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 21 - 22
- 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 2021
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 2021 - 2022.
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 21 - 22
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Tata Liquid Fund Growth ₹3,203.71
↑ 0.15 ₹18,528 5,000 0.2 0.7 1.5 4.2 4.3 0% 1Y 4M 17D Aditya Birla Sun Life Liquid Fund Growth ₹327.135
↑ 0.01 ₹34,970 5,000 0.2 0.7 1.6 4.2 4.3 3.01% 1M 2D 1M 2D ICICI Prudential Liquid Fund Growth ₹301.056
↑ 0.02 ₹46,016 500 0.2 0.7 1.6 4.2 4.3 2.98% 1M 5D 1M 7D Axis Liquid Fund Growth ₹2,257.6
↑ 0.11 ₹27,868 500 0.2 0.7 1.6 4.2 4.3 2.94% 26D 1M 5D Nippon India Liquid Fund Growth ₹4,964.42
↑ 0.10 ₹23,106 100 0.2 0.7 1.5 4.1 4.3 2.94% 27D 29D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹419.332
↓ 0.00 ₹17,295 1,000 1 2.4 6.8 7.6 7 3.76% 5M 16D 6M 7D UTI Ultra Short Term Fund Growth ₹3,235.91
↑ 0.43 ₹1,557 5,000 1 2.1 5.1 5.1 5.3 5.11% 3M 27D 3M 29D ICICI Prudential Ultra Short Term Fund Growth ₹21.3752
↑ 0.00 ₹9,030 5,000 1 2.5 6.3 7.4 6.5 4.61% 4M 20D 5M 12D SBI Magnum Ultra Short Duration Fund Growth ₹4,643.07
↑ 0.28 ₹14,533 5,000 0.8 1.9 5.7 7.2 5.9 0% Kotak Savings Fund Growth ₹33.4974
↑ 0.00 ₹13,560 5,000 0.8 1.8 5.6 7 5.8 3.56% 5M 1D 5M 8D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Top and Best Floating Rate Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹264.625
↓ -0.14 ₹7,492 1,000 1.1 2.6 8.1 8.1 8.6 4.06% 1Y 1M 2D 1Y 3M 11D Nippon India Floating Rate Fund Growth ₹34.503
↓ -0.02 ₹15,521 5,000 1.4 3 10.8 8.5 11.3 4.63% 2Y 11D 2Y 8M 16D ICICI Prudential Floating Interest Fund Growth ₹324.282
↑ 0.19 ₹11,473 5,000 2 4 9.4 8.2 9.5 5.36% 1Y 2M 8D 3Y 4M 28D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Top 5 Best Money Market Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹282.58
↑ 0.03 ₹12,717 1,000 0.9 2.1 6.5 7.5 6.6 3.47% 4M 2D 4M 2D ICICI Prudential Money Market Fund Growth ₹290.72
↑ 0.04 ₹12,412 500 0.8 2 6.1 7.2 6.2 3.32% 3M 28D 4M 3D UTI Money Market Fund Growth ₹2,355.04
↑ 0.32 ₹8,317 10,000 0.9 2 5.9 7.2 6 3.36% 4M 10D 4M 11D Kotak Money Market Scheme Growth ₹3,439.21
↑ 0.29 ₹11,040 5,000 0.9 1.9 5.5 7.1 5.7 3.39% 4M 6D 4M 10D L&T Money Market Fund Growth ₹20.6518
↑ 0.00 ₹1,032 10,000 0.7 1.5 5.2 6.9 5.4 3.42% 4M 2D 4M 6D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Top 5 Short Term Bond Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹35.3002
↓ -0.01 ₹42 0.7 2 8 4 7.8 4.38% 2Y 2M 1D 2Y 6M 14D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹36.432
↓ -0.02 ₹8,532 1.3 4.1 10.5 8.6 11.1 5.17% 2Y 6M 7D 3Y 1M 24D ICICI Prudential Short Term Fund Growth ₹45.716
↓ -0.02 ₹22,802 1.6 3.1 10.4 8.6 10.6 5.11% 2Y 4M 28D 3Y 6M UTI Short Term Income Fund Growth ₹23.3624
↓ -0.01 ₹3,302 1 2.4 9.9 3.9 10.5 4.9% 1Y 11M 19D 2Y 6M 4D Nippon India Short Term Fund Growth ₹40.5109
↓ -0.02 ₹8,971 1.3 2.8 9 8 9.5 5.11% 2Y 2Y 7M 28D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Income Fund Growth ₹54.6901
