Table of Contents
- Why To Invest in Debt Mutual Funds?
- Risks In Debt Mutual Funds
- Debt Mutual Fund Taxation
- Best Debt Mutual Funds in India for Investments FY 23 - 24
- Top 5 Liquid Mutual Funds
- Top 5 Ultra Short Term Bond Mutual Funds
- Top and Best Floating Rate Mutual Funds
- Top 5 Best Money Market Mutual Funds
- Top 5 Short Term Bond Mutual Funds
- Top 5 Medium to Long Term Bond Mutual Funds
- Top 5 Banking and PSU Debt Mutual Funds
- Top 5 Credit Risk Mutual Funds
- Top 5 Dynamic Bond Mutual Funds
- Top 5 Corporate Bond Mutual Funds
- Top 5 Gilt Mutual Funds
- How to Evaluate Best Debt Mutual Funds
- Things to consider as an investor
- How to Invest in Best Debt Funds Online?
- Conclusion
Top 5 Funds
Best Debt Mutual Funds 2023
Best debt funds vary according to the tenor of investment of the investor. Investors need to be clear on their time horizon of investment when selecting the best Debt fund for their investment and also factor in the interest rate scenario.
For investors with a very short holding period, say for a couple of days to a month, Liquid Funds and ultra-short term funds may be relevant. When the time horizon is one to two years then short-term funds may be the desired vehicle. For longer tenors, for more than 3 years, long-term debt funds are the most preferred instruments by investors, especially during falling interest rates. Above all, debt funds have proved to be less risky than equities when looking for short-term investments, however, the volatility of long-term income funds may match that of equities.
As debt funds invest in fixed income instruments like government securities, treasury bills, corporate Bonds, etc., they have the capacity of generating consistent and regular returns over time. However, there are many qualitative and quantitative factors that one needs understand before selecting the best debt funds to invest, viz - AUM, Average Maturity, Taxation, the credit quality of the portfolio, etc. Below we have listed the top 5 best debt funds to invest across the various categories of debt funds - Best Liquid Funds, best ultra short-term funds, best short-term funds, best long-term funds and best Gilt Funds to invest in 2023 - 2024.
Why To Invest in Debt Mutual Funds?
a. Debt funds are considered to be an ideal investment for generating regular income. For example, choosing dividend payout can be an option for regular income.
b. In debt funds, investors can withdraw required money from the investment at any point in time and can let the remaining money stay invested.
c. Since debt funds largely invest in government securities, corporate debt and other securities like treasury bills, etc., they are not affected by equity market volatility.
d. If an investor is planning to achieve short-term Financial goals or invest for short periods then debt funds can be a good option. Liquid funds, ultra short-term funds, and short-term income funds may be the desired options.
e. In debt funds, investors can generate fixed income every month by starting a Systematic Withdrawal Plan (SWP is a reverse of SIP / STP) to withdraw a fixed amount on a monthly basis. Also, you can change the amount of the SWP when required.
Risks In Debt Mutual Funds
While Investing in debt funds, investors should be cautious about two major risks associated with them- credit risk and interest risk.
a. Credit Risk
A credit risk arises when a company that has issued the debt instruments does not make regular payments. In such cases, it has a major impact on the fund, depending on how much portion the fund has in the portfolio. Hence, it is suggested to be in debt instruments with a rating higher credit rating. An AAA rating is considered to be the highest quality with little or negligible payment Default Risk.
b. Interest Risks
The interest rate risk refers to a change in the bond price due to the change in the prevailing interest rate. When the interest rate rise in the economy the bond prices fall down and vice versa. The higher the maturity of the funds’ portfolio, the more prone it is to the interest rate risk. So in a rising interest rate scenario, it is advisable to go for lower maturity debt funds. And the reverse in a falling interest rate scenario.
