+91-22-48913909Accrual 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 (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Corporate Bond Fund Growth ₹31.0204
↑ 0.02 ₹33,250 1 3 7.5 7.8 7.36% 3Y 4M 24D 6Y 4D BNP Paribas Corporate Bond Fund Growth ₹28.5316
↑ 0.02 ₹422 0.8 2.8 7.8 7.8 7.18% 3Y 1M 6D 4Y 29D Franklin India Corporate Debt Fund Growth ₹103.643
↑ 0.06 ₹1,323 1.2 3.1 8.9 7.8 7.48% 2Y 5M 26D 5Y 9M 11D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Feb 26 Research Highlights & Commentary of 3 Funds showcased
Commentary ICICI Prudential Corporate Bond Fund BNP Paribas Corporate Bond Fund Franklin India Corporate Debt Fund Point 1 Highest AUM (₹33,250 Cr). Bottom quartile AUM (₹422 Cr). Lower mid AUM (₹1,323 Cr). Point 2 Established history (16+ yrs). Established history (17+ yrs). Oldest track record among peers (28 yrs). Point 3 Top rated. Rating: 3★ (lower mid). Rating: 2★ (bottom quartile). Point 4 Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderate. Point 5 1Y return: 7.53% (bottom quartile). 1Y return: 7.84% (lower mid). 1Y return: 8.91% (upper mid). Point 6 1M return: 0.74% (bottom quartile). 1M return: 0.90% (upper mid). 1M return: 0.79% (lower mid). Point 7 Sharpe: 1.04 (lower mid). Sharpe: 0.68 (bottom quartile). Sharpe: 1.25 (upper mid). Point 8 Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 7.36% (lower mid). Yield to maturity (debt): 7.18% (bottom quartile). Yield to maturity (debt): 7.48% (upper mid). Point 10 Modified duration: 3.40 yrs (bottom quartile). Modified duration: 3.10 yrs (lower mid). Modified duration: 2.49 yrs (upper mid). ICICI Prudential Corporate Bond Fund
BNP Paribas Corporate Bond Fund
Franklin India Corporate Debt 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. 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. Research Highlights for BNP Paribas Corporate Bond Fund 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. Research Highlights for Franklin India Corporate Debt Fund Below is the key information for Franklin India Corporate Debt Fund Returns up to 1 year are on 1. ICICI Prudential Corporate Bond Fund
ICICI Prudential Corporate Bond Fund
Growth Launch Date 11 Aug 09 NAV (25 Feb 26) ₹31.0204 ↑ 0.02 (0.06 %) Net Assets (Cr) ₹33,250 on 31 Jan 26 Category Debt - Corporate Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.57 Sharpe Ratio 1.04 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.36% Effective Maturity 6 Years 4 Days Modified Duration 3 Years 4 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,402 31 Jan 23 ₹10,912 31 Jan 24 ₹11,762 31 Jan 25 ₹12,708 31 Jan 26 ₹13,651 Returns for ICICI Prudential Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Feb 26 Duration Returns 1 Month 0.7% 3 Month 1% 6 Month 3% 1 Year 7.5% 3 Year 7.8% 5 Year 6.6% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Fund Manager information for ICICI Prudential Corporate Bond Fund
Name Since Tenure Manish Banthia 22 Jan 24 2.03 Yr. Ritesh Lunawat 22 Jan 24 2.03 Yr. Data below for ICICI Prudential Corporate Bond Fund as on 31 Jan 26
Asset Allocation
Asset Class Value Cash 16.33% Debt 83.39% Other 0.29% Debt Sector Allocation
Sector Value Corporate 55.85% Government 27.53% Cash Equivalent 16.33% Credit Quality
Rating Value AA 0.5% AAA 99.5% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.48% Gs 2035
Sovereign Bonds | -6% ₹1,833 Cr 186,102,800
↑ 6,695,000 LIC Housing Finance Ltd
Debentures | -4% ₹1,457 Cr 145,500 6.68% Gs 2040
Sovereign Bonds | -3% ₹1,098 Cr 114,006,250 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹1,003 Cr 1,000 Goi Floating Rate Bond 2033
Sovereign Bonds | -3% ₹951 Cr 92,096,680
↓ -769,210 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹903 Cr 900 Small Industries Development Bank of India
Debentures | -2% ₹789 Cr 79,433 7.10% Gs 2034
Sovereign Bonds | -2% ₹701 Cr 68,594,780 National Bank For Agriculture And Rural Development
Debentures | -2% ₹700 Cr 69,550