↓ -0.08 ₹1,710 1.3 3.2 11.3 9.2 11.6 0% Aditya Birla Sun Life Income Fund Growth ₹98.024
↓ -0.03 ₹1,685 1.8 2.4 12.7 9.2 12.8 6.36% 5Y 6M 29D 8Y 1M 10D ICICI Prudential Bond Fund Growth ₹30.9311
↓ -0.03 ₹4,305 1.1 2.5 11.2 8.8 11.5 0% Kotak Bond Fund Growth ₹61.2703
↓ -0.04 ₹1,646 2.5 3.1 12.8 9.3 12.3 5.59% 5Y 5M 12D 9Y 7M 17D HDFC Income Fund Growth ₹46.8194
↓ -0.08 ₹688 1.3 2.4 9.4 7.2 9.3 6.34% 5Y 8M 23D 8Y 7M 17D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Top 5 Banking and PSU Debt Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Banking and PSU Debt Fund Growth ₹17.8271
↓ -0.01 ₹10,652 1.5 3.2 10.2 8.7 10.6 5.43% 2Y 10M 6D 3Y 10M 17D UTI Banking & PSU Debt Fund Growth ₹16.0859
↓ 0.00 ₹263 0.7 2 8.5 4.7 8.9 4.13% 1Y 8M 12D 2Y 2M 6D Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹283.096
↓ -0.14 ₹15,019 1.4 2.7 10.4 9 10.9 4.93% 2Y 10M 10D 3Y 8M 1D DSP BlackRock Banking and PSU Debt Fund Growth ₹18.6501
↓ -0.01 ₹3,576 0.9 2.3 10.1 8.8 10.9 4.63% 2Y 9M 7D 3Y 3M 18D Kotak Banking and PSU Debt fund Growth ₹50.3808
↓ -0.01 ₹10,215 1.6 2.8 10.1 9.2 10.5 5.31% 2Y 10M 13D 3Y 9M 29D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Credit Risk Fund Growth ₹16.0873
↓ 0.00 ₹570 1.9 3.9 8 6.1 8.2 7.77% 1Y 6M 2Y 1M 6D HDFC Credit Risk Debt Fund Growth ₹18.0638
↓ 0.00 ₹6,480 3.1 5.5 10.9 8.3 10.9 8.55% 2Y 1M 2D 2Y 7M 13D SBI Credit Risk Fund Growth ₹34.0583
↓ -0.02 ₹3,699 1.8 4.2 9.2 7.3 9.8 0% Kotak Credit Risk Fund Growth ₹23.1998
↓ 0.00 ₹1,851 1.3 3.6 6.4 7.2 6.6 7.49% 1Y 9M 22D 2Y 6M 11D Nippon India Credit Risk Fund Growth ₹24.259
↑ 0.00 ₹1,284 2.5 4.7 -5.9 0.6 -5.9 11.69% 1Y 4M 2D 1Y 10M 17D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Long Term Plan Growth ₹27.8307
↓ -0.02 ₹5,039 1.6 3.3 11.9 9.3 11.8 6.57% 4Y 4M 2D 6Y 5M 8D SBI Dynamic Bond Fund Growth ₹27.6239
↓ -0.05 ₹2,409 0.7 1.5 9.8 9.2 10.4 0% IDFC Dynamic Bond Fund Growth ₹27.2426
↓ -0.05 ₹2,978 1 1.8 13.1 10 12.9 5.97% 6Y 29D 8Y 22D Axis Dynamic Bond Fund Growth ₹23.0238
↓ 0.00 ₹1,358 1.3 2 12.2 9.7 12.3 6.41% 6Y 2M 12D 8Y 10M 24D Aditya Birla Sun Life Dynamic Bond Fund Growth ₹34.2519
↓ -0.01 ₹1,690 1.1 3.1 9.5 4.9 9.7 6.75% 3Y 2M 1D 4Y 5M 1D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
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 (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Corporate Bond Fund Growth ₹24.9142
↓ -0.01 ₹26,279 1.6 2.9 11.5 9.4 11.8 5.15% 3Y 3M 11D 4Y 7M 10D Aditya Birla Sun Life Corporate Bond Fund Growth ₹85.5259
↓ -0.05 ₹24,424 1.4 3 11.3 9.3 11.9 4.87% 2Y 6M 11D 3Y 1M 28D ICICI Prudential Corporate Bond Fund Growth ₹22.5793
↓ 0.00 ₹18,155 1.4 2.8 10.2 8.8 10.4 4.93% 2Y 11M 8D 4Y 4M 28D Kotak Corporate Bond Fund Standard Growth ₹2,893.69
↓ -1.86 ₹7,980 1.3 3 9.2 8.8 9.7 4.74% 1Y 10M 24D 2Y 4M 17D Nippon India Prime Debt Fund Growth ₹45.0824
↓ -0.02 ₹1,693 1.6 3.5 9 7.9 9.5 4.95% 1Y 8M 8D 2Y 2M 19D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Top 5 Gilt Mutual Funds