Debt Mutual Fund Taxation
Tax implication on debt funds is computed in the following manner-
a. Short Term Capital Gains
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.
b. Long Term Capital Gains
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 |
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Best Debt Mutual Funds in India for Investments FY 23 - 24
Top 5 Liquid Mutual Funds
Top Liquid funds with AUM/Net Assets > 10,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Liquid Fund Growth ₹2,479.89
↑ 0.33 ₹27,226 500 0.6 1.7 3.3 5.6 4.9 7.23% 1M 7D 1M 8D Aditya Birla Sun Life Liquid Fund Growth ₹359.119
↑ 0.03 ₹28,072 5,000 0.6 1.7 3.2 5.6 4.8 7.22% 1M 2D 1M 2D ICICI Prudential Liquid Fund Growth ₹330.076
↑ 0.04 ₹47,246 500 0.5 1.6 3.2 5.5 4.8 7.22% 1M 7D 1M 10D Nippon India Liquid Fund Growth ₹5,443.71
↑ 0.59 ₹25,358 100 0.5 1.6 3.2 5.5 4.8 7.35% 1M 13D 1M 16D Tata Liquid Fund Growth ₹3,512.51
↑ 0.49 ₹18,212 5,000 0.5 1.6 3.2 5.5 4.8 7.21% 1M 7D 1M 7D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Ultra Short Term Bond Mutual Funds
Top Ultra Short Bond funds with AUM/Net Assets > 1,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹463.058
↑ 0.00 ₹14,457 1,000 1.7 3.2 5.3 5.7 4.8 7.83% 5M 19D 6M UTI Ultra Short Term Fund Growth ₹3,625.45
↑ 0.36 ₹2,131 5,000 1.6 3 4.9 5.6 4.2 7.51% 4M 25D 4M 30D ICICI Prudential Ultra Short Term Fund Growth ₹23.5603
↑ 0.00 ₹12,447 5,000 1.6 3.1 5.2 5.4 4.5 7.81% 4M 28D 5M 23D Kotak Savings Fund Growth ₹36.6187
↑ 0.00 ₹12,325 5,000 1.6 3.1 5.1 4.9 4.5 7.69% 4M 20D 6M 18D SBI Magnum Ultra Short Duration Fund Growth ₹5,085.03
↑ 1.16 ₹8,908 5,000 1.6 3.2 5.1 5 4.5 7.53% 5M 5D 5M 23D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top and Best Floating Rate Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹292.265
↑ 0.04 ₹12,365 1,000 1.7 3.3 5.4 6.4 4.8 7.86% 8M 23D 9M 22D ICICI Prudential Floating Interest Fund Growth ₹354.81
↑ 0.00 ₹11,651 5,000 1.4 2.9 5.5 6.4 4.3 7.88% 6M 11D 8Y 4M 24D Nippon India Floating Rate Fund Growth ₹37.7293
↑ 0.01 ₹7,288 5,000 1.4 3.1 4.3 6.8 3.8 7.73% 2Y 3M 29D 3Y 1M 10D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Best Money Market Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹312.258
↑ 0.02 ₹13,095 1,000 1.8 3.4 5.5 5.7 4.8 7.76% 5M 19D 5M 19D UTI Money Market Fund Growth ₹2,601.64
↑ 0.33 ₹7,898 10,000 1.8 3.4 5.6 5.3 4.9 7.28% 4M 6D 4M 6D Kotak Money Market Scheme Growth ₹3,794.64
↑ 0.33 ₹14,248 5,000 1.7 3.3 5.5 5.1 4.9 7.68% 5M 16D 5M 16D ICICI Prudential Money Market Fund Growth ₹320.285
↑ 0.04 ₹11,476 500 1.7 3.3 5.4 5.4 4.7 7.57% 5M 29D 6M 14D L&T Money Market Fund Growth ₹22.4127
↑ 0.00 ₹717 10,000 1.6 3 4.7 4.6 4 7.57% 7M 22D 7M 22D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Short Term Bond Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹38.1045
↑ 0.02 ₹29 1.4 2.9 4 5.7 3.3 7.12% 11M 26D 1Y 2M 12D ICICI Prudential Short Term Fund Growth ₹50.4003
↑ 0.01 ₹14,561 1.5 3.3 5.7 6.9 4.7 8.1% 1Y 5M 12D 4Y 11M 19D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹40.0172
↑ 0.02 ₹5,045 1.5 3.1 4.8 7.3 4.2 8.02% 2Y 7D 2Y 6M 14D UTI Short Term Income Fund Growth ₹26.702
↑ 0.01 ₹2,270 1.5 3.1 4.5 8.1 3.8 7.77% 1Y 7M 28D 2Y 3M Nippon India Short Term Fund Growth ₹44.2674
