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Accrual Mutual Funds

Updated on November 28, 2024 , 843 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 ₹18.2941
↑ 0.03
₹14,09824.27.75.56.87.32%3Y 1M 2D4Y 4D
ICICI Prudential Corporate Bond Fund Growth ₹28.3817
↑ 0.02
₹27,1641.94.18.26.57.67.63%2Y 3M 25D3Y 10M 6D
BNP Paribas Corporate Bond Fund Growth ₹26.023
↑ 0.03
₹19624.38.55.477.2%3Y 9M 11D5Y 2M 12D
Franklin India Corporate Debt Fund Growth ₹93.7852
↑ 0.06
₹76524.17.75.66.57.46%2Y 8M 5D3Y 8M 2D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Nov 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 7% 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 (29 Nov 24) ₹18.2941 ↑ 0.03   (0.14 %)
Net Assets (Cr) ₹14,098 on 31 Oct 24
Category Debt - Corporate Bond
AMC IDFC Asset Management Company Limited
Rating Not Rated
Risk Moderate
Expense Ratio 0.61
Sharpe Ratio 0.82
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 1,000
Exit Load NIL
Yield to Maturity 7.32%
Effective Maturity 4 Years 4 Days
Modified Duration 3 Years 1 Month 2 Days

Growth of 10,000 investment over the years.

DateValue
30 Nov 19₹10,000
30 Nov 20₹11,170
30 Nov 21₹11,607
30 Nov 22₹11,861
30 Nov 23₹12,662
30 Nov 24₹13,636

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 29 Nov 24

DurationReturns
1 Month 0.6%
3 Month 2%
6 Month 4.2%
1 Year 7.7%
3 Year 5.5%
5 Year 6.4%
10 Year
15 Year
Since launch 7%
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 213.26 Yr.
Gautam Kaul1 Dec 212.92 Yr.
Brijesh Shah10 Jun 240.39 Yr.

Data below for IDFC Corporate Bond Fund as on 31 Oct 24

Asset Allocation
Asset ClassValue
Cash3.99%
Debt95.72%
Other0.29%
Debt Sector Allocation
SectorValue
Government50.95%
Corporate44.77%
Cash Equivalent3.99%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
07.18 Goi 14082033
Sovereign Bonds | -
18%₹2,502 Cr244,000,000
↓ -39,000,000
7.10%Goi 08/04/2034
Sovereign Bonds | -
7%₹997 Cr97,500,000
↑ 86,500,000
Export-Import Bank of India 7.4%
Domestic Bonds | -
6%₹882 Cr87,350,000
↓ -20,000,000
National Housing Bank
Debentures | -
6%₹843 Cr84,000,000
Bajaj Housing Finance Ltd. 7.78%
Debentures | -
6%₹800 Cr80,000,000
National Bank For Agriculture And Rural Development
Debentures | -
3%₹480 Cr48,000,000
↓ -15,000,000
Indian Railway Finance Corporation Limited
Debentures | -
3%₹374 Cr37,500,000
Tata Capital Financial Services Limited
Debentures | -
2%₹250 Cr25,000,000
Bajaj Housing Finance Limited
Debentures | -
2%₹230 Cr23,000,000
↑ 500,000
Grasim Industries Limited
Debentures | -
2%₹227 Cr22,500,000
↑ 2,500,000

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 7.1% 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 (29 Nov 24) ₹28.3817 ↑ 0.02   (0.08 %)
Net Assets (Cr) ₹27,164 on 31 Oct 24
Category Debt - Corporate Bond
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.57
Sharpe Ratio 2.34
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 100
Exit Load NIL
Yield to Maturity 7.63%
Effective Maturity 3 Years 10 Months 6 Days
Modified Duration 2 Years 3 Months 25 Days

Growth of 10,000 investment over the years.

DateValue
30 Nov 19₹10,000
30 Nov 20₹11,045
30 Nov 21₹11,547
30 Nov 22₹12,012
30 Nov 23₹12,890
30 Nov 24₹13,942

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 ₹200,132.
Net Profit of ₹20,132
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 29 Nov 24

DurationReturns
1 Month 0.6%
3 Month 1.9%
6 Month 4.1%
1 Year 8.2%
3 Year 6.5%
5 Year 6.9%
10 Year
15 Year
Since launch 7.1%
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 240.78 Yr.
Ritesh Lunawat22 Jan 240.78 Yr.