Top 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 (Erstwhile HDFC Medium Term Opportunities Fund) To generate regular income through investments in Debt/
Money Market Instruments and Government Securities with
maturities not exceeding 60 months. HDFC Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 29 Jun 10. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Corporate Bond Fund Returns up to 1 year are on (Erstwhile Aditya Birla Sun Life Short Term Fund) An Open-ended income scheme with the objective to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities. Aditya Birla Sun Life Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 3 Mar 97. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Corporate Bond Fund Returns up to 1 year are on To generate regular income through investments in debt and money market instruments consisting predominantly of securities issued by entities such as Scheduled Commercial Banks and Public Sector undertakings. There is no assurance that the investment objective of the Scheme will be realized. HDFC Banking and PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 26 Mar 14. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Banking and PSU Debt 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 GILT funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Gilt Fund Growth ₹77.852
↓ -0.09 ₹4,841 1.3 2 13 10.1 12.6 0% Aditya Birla Sun Life Government Securities Fund Growth ₹63.4799
↓ -0.11 ₹567 1 1.8 11.8 9.9 12.1 5.96% 6Y 7M 10D 9Y 4M 17D SBI Magnum Constant Maturity Fund Growth ₹49.715
↓ -0.13 ₹809 0.9 2.1 11.7 10.9 11.6 0% Nippon India Gilt Securities Fund Growth ₹30.2784
↓ -0.04 ₹2,127 0.8 1.4 11.4 10.5 11.2 5.71% 6Y 10M 13D 10Y 7M 20D SBI Magnum Gilt Fund Growth ₹50.2585
↓ -0.10 ₹4,356 1 1.8 11.4 9.8 11.7 0% Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21 1. ICICI Prudential Long Term Plan
CAGR/Annualized return of 9.8% since its launch. Ranked 1 in Dynamic Bond category. Return for 2020 was 11.8% , 2019 was 10.2% and 2018 was 6.2% . ICICI Prudential Long Term Plan
Growth Launch Date 20 Jan 10 NAV (15 Jan 21) ₹27.8307 ↓ -0.02 (-0.08 %) Net Assets (Cr) ₹5,039 on 30 Nov 20 Category Debt - Dynamic Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.31 Sharpe Ratio 2.31 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 6.57% Effective Maturity 6 Years 5 Months 8 Days Modified Duration 4 Years 4 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,686 31 Dec 17 ₹12,283 31 Dec 18 ₹13,047 31 Dec 19 ₹14,373 31 Dec 20 ₹16,065 Returns for ICICI Prudential Long Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 15 Jan 21 Duration Returns 1 Month 0.2% 3 Month 1.6% 6 Month 3.3% 1 Year 11.9% 3 Year 9.3% 5 Year 10% 10 Year 15 Year Since launch 9.8% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.8% 2019 10.2% 2018 6.2% 2017 5.1% 2016 16.9% 2015 5.7% 2014 19.4% 2013 9.6% 2012 9.9% 2011 8.9% Fund Manager information for ICICI Prudential Long Term Plan