↑ 0.02 ₹5,147 1.3 3 3.6 6.1 3.2 7.91% 2Y 3M 29D 2Y 9M 29D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Medium to Long Term Bond Mutual Funds
Top Medium to Long Term Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Income Fund Growth ₹59.3548
↑ 0.08 ₹1,511 1.6 3.6 4.4 6.4 3 7.87% 5Y 5M 1D 8Y 4M 17D ICICI Prudential Bond Fund Growth ₹33.3283
↑ 0.03 ₹2,223 1.5 3.3 4.8 6.5 3.1 7.75% 2Y 9M 4D 5Y 9M 22D Aditya Birla Sun Life Income Fund Growth ₹105.908
↑ 0.08 ₹1,497 1.5 3.5 3.1 6.9 2.4 7.63% 3Y 9M 4D 4Y 9M 18D Kotak Bond Fund Growth ₹64.7033
↑ 0.07 ₹1,585 1.4 3.1 3.2 5.6 1.7 7.89% 3Y 1M 17D 7Y 8M 16D HDFC Income Fund Growth ₹48.8477
↑ 0.05 ₹529 1.2 2.9 2.4 4.2 0.9 7.55% 5Y 4M 5D 9Y 3M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Banking and PSU Debt Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity UTI Banking & PSU Debt Fund Growth ₹18.5085
↑ 0.00 ₹525 1.4 3.4 10.8 7.9 10.3 7.56% 3Y 2M 23D 3Y 11M 5D HDFC Banking and PSU Debt Fund Growth ₹19.3538
↑ 0.00 ₹4,806 1.4 2.9 4 6.5 3.3 7.64% 1Y 11M 20D 3Y 1M 28D ICICI Prudential Banking and PSU Debt Fund Growth ₹27.4505
↓ 0.00 ₹7,266 1.5 3.1 5.3 6.7 4.3 7.99% 2Y 18D 7Y 2M 12D Kotak Banking and PSU Debt fund Growth ₹54.9609
↑ 0.01 ₹5,257 1.4 3.2 4.3 6.6 3.6 8.15% 2Y 7M 2D 6Y 10M 17D Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹308.486
↑ 0.04 ₹7,994 1.5 3.1 4.2 6.7 3.7 7.76% 2Y 4M 10D 3Y 4M 13D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Credit Risk Mutual Funds
Top Credit Risk funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Credit Risk Fund Growth ₹17.9771
↑ 0.01 ₹621 1.7 3.3 4.6 6.6 4 8.69% 1Y 7M 10D 1Y 11M 12D SBI Credit Risk Fund Growth ₹37.7861
↑ 0.02 ₹2,783 1.5 3.1 4.7 6.8 4.2 8.33% 1Y 11M 8D 3Y 7M 2D HDFC Credit Risk Debt Fund Growth ₹20.2194
↑ 0.02 ₹8,438 1.4 3 4.1 7.5 3.7 8.6% 1Y 11M 5D 2Y 6M 10D Kotak Credit Risk Fund Growth ₹24.8493
↑ 0.08 ₹1,205 1.1 2.4 0.9 5.1 0.9 8.29% 1Y 8M 8D 2Y 11M 23D Nippon India Credit Risk Fund Growth ₹28.924
↑ 0.00 ₹927 1.3 3.2 4.2 8.9 3.9 8.71% 1Y 10M 2D 2Y 2M 12D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Dynamic Bond Mutual Funds
Top Dynamic Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Long Term Plan Growth ₹30.7897
↑ 0.01 ₹6,755 1.5 3.4 5.8 6.9 4.5 8.19% 2Y 1M 10D 5Y 10M 24D SBI Dynamic Bond Fund Growth ₹29.8874
↑ 0.04 ₹2,408 1.5 3.5 5.4 5.4 4.2 7.47% 6Y 11D 10Y 8M 23D Aditya Birla Sun Life Dynamic Bond Fund Growth ₹38.6125
↑ 0.03 ₹1,795 1.5 3.2 7 7.6 6 7.91% 2Y 8M 19D 3Y 6M 29D HDFC Dynamic Debt Fund Growth ₹75.46
↑ 0.07 ₹528 1.4 3 3.4 6.5 1.6 7.52% 2Y 7M 12D 6Y 4M 28D Axis Dynamic Bond Fund Growth ₹24.7111
↑ 0.02 ₹1,733 1.1 3.2 3.2 6.4 2.1 7.69% 5Y 11D 6Y 10M 13D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Corporate Bond Mutual Funds
Top Corporate Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Corporate Bond Fund Growth ₹94.1193
↑ 0.02 ₹12,121 1.5 3.4 4.6 7.2 4.1 8% 1Y 8M 23D 2Y 2M 1D HDFC Corporate Bond Fund Growth ₹27.1019
↑ 0.01 ₹23,487 1.4 3.1 3.9 6.7 3.3 7.6% 2Y 7M 6D 5Y 22D ICICI Prudential Corporate Bond Fund Growth ₹24.8993
↓ -0.01 ₹16,998 1.5 3.2 5.5 6.8 4.5 7.98% 1Y 1M 17D 4Y 5M 16D Nippon India Prime Debt Fund Growth ₹49.9613
↑ 0.01 ₹1,702 1.5 3.5 4.8 6.5 4.3 7.92% 2Y 7M 24D 3Y 4M 6D Kotak Corporate Bond Fund Standard Growth ₹3,153.72
↓ -0.11 ₹8,881 1.3 3 4.2 6.2 3.7 8.02% 1Y 8M 23D 3Y 5M 19D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23
