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 25 - 26
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity IDFC Corporate Bond Fund Growth ₹19.0689
↓ 0.00 ₹14,114 3 4.8 9.5 6.7 7.7 7.33% 3Y 3Y 10M 28D ICICI Prudential Corporate Bond Fund Growth ₹29.5623
↓ -0.01 ₹29,929 3 4.8 9.3 7.7 8 7.37% 2Y 11M 5D 4Y 11M 26D BNP Paribas Corporate Bond Fund Growth ₹27.2524
↑ 0.00 ₹196 3.3 5.2 10.1 7.1 8.3 7.4% 3Y 5M 12D 4Y 8M 26D Franklin India Corporate Debt Fund Growth ₹98.5815
↓ -0.09 ₹759 4.2 5.7 10.1 7.1 7.6 7.41% 3Y 4M 10D 5Y 4M 10D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 30 Apr 25
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 7.2% since its launch. Return for 2024 was 7.7% , 2023 was 6.8% and 2022 was 2.6% . IDFC Corporate Bond Fund
Growth Launch Date 12 Jan 16 NAV (30 Apr 25) ₹19.0689 ↓ 0.00 (0.00 %) Net Assets (Cr) ₹14,114 on 31 Mar 25 Category Debt - Corporate Bond AMC IDFC Asset Management Company Limited Rating Risk Moderate Expense Ratio 0.61 Sharpe Ratio 1.3 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.33% Effective Maturity 3 Years 10 Months 28 Days Modified Duration 3 Years Growth of 10,000 investment over the years.
Date Value 30 Apr 20 ₹10,000 30 Apr 21 ₹10,969 30 Apr 22 ₹11,346 30 Apr 23 ₹11,834 30 Apr 24 ₹12,599 Returns for IDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 30 Apr 25 Duration Returns 1 Month 1.4% 3 Month 3% 6 Month 4.8% 1 Year 9.5% 3 Year 6.7% 5 Year 6.7% 10 Year 15 Year Since launch 7.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.7% 2022 6.8% 2021 2.6% 2020 3.7% 2019 11.6% 2018 8.5% 2017 6.3% 2016 6.2% 2015 2014 Fund Manager information for IDFC Corporate Bond Fund
Name Since Tenure Suyash Choudhary 28 Jul 21 3.68 Yr. Gautam Kaul 1 Dec 21 3.33 Yr. Brijesh Shah 10 Jun 24 0.81 Yr. Data below for IDFC Corporate Bond Fund as on 31 Mar 25
Asset Allocation
Asset Class Value Cash 0.82% Debt 98.89% Other 0.29% Debt Sector Allocation
Sector Value Corporate 53.4% Government 45.5% Cash Equivalent 0.82% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -20% ₹2,923 Cr 279,000,000
↑ 81,500,000 Bajaj Housing Finance Ltd. 7.78%
Debentures | -7% ₹956 Cr 95,000,000
↑ 10,000,000 National Housing Bank
Debentures | -4% ₹625 Cr 62,000,000 Larsen And Toubro Limited
Debentures | -4% ₹567 Cr 55,500,000
↑ 20,000,000 7.1% Govt Stock 2034
Sovereign Bonds | -4% ₹522 Cr 50,000,000
↓ -10,000,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹503 Cr 50,000,000 Reliance Industries Limited
Debentures | -3% ₹495 Cr 47,000,000 8.098% Tata Capital Limited (23/09/2027) **
Debentures | -3% ₹406 Cr 40,000,000
↑ 5,000,000 Indian Railway Finance Corporation Limited
Debentures | -3% ₹377 Cr 37,500,000
↓ -5,000,000 Nuclear Power Corporation Of India Limited
Debentures | -2% ₹358 Cr 35,000,000 2. ICICI Prudential Corporate Bond Fund
CAGR/Annualized return of 7.1% since its launch. Ranked 7 in Corporate Bond category. Return for 2024 was 8% , 2023 was 7.6% and 2022 was 4.5% . ICICI Prudential Corporate Bond Fund