Name Since Tenure Manish Banthia 28 Sep 12 8.26 Yr. Anuj Tagra 15 Jan 15 5.97 Yr. Data below for ICICI Prudential Long Term Plan as on 30 Nov 20
Asset Allocation
Asset Class Value Cash 20.7% Debt 79.3% Debt Sector Allocation
Sector Value Corporate 47.98% Government 31.32% Cash Equivalent 20.7% Credit Quality
Rating Value AA 52.1% AAA 47.9% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.22% Govt Stock 2035
Sovereign Bonds | -13% ₹677 Cr 68,000,000
↑ 9,000,000 5.77% GOI 2030
Sovereign Bonds | -8% ₹406 Cr 41,000,000
↓ -7,500,000 6.19% Govt Stock 2034
Sovereign Bonds | -7% ₹377 Cr 37,900,000
↓ -27,500,000 Embassy Office Parks Reit
Debentures | -4% ₹227 Cr 1,900 Godrej Industries Limited
Debentures | -3% ₹150 Cr 1,500 ICICI Bank Limited
Debentures | -2% ₹132 Cr 1,249 State Bank Of India
Debentures | -2% ₹123 Cr 1,200 TMF Holdings Limited
Debentures | -2% ₹119 Cr 1,000 Godrej Properties Limited
Debentures | -2% ₹111 Cr 1,100 Tata Realty And Infrastructure Limited
Debentures | -2% ₹111 Cr 1,100 2. HDFC Corporate Bond Fund
CAGR/Annualized return of 9% since its launch. Ranked 2 in Corporate Bond category. Return for 2020 was 11.8% , 2019 was 10.3% and 2018 was 6.5% . HDFC Corporate Bond Fund
Growth Launch Date 29 Jun 10 NAV (15 Jan 21) ₹24.9142 ↓ -0.01 (-0.03 %) Net Assets (Cr) ₹26,279 on 30 Nov 20 Category Debt - Corporate Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.44 Sharpe Ratio 2.38 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 5.15% Effective Maturity 4 Years 7 Months 10 Days Modified Duration 3 Years 3 Months 11 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,063 31 Dec 17 ₹11,784 31 Dec 18 ₹12,549 31 Dec 19 ₹13,845 31 Dec 20 ₹15,480 Returns for HDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 15 Jan 21 Duration Returns 1 Month 0.2% 3 Month 1.6% 6 Month 2.9% 1 Year 11.5% 3 Year 9.4% 5 Year 9% 10 Year 15 Year Since launch 9% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.8% 2019 10.3% 2018 6.5% 2017 6.5% 2016 10.6% 2015 8.6% 2014 10.9% 2013 7.6% 2012 10.5% 2011 8.7% Fund Manager information for HDFC Corporate Bond Fund
Name Since Tenure Anupam Joshi 27 Oct 15 5.18 Yr. Anand Laddha 21 Oct 20 0.2 Yr. Data below for HDFC Corporate Bond Fund as on 30 Nov 20
Asset Allocation
Asset Class Value Cash 9.34% Debt 90.66% Debt Sector Allocation
Sector Value Government 45.74% Corporate 44.8% Cash Equivalent 9.34% Securitized 0.12% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.79% Govt Stock 2027
Sovereign Bonds | -7% ₹2,185 Cr 205,000,000
↓ -34,000,000 6.97% Govt Stock 2026
Sovereign Bonds | -5% ₹1,449 Cr 134,500,000
↓ -1,000,000 GOVT STOCK
Sovereign Bonds | -3% ₹1,001 Cr 100,000,000
↑ 50,000,000 8.24% Govt Stock 2027
Sovereign Bonds | -3% ₹852 Cr 75,000,000 State Bank of India
Debentures | -2% ₹706 Cr 6,500 Housing Development Finance Corporation Limited
Debentures | -2% ₹629 Cr 5,993 Reliance Industries Limited
Debentures | -2% ₹579 Cr 5,000 Mangalore Refinery & Petrochemicals Ltd.