Top 5 Gilt Mutual Funds
Top The investment objective of the scheme is to generate optimal returns with adequate liquidity through active management of the portfolio, by investing in debt and money market instruments. However, there can be no assurance that the investment objective of the scheme will be realized. UTI Dynamic Bond Fund is a Debt - Dynamic Bond fund was launched on 16 Jun 10. It is a fund with Moderate risk and has given a Below is the key information for UTI Dynamic Bond Fund Returns up to 1 year are on The investment objective of the scheme is to generate steady and reasonable income, with low risk and high level of liquidity from a portfolio of predominantly debt & money market securities by Banks and Public Sector Undertakings (PSUs). UTI Banking & PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 3 Feb 14. It is a fund with Moderate risk and has given a Below is the key information for UTI Banking & PSU Debt Fund Returns up to 1 year are on (Erstwhile DHFL Pramerica Credit Opportunities Fund) The investment objective of the Scheme is to generate income and capital appreciation by investing predominantly in corporate debt. There can be no assurance that the investment objective of the Scheme will be realized. PGIM India Credit Risk Fund is a Debt - Credit Risk fund was launched on 29 Sep 14. It is a fund with Moderate risk and has given a Below is the key information for PGIM India Credit Risk Fund Returns up to 1 year are on To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity. ICICI Prudential Long Term Plan is a Debt - Dynamic Bond fund was launched on 20 Jan 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Long Term Plan Returns up to 1 year are on To provide investors with as high a level of income available from short-term investments as is considered consistent with preservation of capital and maintenance of liquidity, by investing in a portfolio of money market and investment grade debt instruments.
The scheme will invest its assets in a portfolio of money market instruments. The investments will be in securities, which the Investment Manager believes present minimal liquidity and/or credit risks. Principal Cash Management Fund is a Debt - Liquid Fund fund was launched on 30 Aug 04. It is a fund with Low risk and has given a Below is the key information for Principal Cash Management Fund Returns up to 1 year are on GILT funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Gilt Fund Growth ₹85.0375
↑ 0.03 ₹2,693 1.5 3 5.7 6.3 3.7 7.56% 1Y 7M 6D 8Y 8M 19D SBI Magnum Gilt Fund Growth ₹55.0026
↑ 0.08 ₹4,301 1.6 3.7 5.6 6 4.2 7.45% 6Y 4M 10D 11Y 9M 11D UTI Gilt Fund Growth ₹52.7494
↑ 0.06 ₹517 1.5 3.3 5 5.1 2.9 7.05% 3Y 8M 26D 5Y 3M 18D SBI Magnum Constant Maturity Fund Growth ₹52.6345
↑ 0.09 ₹871 1.7 3.8 3.8 4.9 1.3 7.58% 6Y 9M 7D 9Y 8M 1D Nippon India Gilt Securities Fund Growth ₹32.0317
↑ 0.05 ₹1,159 1.4 3.2 3.7 4.8 2.1 7.58% 4Y 6M 18D 6Y 14D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Mar 23 1. UTI Dynamic Bond Fund
CAGR/Annualized return of 7.8% since its launch. Ranked 3 in Dynamic Bond category. Return for 2022 was 10.1% , 2021 was 10.8% and 2020 was 5.9% . UTI Dynamic Bond Fund
