6 Best Credit Risk Mutual Funds 2026

Updated on March 19, 2026 , 13027 views

The credit risk fund is one of the categories of Mutual Funds introduced by the Securities and Exchange Board of India (SEBI) on Oct 2017. In simple terms, credit risk funds are a type if debt funds that invest in corporate Bonds and commercial papers. These funds basically invest in low-rated bonds that may see an upgrade in rating in the future. As per definition by SEBI, the credit risk scheme will invest in AA and below the high-rated corporate bonds.

The credit risk mutual funds should invest at least 65 percent of its assets below the highest-rated instruments Generally AAA AA debt rated instrument.

How do Credit Risk Funds Work?

By Investing in low credit rated debt instruments which are below AA rated, credit risk funds aim for higher returns. It is believed that low credit rated debt instruments tend to provide higher returns as these funds are high-risk investments.

Usually, a debt instrument with an AA rating is considered to be riskier than one with AAA ratings. Credit risk fund managers may take a call in investing in the AA instrument over AAA ones. This possibly could be because of the potential upgrade on the ratings later in the future or assured returns due to strong fundamentals.

The corporate sector shows positivity when the economy of the country improves. Due to which there is an improvement in its finances and this leads to an upgrade in bond ratings issued by the company. An instrument with high rating generally offers a lower interest rate compared to the bond/instruments that come with a low rating. Therefore, when rating upgrades, it leads to a fall in yield and a rise in bond price. During the period of economic recovery, there are chances of rating upgrades and one can play this theme with credit risk funds.

Also, since these funds are known for its 2-3% extra returns than those of other risk-free debt funds, investors tend to invest in this fund by taking a little risk.

Who Should Invest in Credit Risk Funds?

Even though this fund belongs to the debt category, credit risk fund comes with a fair amount of risk. Investors should be aware that rise and fall are a frequent trait in such funds. Therefore, investors who can bear risk in their investments should only prefer investing in this fund. One with the low-risk ability should stay away from this fund.

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Fund Selection Methodology used to find 6 funds

Category: Debt
Sub-category: Credit%20Risk
AUM Range: 100 to 1000000 Cr
Sorted On : 1-year return (high to low)
No Of Funds: 6

Top 6 Performing Credit Risk Mutual Funds FY 26 - 27

Fund	NAV	Net Assets (Cr)	3 MO (%)	6 MO (%)	1 YR (%)	3 YR (%)	2024 (%)	Debt Yield (YTM)	Mod. Duration	Eff. Maturity
Aditya Birla Sun Life Credit Risk Fund Growth	₹24.3348 ↓ -0.02	₹1,175	4.7	6.8	12.7	11.9	13.4	7.96%	2Y 4D	2Y 7M 6D
BOI AXA Credit Risk Fund Growth	₹13.3082 ↑ 0.00	₹104	6.1	8	11.5	7.8	6.5	6.53%	6M 18D	8M 5D
ICICI Prudential Regular Savings Fund Growth	₹33.4749 ↓ -0.02	₹5,887	1.1	3.3	8.6	8.3	9.5	8.41%	2Y 3M 14D	3Y 7M 24D
Nippon India Credit Risk Fund Growth	₹36.8131 ↓ -0.01	₹1,059	1.6	3.3	8.5	8.4	8.9	8.72%	1Y 11M 23D	2Y 4M 28D
Axis Credit Risk Fund Growth	₹22.5008 ↓ 0.00	₹367	1.4	3.3	8.2	7.8	8.7	8.35%	2Y 11M 12D	4Y 3M 25D
Kotak Credit Risk Fund Growth	₹30.8668 ↓ -0.04	₹711	1.1	2.8	8.1	7.6	9.1	8.11%	2Y 3M 7D	2Y 11M 5D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Mar 26