Debentures | -2% ₹572 Cr 5,720
↑ 5,720 State Bank Of India
Debentures | -2% ₹554 Cr 5,500 LIC Housing Finance Limited
Debentures | -2% ₹547 Cr 5,000 3. Aditya Birla Sun Life Corporate Bond Fund
CAGR/Annualized return of 9.4% since its launch. Ranked 1 in Corporate Bond category. Return for 2020 was 11.9% , 2019 was 9.6% and 2018 was 7% . Aditya Birla Sun Life Corporate Bond Fund
Growth Launch Date 3 Mar 97 NAV (15 Jan 21) ₹85.5259 ↓ -0.05 (-0.06 %) Net Assets (Cr) ₹24,424 on 30 Nov 20 Category Debt - Corporate Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.39 Sharpe Ratio 3.03 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 4.87% Effective Maturity 3 Years 1 Month 28 Days Modified Duration 2 Years 6 Months 11 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,024 31 Dec 17 ₹11,743 31 Dec 18 ₹12,565 31 Dec 19 ₹13,771 31 Dec 20 ₹15,408 Returns for Aditya Birla Sun Life Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 15 Jan 21 Duration Returns 1 Month 0.1% 3 Month 1.4% 6 Month 3% 1 Year 11.3% 3 Year 9.3% 5 Year 8.9% 10 Year 15 Year Since launch 9.4% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.9% 2019 9.6% 2018 7% 2017 6.5% 2016 10.2% 2015 8.9% 2014 10.9% 2013 8.4% 2012 10.6% 2011 9.5% Fund Manager information for Aditya Birla Sun Life Corporate Bond Fund
Name Since Tenure Maneesh Dangi 1 Apr 17 3.75 Yr. Kaustubh Gupta 1 Apr 17 3.75 Yr. Data below for Aditya Birla Sun Life Corporate Bond Fund as on 30 Nov 20
Asset Allocation
Asset Class Value Cash 7.45% Debt 92.55% Debt Sector Allocation
Sector Value Corporate 49.21% Government 43.19% Cash Equivalent 7.45% Securitized 0.15% Credit Quality
Rating Value AA 3.68% AAA 96.32% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.24% Govt Stock 2027
Sovereign Bonds | -2% ₹602 Cr 53,000,000 5.77% GOI 2030
Sovereign Bonds | -2% ₹574 Cr 57,949,000
↑ 20,500,000 Larsen and Toubro Limited
Debentures | -2% ₹544 Cr 5,150 Reliance Industries Limited
Debentures | -2% ₹541 Cr 5,150 National Bank For Agriculture and Rural Development
Debentures | -2% ₹495 Cr 4,750 Power Finance Corporation Limited
Debentures | -2% ₹425 Cr 4,050 8.15% Govt Stock 2026
Sovereign Bonds | -2% ₹425 Cr 37,500,000 Rural Electrification Corporation Limited
Debentures | -2% ₹421 Cr 4,000 Reliance Industries Limited
Debentures | -2% ₹420 Cr 4,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹419 Cr 4,050 4. HDFC Banking and PSU Debt Fund
CAGR/Annualized return of 8.9% since its launch. Ranked 6 in Banking & PSU Debt category. Return for 2020 was 10.6% , 2019 was 10.2% and 2018 was 5.9% . HDFC Banking and PSU Debt Fund
Growth Launch Date 26 Mar 14 NAV (15 Jan 21) ₹17.8271 ↓ -0.01 (-0.06 %) Net Assets (Cr) ₹10,652 on 30 Nov 20 Category Debt - Banking & PSU Debt AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.26 Sharpe Ratio 1.85 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 5.43% Effective Maturity 3 Years 10 Months 17 Days Modified Duration 2 Years 10 Months 6 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,083 31 Dec 17 ₹11,784 31 Dec 18 ₹12,475 31 Dec 19 ₹13,751 31 Dec 20 ₹15,204 Returns for HDFC Banking and PSU Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 15 Jan 21 Duration Returns 1 Month 0.3% 3 Month 1.5% 6 Month 3.2% 1 Year 10.2% 3 Year 8.7% 5 Year 8.6% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2020 10.6% 2019 10.2% 2018 5.9% 2017 6.3% 2016 10.8% 2015 9.8% 2014 2013 2012 2011 Fund Manager information for HDFC Banking and PSU Debt Fund