Growth Launch Date 16 Jun 10 NAV (24 Mar 23) ₹26.103 ↑ 0.03 (0.12 %) Net Assets (Cr) ₹469 on 28 Feb 23 Category Debt - Dynamic Bond AMC UTI Asset Management Company Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.59 Sharpe Ratio 0.74 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.11% Effective Maturity 4 Years 1 Month 24 Days Modified Duration 2 Years 11 Months 19 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 18 ₹10,000 28 Feb 19 ₹10,351 29 Feb 20 ₹9,976 28 Feb 21 ₹10,652 28 Feb 22 ₹11,879 28 Feb 23 ₹13,189 Returns for UTI Dynamic Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23 Duration Returns 1 Month 0.8% 3 Month 1.5% 6 Month 2.8% 1 Year 12% 3 Year 10.7% 5 Year 5.7% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2022 10.1% 2021 10.8% 2020 5.9% 2019 -3.9% 2018 5.2% 2017 4.2% 2016 14.9% 2015 6.9% 2014 14.7% 2013 7.6% Fund Manager information for UTI Dynamic Bond Fund
Name Since Tenure Sudhir Agarwal 1 Dec 21 1.17 Yr. Data below for UTI Dynamic Bond Fund as on 28 Feb 23
Asset Allocation
Asset Class Value Cash 47.85% Debt 52.15% Debt Sector Allocation
Sector Value Government 54.4% Cash Equivalent 31.34% Corporate 14.26% Credit Quality
Rating Value AA 6.91% AAA 93.09% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -22% ₹100 Cr 1,000,000,000
↑ 500,000,000 7.26 8/22/2032 12:00:00 Am
Sovereign Bonds | -13% ₹60 Cr 600,000,000
↓ -350,000,000 7.64% MP Sdl 2033
Sovereign Bonds | -6% ₹25 Cr 250,000,000
↑ 250,000,000 Indian Railway Finance Corporation Limited
Debentures | -6% ₹25 Cr 2,500 182 DTB 23032023
Sovereign Bonds | -3% ₹15 Cr 150,000,000 Punjab National Bank
Debentures | -2% ₹10 Cr 100 Can Fin Homes Limited
Debentures | -2% ₹10 Cr 100 Tata Capital Limited
Debentures | -1% ₹5 Cr 50 Net Current Assets
Net Current Assets | -28% ₹124 Cr Canara Bank
Certificate of Deposit | -6% ₹25 Cr 250,000,000 2. UTI Banking & PSU Debt Fund
CAGR/Annualized return of 7% since its launch. Ranked 3 in Banking & PSU Debt category. Return for 2022 was 10.3% , 2021 was 2.8% and 2020 was 8.9% . UTI Banking & PSU Debt Fund
Growth Launch Date 3 Feb 14 NAV (24 Mar 23) ₹18.5085 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹525 on 28 Feb 23 Category Debt - Banking & PSU Debt AMC UTI Asset Management Company Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 0.31 Sharpe Ratio 0.8 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.56% Effective Maturity 3 Years 11 Months 5 Days Modified Duration 3 Years 2 Months 23 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 18 ₹10,000 28 Feb 19 ₹10,499 29 Feb 20 ₹10,696 28 Feb 21 ₹11,394 28 Feb 22 ₹11,837 28 Feb 23 ₹13,034 Returns for UTI Banking & PSU Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23 Duration Returns 1 Month 0.8% 3 Month 1.4% 6 Month 3.4% 1 Year 10.8% 3 Year 7.9% 5 Year 5.5% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2022 10.3% 2021 2.8% 2020 8.9% 2019 -1% 2018 6.8% 2017 6.4% 2016 11.7% 2015 8.6% 2014 2013 Fund Manager information for UTI Banking & PSU Debt Fund
Name Since Tenure Anurag Mittal 1 Dec 21 1.17 Yr. Data below for UTI Banking & PSU Debt Fund as on 28 Feb 23
Asset Allocation
Asset Class Value Cash 5.77% Debt 94.23% Debt Sector Allocation
Sector Value Government 47.38% Corporate 46.85% Cash Equivalent 5.77% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -21% ₹110 Cr 1,100,000,000
↓ -150,000,000 Power Finance Corporation Ltd.