Research Highlights & Commentary of 6 Funds showcased

Commentary	Aditya Birla Sun Life Credit Risk Fund	BOI AXA Credit Risk Fund	ICICI Prudential Regular Savings Fund	Nippon India Credit Risk Fund	Axis Credit Risk Fund	Kotak Credit Risk Fund
Point 1	Upper mid AUM (₹1,175 Cr).	Bottom quartile AUM (₹104 Cr).	Highest AUM (₹5,887 Cr).	Upper mid AUM (₹1,059 Cr).	Bottom quartile AUM (₹367 Cr).	Lower mid AUM (₹711 Cr).
Point 2	Established history (10+ yrs).	Established history (11+ yrs).	Established history (15+ yrs).	Oldest track record among peers (20 yrs).	Established history (11+ yrs).	Established history (15+ yrs).
Point 3	Not Rated.	Not Rated.	Rating: 1★ (lower mid).	Rating: 2★ (upper mid).	Top rated.	Rating: 3★ (upper mid).
Point 4	Risk profile: Moderate.	Risk profile: Moderate.	Risk profile: Moderate.	Risk profile: Moderate.	Risk profile: Moderate.	Risk profile: Moderately Low.
Point 5	1Y return: 12.68% (top quartile).	1Y return: 11.53% (upper mid).	1Y return: 8.61% (upper mid).	1Y return: 8.46% (lower mid).	1Y return: 8.21% (bottom quartile).	1Y return: 8.10% (bottom quartile).
Point 6	1M return: 0.10% (lower mid).	1M return: 0.34% (upper mid).	1M return: -0.09% (bottom quartile).	1M return: 0.37% (top quartile).	1M return: 0.18% (upper mid).	1M return: -0.12% (bottom quartile).
Point 7	Sharpe: 2.39 (lower mid).	Sharpe: 1.17 (bottom quartile).	Sharpe: 3.19 (top quartile).	Sharpe: 2.51 (upper mid).	Sharpe: 2.62 (upper mid).	Sharpe: 2.16 (bottom quartile).
Point 8	Information ratio: 0.00 (top quartile).	Information ratio: 0.00 (upper mid).	Information ratio: 0.00 (upper mid).	Information ratio: 0.00 (lower mid).	Information ratio: 0.00 (bottom quartile).	Information ratio: 0.00 (bottom quartile).
Point 9	Yield to maturity (debt): 7.96% (bottom quartile).	Yield to maturity (debt): 6.53% (bottom quartile).	Yield to maturity (debt): 8.41% (upper mid).	Yield to maturity (debt): 8.72% (top quartile).	Yield to maturity (debt): 8.35% (upper mid).	Yield to maturity (debt): 8.11% (lower mid).
Point 10	Modified duration: 2.01 yrs (upper mid).	Modified duration: 0.55 yrs (top quartile).	Modified duration: 2.29 yrs (bottom quartile).	Modified duration: 1.98 yrs (upper mid).	Modified duration: 2.95 yrs (bottom quartile).	Modified duration: 2.27 yrs (lower mid).

Aditya Birla Sun Life Credit Risk Fund

Upper mid AUM (₹1,175 Cr).
Established history (10+ yrs).
Not Rated.
Risk profile: Moderate.
1Y return: 12.68% (top quartile).
1M return: 0.10% (lower mid).
Sharpe: 2.39 (lower mid).
Information ratio: 0.00 (top quartile).
Yield to maturity (debt): 7.96% (bottom quartile).
Modified duration: 2.01 yrs (upper mid).

BOI AXA Credit Risk Fund

Bottom quartile AUM (₹104 Cr).
Established history (11+ yrs).
Not Rated.
Risk profile: Moderate.
1Y return: 11.53% (upper mid).
1M return: 0.34% (upper mid).
Sharpe: 1.17 (bottom quartile).
Information ratio: 0.00 (upper mid).
Yield to maturity (debt): 6.53% (bottom quartile).
Modified duration: 0.55 yrs (top quartile).

ICICI Prudential Regular Savings Fund

Highest AUM (₹5,887 Cr).
Established history (15+ yrs).
Rating: 1★ (lower mid).
Risk profile: Moderate.
1Y return: 8.61% (upper mid).
1M return: -0.09% (bottom quartile).
Sharpe: 3.19 (top quartile).
Information ratio: 0.00 (upper mid).
Yield to maturity (debt): 8.41% (upper mid).
Modified duration: 2.29 yrs (bottom quartile).

Nippon India Credit Risk Fund

Upper mid AUM (₹1,059 Cr).
Oldest track record among peers (20 yrs).
Rating: 2★ (upper mid).
Risk profile: Moderate.
1Y return: 8.46% (lower mid).
1M return: 0.37% (top quartile).
Sharpe: 2.51 (upper mid).
Information ratio: 0.00 (lower mid).
Yield to maturity (debt): 8.72% (top quartile).
Modified duration: 1.98 yrs (upper mid).

Axis Credit Risk Fund

Bottom quartile AUM (₹367 Cr).
Established history (11+ yrs).
Top rated.
Risk profile: Moderate.
1Y return: 8.21% (bottom quartile).
1M return: 0.18% (upper mid).
Sharpe: 2.62 (upper mid).
Information ratio: 0.00 (bottom quartile).
Yield to maturity (debt): 8.35% (upper mid).
Modified duration: 2.95 yrs (bottom quartile).

Kotak Credit Risk Fund

Lower mid AUM (₹711 Cr).
Established history (15+ yrs).
Rating: 3★ (upper mid).
Risk profile: Moderately Low.
1Y return: 8.10% (bottom quartile).
1M return: -0.12% (bottom quartile).
Sharpe: 2.16 (bottom quartile).
Information ratio: 0.00 (bottom quartile).
Yield to maturity (debt): 8.11% (lower mid).
Modified duration: 2.27 yrs (lower mid).

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Disclaimer

Content is for educational and informational purposes only and is not investment advice. Please consider your risk profile and consult a financial advisor before investing.

Things to Keep in Mind While Investing

a. Risk

Since these funds are risky, you need to have a high-risk appetite. You should be able to tolerate the risk in this fund.

b. Role of Fund Manager

Always go for an experienced and reputed fund manager. Check the past performance of the schemes managed by that fund manager.

c. Asset Under Management (AUM)

Check the AUM of the fund before investing. Ideally, when you invest in this type of fund, the size of the fund should be big. This is because their greater corpus helps in spreading out the risk and the scope of diversification is better.

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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.