Name Since Tenure Anil Bamboli 26 Mar 14 6.77 Yr. Anand Laddha 21 Oct 20 0.2 Yr. Data below for HDFC Banking and PSU Debt Fund as on 30 Nov 20
Asset Allocation
Asset Class Value Cash 8.23% Debt 91.77% Debt Sector Allocation
Sector Value Government 57.76% Corporate 35.76% Cash Equivalent 6.48% Credit Quality
Rating Value AA 15.29% AAA 84.67% Below B 0.04% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.79% Govt Stock 2027
Sovereign Bonds | -3% ₹320 Cr 30,000,000 State Bank Of India
Debentures | -2% ₹276 Cr 2,700 National Bank For Agriculture and Rural Development
Debentures | -2% ₹270 Cr 2,500 5.77% GOI 2030
Sovereign Bonds | -2% ₹253 Cr 25,500,000 Food Corporation of India
Debentures | -2% ₹246 Cr 2,300 NHPC Limited (National Hydroelectric Power Corporation Limited)
Debentures | -2% ₹235 Cr 2,100 5.22% GOI 2025
Sovereign Bonds | -2% ₹227 Cr 22,500,000 Housing and Urban Development Corporation Limited
Debentures | -2% ₹225 Cr 2,000 National Highways Authority of India
Debentures | -2% ₹212 Cr 2,050 State Bank of India
Debentures | -2% ₹207 Cr 2,015 5. UTI Banking & PSU Debt Fund
CAGR/Annualized return of 7.1% since its launch. Ranked 3 in Banking & PSU Debt category. Return for 2020 was 8.9% , 2019 was -1% and 2018 was 6.8% . UTI Banking & PSU Debt Fund
Growth Launch Date 3 Feb 14 NAV (15 Jan 21) ₹16.0859 ↓ 0.00 (-0.02 %) Net Assets (Cr) ₹263 on 30 Nov 20 Category Debt - Banking & PSU Debt AMC UTI Asset Management Company Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 0.31 Sharpe Ratio 2.19 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 4.13% Effective Maturity 2 Years 2 Months 6 Days Modified Duration 1 Year 8 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,168 31 Dec 17 ₹11,881 31 Dec 18 ₹12,690 31 Dec 19 ₹12,559 31 Dec 20 ₹13,675 Returns for UTI Banking & PSU Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 15 Jan 21 Duration Returns 1 Month 0% 3 Month 0.7% 6 Month 2% 1 Year 8.5% 3 Year 4.7% 5 Year 6.3% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2020 8.9% 2019 -1% 2018 6.8% 2017 6.4% 2016 11.7% 2015 8.6% 2014 2013 2012 2011 Fund Manager information for UTI Banking & PSU Debt Fund
Name Since Tenure Sudhir Agarwal 3 Feb 14 6.91 Yr. Data below for UTI Banking & PSU Debt Fund as on 30 Nov 20
Asset Allocation
Asset Class Value Cash 33.96% Debt 66.04% Debt Sector Allocation
Sector Value Government 50.51% Corporate 32.51% Cash Equivalent 16.98% Credit Quality
Rating Value AAA 96.09% Below B 3.91% Top Securities Holdings / Portfolio
Name Holding Value Quantity Food Corporation of India
Debentures | -7% ₹21 Cr 200 Small Industries Development Bank Of India
Debentures | -5% ₹15 Cr 150
↑ 150 Chennai Petroleum Corporation Limited
Debentures | -5% ₹15 Cr 150 6.19% Govt Stock 2034
Sovereign Bonds | -5% ₹15 Cr 150,000,000
↑ 50,000,000 REC Limited
Debentures | -5% ₹14 Cr 130 Housing and Urban Development Corporation Limited (Hudco)
Debentures | -5% ₹13 Cr 125 NTPC Limited
Debentures | -4% ₹11 Cr 100 Indian Railway Finance Corporation Limited
Debentures | -4% ₹11 Cr 103 Hindustan Petroleum Corporation Limited
Debentures | -4% ₹10 Cr 100 Small Industries Development Bank of India
Debentures | -4% ₹10 Cr 100
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 2021 - 2022 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