Debentures | -7% ₹40 Cr 400
↑ 50 National Housing Bank
Debentures | -7% ₹40 Cr 400 Axis Bank Limited
Debentures | -6% ₹30 Cr 300 National Bank For Agriculture And Rural Development
Debentures | -5% ₹26 Cr 250 Export Import Bank Of India
Debentures | -5% ₹25 Cr 250 Indian Railway Finance Corporation Limited
Debentures | -5% ₹25 Cr 250 Small Industries Development Bank Of India
Debentures | -5% ₹25 Cr 250 Rec Limited
Debentures | -5% ₹25 Cr 250 ICICI Bank Limited
Debentures | -4% ₹24 Cr 250 3. PGIM India Credit Risk Fund
CAGR/Annualized return of 6.3% since its launch. Ranked 2 in Credit Risk category. . PGIM India Credit Risk Fund
Growth Launch Date 29 Sep 14 NAV (21 Jan 22) ₹15.5876 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹39 on 31 Dec 21 Category Debt - Credit Risk AMC Pramerica Asset Managers Private Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.85 Sharpe Ratio 1.73 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 5.01% Effective Maturity 7 Months 2 Days Modified Duration 6 Months 14 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 18 ₹10,000 28 Feb 19 ₹10,549 29 Feb 20 ₹10,960 28 Feb 21 ₹10,713 Returns for PGIM India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23 Duration Returns 1 Month 0.3% 3 Month 0.6% 6 Month 4.4% 1 Year 8.4% 3 Year 3% 5 Year 4.2% 10 Year 15 Year Since launch 6.3% Historical performance (Yearly) on absolute basis
Year Returns 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Fund Manager information for PGIM India Credit Risk Fund
Name Since Tenure Data below for PGIM India Credit Risk Fund as on 31 Dec 21
Asset Allocation
Asset Class Value Debt Sector Allocation
Sector Value Credit Quality
Rating Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 4. ICICI Prudential Long Term Plan
CAGR/Annualized return of 8.9% since its launch. Ranked 1 in Dynamic Bond category. Return for 2022 was 4.5% , 2021 was 4.3% and 2020 was 11.8% . ICICI Prudential Long Term Plan
Growth Launch Date 20 Jan 10 NAV (24 Mar 23) ₹30.7897 ↑ 0.01 (0.05 %) Net Assets (Cr) ₹6,755 on 28 Feb 23 Category Debt - Dynamic Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.41 Sharpe Ratio -0.16 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Months (0.25%),1 Months and above(NIL) Yield to Maturity 8.19% Effective Maturity 5 Years 10 Months 24 Days Modified Duration 2 Years 1 Month 10 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 18 ₹10,000 28 Feb 19 ₹10,673 29 Feb 20 ₹12,001 28 Feb 21 ₹13,041 28 Feb 22 ₹13,674 28 Feb 23 ₹14,378 Returns for ICICI Prudential Long Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23 Duration Returns 1 Month 0.7% 3 Month 1.5% 6 Month 3.4% 1 Year 5.8% 3 Year 6.9% 5 Year 7.4% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2022 4.5% 2021 4.3% 2020 11.8% 2019 10.2% 2018 6.2% 2017 5.1% 2016 16.9% 2015 5.7% 2014 19.4% 2013 9.6% Fund Manager information for ICICI Prudential Long Term Plan
Name Since Tenure Manish Banthia 28 Sep 12 10.35 Yr. Anuj Tagra 15 Jan 15 8.05 Yr. Data below for ICICI Prudential Long Term Plan as on 28 Feb 23
Asset Allocation
Asset Class Value Cash 13.55% Debt 86.45% Debt Sector Allocation
Sector Value Government 45.32% Corporate 43.63% Cash Equivalent 11.06% Credit Quality
Rating Value AA 35.62% AAA 64.38% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.42 9/22/2033 12:00:00 Am
Sovereign Bonds | -12% ₹770 Cr 77,450,350 7.26 8/22/2032 12:00:00 Am
Sovereign Bonds | -11% ₹705 Cr 70,932,300
↓ -20,000,000 7.01 10/4/2028 12:00:00 Am
Sovereign Bonds | -7% ₹481 Cr 48,878,150 7.69 10/30/2034 12:00:00 Am
Sovereign Bonds | -7% ₹448 Cr 45,960,800 7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -6% ₹419 Cr 41,735,270 Embassy Office Parks Reit
Debentures | -2% ₹122 Cr 1,250 Motilal Oswal Finvest Limited