Growth Launch Date 11 Aug 09 NAV (30 Apr 25) ₹29.5623 ↓ -0.01 (-0.02 %) Net Assets (Cr) ₹29,929 on 31 Mar 25 Category Debt - Corporate Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.57 Sharpe Ratio 1.84 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.37% Effective Maturity 4 Years 11 Months 26 Days Modified Duration 2 Years 11 Months 5 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 20 ₹10,000 30 Apr 21 ₹10,885 30 Apr 22 ₹11,298 30 Apr 23 ₹12,019 30 Apr 24 ₹12,913 Returns for ICICI Prudential Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 30 Apr 25 Duration Returns 1 Month 1.3% 3 Month 3% 6 Month 4.8% 1 Year 9.3% 3 Year 7.7% 5 Year 7.1% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 8% 2022 7.6% 2021 4.5% 2020 4.1% 2019 10.4% 2018 9.9% 2017 6.4% 2016 6.3% 2015 9.8% 2014 8.8% Fund Manager information for ICICI Prudential Corporate Bond Fund
Name Since Tenure Manish Banthia 22 Jan 24 1.19 Yr. Ritesh Lunawat 22 Jan 24 1.19 Yr. Data below for ICICI Prudential Corporate Bond Fund as on 31 Mar 25
Asset Allocation
Asset Class Value Cash 4.34% Debt 95.4% Other 0.26% Debt Sector Allocation
Sector Value Corporate 60.53% Government 35.18% Cash Equivalent 4.03% Credit Quality
Rating Value AAA 99.44% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2034
Sovereign Bonds | -9% ₹2,873 Cr 275,127,880
↑ 15,000,000 7.81% Govt Stock 2033
Sovereign Bonds | -7% ₹2,034 Cr 196,295,540 National Bank For Agriculture And Rural Development
Debentures | -3% ₹971 Cr 96,500 National Bank For Agriculture And Rural Development
Debentures | -3% ₹968 Cr 95,550 Pipeline Infrastructure Private Limited
Debentures | -3% ₹827 Cr 80,500 Small Industries Development Bank Of India
Debentures | -2% ₹661 Cr 65,000
↑ 65,000 7.34% Govt Stock 2064
Sovereign Bonds | -2% ₹620 Cr 58,412,000 7.58% LIC Housing Finance Limited (23/03/2035)
Debentures | -2% ₹610 Cr 60,000
↑ 10,000 Bharat Petroleum Corporation Limited
Debentures | -2% ₹594 Cr 59,000 INDIA UNIVERSAL TRUST AL1
Unlisted bonds | -2% ₹526 Cr 535 3. BNP Paribas Corporate Bond Fund
CAGR/Annualized return of 6.3% since its launch. Ranked 24 in Corporate Bond category. Return for 2024 was 8.3% , 2023 was 7% and 2022 was 1.6% . BNP Paribas Corporate Bond Fund
Growth Launch Date 8 Nov 08 NAV (30 Apr 25) ₹27.2524 ↑ 0.00 (0.00 %) Net Assets (Cr) ₹196 on 31 Mar 25 Category Debt - Corporate Bond AMC BNP Paribas Asset Mgmt India Pvt. Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.56 Sharpe Ratio 1.24 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 7.4% Effective Maturity 4 Years 8 Months 26 Days Modified Duration 3 Years 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 20 ₹10,000 30 Apr 21 ₹10,794 30 Apr 22 ₹10,995 30 Apr 23 ₹11,516 30 Apr 24 ₹12,271 Returns for BNP Paribas Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 30 Apr 25 Duration Returns 1 Month 1.6% 3 Month 3.3% 6 Month 5.2% 1 Year 10.1% 3 Year 7.1% 5 Year 6.2% 10 Year 15 Year Since launch 6.3% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.3% 2022 7% 2021 1.6% 2020 2.2% 2019 9.9% 2018 0.9% 2017 5.2% 2016 6.7% 2015 10.8% 2014 7.2% Fund Manager information for BNP Paribas Corporate Bond Fund
Name Since Tenure Gurvinder Wasan 21 Oct 24 0.44 Yr. Vikram Pamnani 10 Jul 24 0.73 Yr. Data below for BNP Paribas Corporate Bond Fund as on 31 Mar 25
Asset Allocation
Asset Class Value Cash 3.9% Equity 0.56% Debt 95.27% Other 0.27% Debt Sector Allocation
Sector Value Corporate 63.46% Government 29.84% Cash Equivalent 3.9% Securitized 1.98% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.79% Govt Stock 2034
Sovereign Bonds | -7% ₹14 Cr 1,400,000
↓ -300,000 Rec Limited
Debentures | -6% ₹12 Cr 1,200 National Housing Bank
Debentures | -5% ₹11 Cr 1,100
↑ 1,100 Export Import Bank Of India
Debentures | -5% ₹11 Cr 100 Power Finance Corporation Ltd.