Data below for ICICI Prudential Corporate Bond Fund as on 31 Oct 24

Asset Allocation
Asset ClassValue
Cash3.51%
Debt96.24%
Other0.25%
Debt Sector Allocation
SectorValue
Corporate65.99%
Government30.24%
Cash Equivalent3.51%
Credit Quality
RatingValue
AA1.65%
AAA98.35%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Govt Stock 22092033
Sovereign Bonds | -
8%₹2,220 Cr215,793,930
7.10%Goi 08/04/2034
Sovereign Bonds | -
7%₹1,889 Cr184,704,080
↑ 49,323,800
National Bank For Agriculture And Rural Development
Debentures | -
3%₹866 Cr86,500
Pipeline Infrastructure Private Limited
Debentures | -
3%₹824 Cr80,500
Small Industries Development Bank Of India
Debentures | -
2%₹633 Cr6,350
Small Industries Development Bank Of India
Debentures | -
2%₹626 Cr6,250
Bharat Petroleum Corporation Limited
Debentures | -
2%₹592 Cr59,000
PTC- INDIA UNIVERSAL TRUST AL1-SERIES A3
Unlisted bonds | -
2%₹539 Cr535
LIC Housing Finance Ltd
Debentures | -
2%₹521 Cr5,000
LIC Housing Finance Limited
Debentures | -
2%₹502 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 6.1% 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 (29 Nov 24) ₹26.023 ↑ 0.03   (0.11 %)
Net Assets (Cr) ₹196 on 31 Oct 24
Category Debt - Corporate Bond
AMC BNP Paribas Asset Mgmt India Pvt. Ltd
Rating
Risk Moderate
Expense Ratio 0.56
Sharpe Ratio 1.82
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 7.2%
Effective Maturity 5 Years 2 Months 12 Days
Modified Duration 3 Years 9 Months 11 Days

Growth of 10,000 investment over the years.

DateValue
30 Nov 19₹10,000
30 Nov 20₹10,951
30 Nov 21₹11,225
30 Nov 22₹11,358
30 Nov 23₹12,112
30 Nov 24₹13,147

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 ₹197,169.
Net Profit of ₹17,169
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 29 Nov 24

DurationReturns
1 Month 0.5%
3 Month 2%
6 Month 4.3%
1 Year 8.5%
3 Year 5.4%
5 Year 5.6%
10 Year
15 Year
Since launch 6.1%
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
Gurvinder Wasan21 Oct 240.03 Yr.
Vikram Pamnani10 Jul 240.31 Yr.

Data below for BNP Paribas Corporate Bond Fund as on 31 Oct 24

Asset Allocation
Asset ClassValue
Cash8.06%
Debt91.74%
Other0.2%
Debt Sector Allocation
SectorValue
Government46.02%
Corporate45.72%
Cash Equivalent8.06%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.1% Govt Stock 2034
Sovereign Bonds | -
13%₹25 Cr2,500,000
7.32% Govt Stock 2030
Sovereign Bonds | -
6%₹12 Cr1,200,000
Indian Railway Finance Corporation Limited
Debentures | -
6%₹11 Cr110
Export Import Bank Of India
Debentures | -
5%₹11 Cr100
Hindustan Petroleum Corporation Limited
Debentures | -
5%₹10 Cr100
Power Finance Corporation Ltd.
Debentures | -
5%₹10 Cr1,000
Sundaram Bnp Paribas Home Finance Limited
Debentures | -
5%₹10 Cr1,000
Tata Capital Limited
Debentures | -
5%₹10 Cr1,000
GAil (India) Limited
Debentures | -
5%₹10 Cr100
Bajaj Finance Limited
Debentures | -
5%₹10 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 (29 Nov 24) ₹93.7852 ↑ 0.06   (0.06 %)
Net Assets (Cr) ₹765 on 31 Oct 24
Category Debt - Corporate Bond
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderate
Expense Ratio 0.77
Sharpe Ratio 1.45
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 7.46%
Effective Maturity 3 Years 8 Months 2 Days
Modified Duration 2 Years 8 Months 5 Days

Growth of 10,000 investment over the years.

DateValue
30 Nov 19₹10,000
30 Nov 20₹10,876
30 Nov 21₹11,308
30 Nov 22₹11,634
30 Nov 23₹12,376
30 Nov 24₹13,328

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 ₹197,169.
Net Profit of ₹17,169
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 29 Nov 24

DurationReturns
1 Month 0.6%
3 Month 2%
6 Month 4.1%
1 Year 7.7%
3 Year 5.6%
5 Year 5.9%
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 231.07 Yr.
Anuj Tagra7 Mar 240.65 Yr.
Chandni Gupta7 Mar 240.65 Yr.

Data below for Franklin India Corporate Debt Fund as on 31 Oct 24

Asset Allocation
Asset ClassValue
Cash13.36%
Debt86.37%
Other0.27%
Debt Sector Allocation
SectorValue
Corporate71.86%
Government14.52%
Cash Equivalent13.36%
Credit Quality
RatingValue
AA5.98%
AAA94.02%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Home Finance Company Limited
Debentures | -
7%₹53 Cr5,000
Pipeline Infrastructure Private Limited
Debentures | -
7%₹51 Cr5,000
Sikka Ports And Terminals Limited
Debentures | -
7%₹51 Cr500
Summit Digitel Infrastructure Ltd
Debentures | -
7%₹51 Cr5,000
Rural Electrification Corporation Limited
Debentures | -
7%₹49 Cr9,000
8% Govt Stock 2034
Sovereign Bonds | -
5%₹37 Cr3,500,000
Mahindra & Mahindra Financial Services Ltd. 8.25%
Debentures | -
4%₹27 Cr2,500
Bajaj Finance Limited
Debentures | -
4%₹27 Cr2,500
National Bank For Agriculture And Rural Development
Debentures | -
3%₹26 Cr2,500
Bajaj Finance Ltd. 8.1167%
Debentures | -
3%₹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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