Debentures | -2% ₹119 Cr 1,200
↑ 1,200 Tata Realty And Infrastructure Limited
Debentures | -2% ₹109 Cr 1,100 Varanasi Sangam Expressway Private Limited
Debentures | -2% ₹101 Cr 1,080 Tata Housing Development Company Limited
Debentures | -2% ₹100 Cr 10,000 5. Principal Cash Management Fund
CAGR/Annualized return of 6.4% since its launch. Ranked 5 in Liquid Fund category. Return for 2022 was 4.8% , 2021 was 3.2% and 2020 was 3.8% . Principal Cash Management Fund
Growth Launch Date 30 Aug 04 NAV (24 Mar 23) ₹1,968.47 ↑ 0.27 (0.01 %) Net Assets (Cr) ₹4,170 on 28 Feb 23 Category Debt - Liquid Fund AMC Principal Pnb Asset Mgmt. Co. Priv. Ltd. Rating ☆☆☆☆☆ Risk Low Expense Ratio 0.2 Sharpe Ratio -1.4 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 2,000 Exit Load NIL Yield to Maturity 7.03% Effective Maturity 21 Days Modified Duration 23 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 18 ₹10,000 28 Feb 19 ₹9,819 29 Feb 20 ₹10,398 28 Feb 21 ₹10,754 28 Feb 22 ₹11,104 28 Feb 23 ₹11,694 Returns for Principal Cash Management Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23 Duration Returns 1 Month 0.5% 3 Month 1.6% 6 Month 3.2% 1 Year 5.6% 3 Year 4.1% 5 Year 3.2% 10 Year 15 Year Since launch 6.4% Historical performance (Yearly) on absolute basis
Year Returns 2022 4.8% 2021 3.2% 2020 3.8% 2019 6.2% 2018 -1.8% 2017 6.8% 2016 7.7% 2015 8.4% 2014 9.1% 2013 9.2% Fund Manager information for Principal Cash Management Fund
Name Since Tenure Dwijendra Srivastava 1 Jan 22 1.08 Yr. Sandeep Agarwal 16 May 22 0.71 Yr. Data below for Principal Cash Management Fund as on 28 Feb 23
Asset Allocation
Asset Class Value Cash 98.05% Debt 1.95% Debt Sector Allocation
Sector Value Cash Equivalent 70.22% Corporate 19.24% Government 10.54% Credit Quality
Rating Value AA 1.71% AAA 98.29% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps
CBLO/Reverse Repo | -27% ₹1,013 Cr Axis Bank Limited
Certificate of Deposit | -4% ₹150 Cr 3,000 Dbs Bank India Limited
Certificate of Deposit | -4% ₹139 Cr 2,800 Small Industries Development Bank Of India
Commercial Paper | -3% ₹100 Cr 2,000 Birla Group Holdings Private Limited
Commercial Paper | -3% ₹100 Cr 2,000 Julius Baer Capital (India) Private Limited
Commercial Paper | -3% ₹100 Cr 2,000 ICICI Home Finance Company Limited
Commercial Paper | -3% ₹100 Cr 2,000 Redington Limited
Commercial Paper | -3% ₹100 Cr 2,000 Reliance Jio Infocomm Limited
Commercial Paper | -3% ₹99 Cr 2,000 91 DTB 13042023
Sovereign Bonds | -3% ₹99 Cr 10,000,000
How to Evaluate Best Debt Mutual Funds
In order to select the best debt funds you wish to invest in, it is necessary to consider some of the important parameters such as average maturity, credit quality, AUM, expense ratio, tax implication., etc. Let's have an in-depth look-
1. Average Maturity/Duration
Average maturity is an essential parameter in debt funds that is sometimes overlooked by investors, who tend to invest for a long period without considering the risks involved. Investors need to decide their debt fund investment based on its maturity period, Matching the time period of investment with the maturity period of the debt fund is a good way to ensure you don't end up taking unnecessary risk. Thus, it is advisable to know the average maturity of a debt fund, before investing, in order to aim for optimum risk returns in debt funds. Looking at the average maturity (duration is a similar factor) is important, for example, a liquid fund may have an average maturity of a couple of days to maybe a month, this would mean it is a great option for an investor who is looking to invest money for a couple of days. Similarly, if you are looking at the time frame of one-year Investment plan then, a short-term debt fund can be ideal.
