt Fund

Franklin India Corporate Debt Fund
Growth
Launch Date 23 Jun 97
NAV (12 Apr 24) ₹89.2791 ↓ -0.03   (-0.04 %)
Net Assets (Cr) ₹739 on 29 Feb 24
Category Debt - Corporate Bond
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderate
Expense Ratio 0.78
Sharpe Ratio -0.13
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 7.63%
Effective Maturity 1 Year 4 Months 13 Days
Modified Duration 1 Year 2 Months 1 Day

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,809
31 Mar 21₹11,650
31 Mar 22₹12,125
31 Mar 23₹12,597
31 Mar 24₹13,449

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 12 Apr 24

DurationReturns
1 Month 0.5%
3 Month 1.7%
6 Month 3.4%
1 Year 6.4%
3 Year 4.9%
5 Year 6.2%
10 Year
15 Year
Since launch 8.5%
Historical performance (Yearly) on absolute basis
YearReturns
2023 6.5%
2022 3.2%
2021 3.8%
2020 9%
2019 9.2%
2018 7.5%
2017 7.7%
2016 9%
2015 8.4%
2014 13%
Fund Manager information for Franklin India Corporate Debt Fund
NameSinceTenure
Rahul Goswami6 Oct 230.49 Yr.
Anuj Tagra7 Mar 240.07 Yr.
Chandni Gupta7 Mar 240.07 Yr.

Data below for Franklin India Corporate Debt Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash8.5%
Debt91.24%
Other0.26%
Debt Sector Allocation
SectorValue
Corporate51.12%
Government40.12%
Cash Equivalent8.5%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Export Import Bank Of India
Debentures | -
9%₹65 Cr650
Nuclear Power Corporation Of India Limited
Debentures | -
7%₹54 Cr5,000
Small Industries Development Bank Of India
Debentures | -
7%₹51 Cr500
HDFC Bank Limited
Debentures | -
7%₹50 Cr500
National Housing Bank
Debentures | -
7%₹50 Cr500
ICICI Home Finance Company Limited 8.1%
Debentures | -
7%₹50 Cr5,000
↑ 5,000
National Bank For Agriculture And Rural Development
Debentures | -
7%₹49 Cr500
7.37% Govt Stock 2028
Sovereign Bonds | -
6%₹47 Cr4,500,000
Rural Electrification Corporation Limited
Debentures | -
4%₹27 Cr250
Mahindra & Mahindra Financial Services Ltd
Debentures | -
4%₹26 Cr2,500

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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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