Debentures | -5% ₹10 Cr 1,000 Hindustan Petroleum Corporation Limited
Debentures | -5% ₹10 Cr 100 GAil (India) Limited
Debentures | -5% ₹10 Cr 100 LIC Housing Finance Limited
Debentures | -5% ₹10 Cr 1,000 Tata Capital Housing Finance Limited
Debentures | -5% ₹10 Cr 1,000
↑ 1,000 HDFC Bank Limited
Debentures | -5% ₹10 Cr 100 4. Franklin India Corporate Debt Fund
CAGR/Annualized return of 8.6% since its launch. Ranked 22 in Corporate Bond category. Return for 2024 was 7.6% , 2023 was 6.5% and 2022 was 3.2% . Franklin India Corporate Debt Fund
Growth Launch Date 23 Jun 97 NAV (30 Apr 25) ₹98.5815 ↓ -0.09 (-0.10 %) Net Assets (Cr) ₹759 on 31 Mar 25 Category Debt - Corporate Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆ Risk Moderate Expense Ratio 0.77 Sharpe Ratio 1.32 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 7.41% Effective Maturity 5 Years 4 Months 10 Days Modified Duration 3 Years 4 Months 10 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 20 ₹10,000 30 Apr 21 ₹10,927 30 Apr 22 ₹11,298 30 Apr 23 ₹11,837 30 Apr 24 ₹12,587 Returns for Franklin India Corporate Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 30 Apr 25 Duration Returns 1 Month 2.5% 3 Month 4.2% 6 Month 5.7% 1 Year 10.1% 3 Year 7.1% 5 Year 6.7% 10 Year 15 Year Since launch 8.6% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.6% 2022 6.5% 2021 3.2% 2020 3.8% 2019 9% 2018 9.2% 2017 7.5% 2016 7.7% 2015 9% 2014 8.4% Fund Manager information for Franklin India Corporate Debt Fund
Name Since Tenure Rahul Goswami 6 Oct 23 1.49 Yr. Anuj Tagra 7 Mar 24 1.07 Yr. Chandni Gupta 7 Mar 24 1.07 Yr. Data below for Franklin India Corporate Debt Fund as on 31 Mar 25
Asset Allocation
Asset Class Value Cash 0.4% Debt 99.32% Other 0.28% Debt Sector Allocation
Sector Value Corporate 74.51% Government 24.81% Cash Equivalent 0.4% Credit Quality
Rating Value AA 18.92% AAA 81.08% Top Securities Holdings / Portfolio
Name Holding Value Quantity India (Republic of) 6.9%
Sovereign Bonds | -8% ₹60 Cr 6,000,000
↑ 6,000,000 Sikka Ports & Terminals Limited
Debentures | -7% ₹53 Cr 500 Mankind Pharma Ltd
Debentures | -7% ₹53 Cr 5,000 Pipeline Infrastructure Private Limited
Debentures | -7% ₹52 Cr 5,000 Summit Digitel Infrastructure Ltd
Debentures | -7% ₹51 Cr 5,000 Small Industries Development Bank Of India
Debentures | -7% ₹51 Cr 5,000
↑ 5,000 ICICI Home Finance Company Limited
Debentures | -7% ₹51 Cr 5,000 Rural Electrification Corporation Limited
Debentures | -7% ₹51 Cr 9,000 7.53% Govt Stock 2034
Sovereign Bonds | -4% ₹32 Cr 3,000,000
↓ -2,500,000 Bajaj Finance Ltd. 8.1167%
Debentures | -4% ₹28 Cr 2,500
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