2. Interest Rate Scenario
Understanding the market environment is very important in debt funds which are affected by interest rates and its fluctuations. When the interest rate rises in the economy, the bond price falls and vice-versa. Also, during the time when the interest rates rise, new bonds are issued in the market with a higher yield than the older bonds, making those older bonds of lower value. Therefore, investors are more attracted towards newer bonds in the market and also a re-pricing of older bonds takes place. In case a debt fund is having an exposure to such "older bonds" then when the interest rates rise, the NAV of the debt fund would be impacted negatively. Furthermore, as debt funds are exposed to interest rate fluctuations, it disturbs the prices of the underlying bonds in the fund portfolio. For instance, long-term debt funds are at a higher risk during times of rising interest rates. During this time making a short-term investment plan will lower your interest rate risks.
If one has good knowledge of interest rates and can monitor the same, one can even take advantage of this. In a falling interest rate market, long-term debt funds would be a good choice. However, during the times of rising interest rates then it would be wise to be in funds with shorter average maturities like short-term funds, Ultra Short Term fund or even liquid funds.
3. Current Yield or Portfolio Yield
The yield is a measure of the interest income generated by the bonds in the portfolio. Funds that invest in debt or bonds that have a higher coupon rate (or yield) would have a higher overall portfolio yield. The yield to maturity(ytm) of a debt mutual fund indicates the running yield of the fund. When comparing debt funds on the basis of YTM, one should also look at that fact that how is the extra yield being generated. Is this at the cost of as lower portfolio quality? Investing in not so good quality instruments has its own issues. You don't want to end up investing in a debt fund which has such bonds or securities that may Default later on. So, always look at the portfolio yield and balance it off with the credit quality.
4. Credit Quality of Portfolio
In order to invest in best debt funds, checking the credit quality of the bonds and debt securities is an essential parameter. Bonds are assigned a credit rating by various agencies based on their ability to pay the money back. A bond with AAA rating is considered to be the best credit rating and also implies a safe and secure investment. If one truly wants safety and considers this as the paramount parameter in selecting the best debt fund, then getting into a fund with very high-quality debt instruments (AAA or AA+) may be the desired option.
5. Assets Under Management (AUM)
This is the foremost parameter to consider while choosing the best debt funds. AUM is the total amount invested in a particular scheme by all investors. Since, most Mutual Funds’ total AUM is invested in debt funds, investors need to select scheme assets that have a considerable AUM. Being in a fund which has a large exposure to corporates may be risky, since their withdrawals may be large which may affect the overall fund performance.
6. Expense Ratio
An important factor to be considered in debt funds is its expense ratio. A higher expense ratio creates a larger impact on the funds’ performance. For example, liquid funds have the lowest expense ratios which are up to 50 bps (BPS is a unit to measure interest rates wherein one bps is equal to 1/100th of 1%) whereas, other debt funds could charge up to 150 bps. So to make a choice between one debt mutual fund, it is important to consider the management fee or the fund running expense.
7. Taxation Impacts
Debt funds offer the benefit of long-term capital gains (more than 3 years) with indexation benefits. And the short term capital gains (less than 3 years) is taxed at 30%.
Things to consider as an investor
1. Fund Objectives
Debt Fund aims to earn optimal returns by maintaining a diversified portfolio of various types of securities. You can expect them to perform in a predictable manner. It is because of this reason, that debt funds are popular among conservative investors.
2. Fund Types
Debt funds are further divided into various categories like liquid funds, Monthly Income Plan (MIP), fixed maturity plans (FMP), Dynamic Bond Funds, income funds, credit opportunities funds, GILT funds, short-term funds and ultra short-term funds.
3. Risks
Debt funds are basically exposed to interest rate risk, credit risk, and liquidity risk. The fund value may fluctuate due to the overall interest rate movements. There’s a risk of default in the payment of interest and principal by the issuer. Liquidity risk happens when the fund manager is unable to sell the underlying security due to lack of demand.
4. Cost
Debt funds charge an expense ratio to manage your money. Till now SEBI had mandated the upper limit of expense ratio to be 2.25% (Might change time to time with regulations.).
5. Investment Horizon
An investment of 3 months to 1 year would be ideal for liquid funds. If you have a longer horizon of say 2 to 3 years, you may go for short-term bond funds.
6. Financial Goals
Debt funds can be used to achieve a variety of goals like earning additional income or for purpose of liquidity.
How to Invest in Best Debt Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
Conclusion
Debt funds are one of the best ways to invest your money and generate income on a regular basis by choosing the relevant product matching your risk profile. So, investors looking to generate steady income or take advantage of the debt markets, can consider the above best debt funds for 2023 - 2024 and start investing!_
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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The article is nice and informative but it could be in more simple words because lot of people have much less knowledge in such sector