↑ 5,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹578 Cr 57,500
↑ 6,500 2. BNP Paribas Corporate Bond Fund
BNP Paribas Corporate Bond Fund
Growth Launch Date 8 Nov 08 NAV (25 Feb 26) ₹28.5316 ↑ 0.02 (0.06 %) Net Assets (Cr) ₹422 on 31 Jan 26 Category Debt - Corporate Bond AMC BNP Paribas Asset Mgmt India Pvt. Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.58 Sharpe Ratio 0.68 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 7.18% Effective Maturity 4 Years 29 Days Modified Duration 3 Years 1 Month 6 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,201 31 Jan 23 ₹10,417 31 Jan 24 ₹11,170 31 Jan 25 ₹12,118 31 Jan 26 ₹13,011 Returns for BNP Paribas Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Feb 26 Duration Returns 1 Month 0.9% 3 Month 0.8% 6 Month 2.8% 1 Year 7.8% 3 Year 7.8% 5 Year 5.8% 10 Year 15 Year Since launch 6.2% Historical performance (Yearly) on absolute basis
Year Returns 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Fund Manager information for BNP Paribas Corporate Bond Fund
Name Since Tenure Gurvinder Wasan 21 Oct 24 1.28 Yr. Vikram Pamnani 10 Jul 24 1.56 Yr. Data below for BNP Paribas Corporate Bond Fund as on 31 Jan 26
Asset Allocation
Asset Class Value Cash 3.58% Equity 2.71% Debt 93.4% Other 0.3% Debt Sector Allocation
Sector Value Corporate 64.68% Government 28.73% Cash Equivalent 3.58% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -7% ₹30 Cr 3,000 6.01% Gs 2030
Sovereign Bonds | -6% ₹24 Cr 2,400,000
↑ 500,000 7.18% Gs 2033
Sovereign Bonds | -4% ₹17 Cr 1,700,000
↑ 200,000 Ntpc Limited
Debentures | -4% ₹15 Cr 150 Bajaj Housing Finance Limited
Debentures | -3% ₹15 Cr 1,500 6.33% Gs 2035
Sovereign Bonds | -3% ₹15 Cr 1,500,000 Small Industries Development Bank Of India
Debentures | -3% ₹12 Cr 1,200 National Housing Bank
Debentures | -3% ₹11 Cr 1,100 Hindustan Petroleum Corporation Limited
Debentures | -2% ₹10 Cr 100 Power Finance Corporation Limited
Debentures | -2% ₹10 Cr 1,000 3. Franklin India Corporate Debt Fund
Franklin India Corporate Debt Fund
Growth Launch Date 23 Jun 97 NAV (25 Feb 26) ₹103.643 ↑ 0.06 (0.06 %) Net Assets (Cr) ₹1,323 on 31 Jan 26 Category Debt - Corporate Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆ Risk Moderate Expense Ratio 0.79 Sharpe Ratio 1.25 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 7.48% Effective Maturity 5 Years 9 Months 11 Days Modified Duration 2 Years 5 Months 26 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,404 31 Jan 23 ₹10,761 31 Jan 24 ₹11,476 31 Jan 25 ₹12,331 31 Jan 26 ₹13,425 Returns for Franklin India Corporate Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Feb 26 Duration Returns 1 Month 0.8% 3 Month 1.2% 6 Month 3.1% 1 Year 8.9% 3 Year 7.8% 5 Year 6.3% 10 Year 15 Year Since launch 8.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Fund Manager information for Franklin India Corporate Debt Fund
Name Since Tenure Rahul Goswami 6 Oct 23 2.33 Yr. Anuj Tagra 7 Mar 24 1.91 Yr. Chandni Gupta 7 Mar 24 1.91 Yr. Data below for Franklin India Corporate Debt Fund as on 31 Jan 26
Asset Allocation
Asset Class Value Cash 7.63% Debt 92.1% Other 0.28% Debt Sector Allocation
Sector Value Corporate 64.95% Government 27.15% Cash Equivalent 7.63% Credit Quality
Rating Value AA 6.82% AAA 93.18% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.90% Gs 2065
Sovereign Bonds | -8% ₹101 Cr 10,529,500 Poonawalla Fincorp Limited
Debentures | -6% ₹82 Cr 8,000 National Bank For Agriculture And Rural Development
Debentures | -6% ₹78 Cr 7,500 RJ Corp Limited
Debentures | -4% ₹55 Cr 5,467 Sikka Ports & Terminals Limited
Debentures | -4% ₹52 Cr 500 Summit Digitel Infrastructure Limited
Debentures | -4% ₹51 Cr 5,000 Rec Limited
Debentures | -4% ₹50 Cr 9,000 Embassy Office Parks Reit
Debentures | -4% ₹50 Cr 5,000 Jubilant Beverages Limited
Debentures | -3% ₹46 Cr 4,269 Jubilant Bevco Limited
Debentures | -3% ₹44 Cr 4,076
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Research Highlights for ICICI Prudential Corporate Bond Fund