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Best Debt Mutual Funds 2019

Updated on November 17, 2019 , 13304 views

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.

Best Debt Funds

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 2019 - 2020.

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 19 - 20

Top 5 Liquid Mutual Funds

Top Liquid funds with AUM/Net Assets > 10,000 Crore.

FundNAVNet Assets (Cr)Min Investment1 MO (%)3 MO (%)6 MO (%)1 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Reliance Liquid Fund  Growth ₹4,729.22
↑ 0.75
₹28,862 100 0.41.43.277.45.37%1M 2D1M 6D
Aditya Birla Sun Life Liquid Fund Growth ₹311.5
↑ 0.05
₹50,512 5,000 0.41.43.277.45.3%29D29D
Axis Liquid Fund Growth ₹2,149.98
↑ 0.34
₹30,068 500 0.41.43.16.97.55.29%1M 1D1M 3D
ICICI Prudential Liquid Fund Growth ₹286.712
↑ 0.04
₹61,402 500 0.41.43.16.97.45.36%1M 1D1M 3D
Tata Liquid Fund Growth ₹3,050.66
↑ 0.46
₹21,439 5,000 0.41.43.16.97.45.32%1Y 6M 11D1Y 6M 11D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Ultra Short Term Bond Mutual Funds

Top Ultra Short Bond funds with AUM/Net Assets > 1,000 Crore.

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹27.789
↑ 0.01
₹19,950 10,000 2.14.69.98.78.79.44%5M 16D6M 25D
Aditya Birla Sun Life Savings Fund Growth ₹389.059
↑ 0.07
₹15,840 1,000 1.94.497.77.65.99%3M 22D4M 6D
UTI Ultra Short Term Fund Growth ₹3,050.92
↓ -0.08
₹2,576 5,000 2.1-0.13.65.677.11%3M 20D4M 23D
ICICI Prudential Ultra Short Term Fund Growth ₹19.8906
↑ 0.01
₹5,995 5,000 2.14.48.87.57.57.5%4M 20D5M 5D
SBI Magnum Ultra Short Duration Fund Growth ₹4,355.36
↑ 0.94
₹10,925 5,000 1.94.18.47.57.95.9%5M 1D5M 12D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top and Best Floating Rate Mutual Funds

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹242.54
↑ 0.02
₹6,784 1,000 2.14.79.37.67.55.86%10M 17D1Y 18D
Reliance Floating Rate Fund Growth ₹30.856
↑ 0.01
₹5,842 5,000 24.89.76.85.87.26%9M 25D10M 28D
ICICI Prudential Floating Interest Fund Growth ₹293.502
↑ 0.06
₹7,444 5,000 2.44.68.87.26.67.73%11M 26D1Y 2M 19D
DHFL Pramerica Floating Rate Fund Growth ₹10.8156
↑ 0.00
₹13 5,000 -47.2-46.2-44.4-14 15.04%1M 6D1M 13D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Best Money Market Mutual Funds

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Money Manager Fund Growth ₹263.099
↑ 0.04
₹10,452 1,000 1.74.18.57.67.95.45%3M 25D3M 25D
L&T Money Market Fund Growth ₹19.4872
↑ 0.00
₹788 10,000 3.65.28.77.77.35.75%6M 14D6M 22D
Kotak Money Market Scheme Growth ₹3,232.25
↑ 0.61
₹9,027 5,000 1.84.18.57.57.75.68%4M 24D4M 24D
UTI Money Market Fund Growth ₹2,205.23
↑ 0.37
₹7,535 10,000 1.74.18.47.57.85.55%3M 25D3M 24D
ICICI Prudential Money Market Fund Growth ₹271.794
↑ 0.06
₹10,204 500 1.84.18.37.47.75.54%4M 8D4M 15D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Short Term Bond Mutual Funds

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
DHFL Pramerica Short Maturity Fund Growth ₹32.9706
↑ 0.01
₹844-0.81.14.25.57.57%2Y 5M 19D3Y 1M 6D
Reliance Short Term Fund Growth ₹36.9204
↑ 0.01
₹5,9102.65.710.46.75.57.4%2Y 14D2Y 5M 12D
ICICI Prudential Short Term Fund Growth ₹41.0481
↑ 0.01
₹10,9092.55.610.375.87.28%1Y 10M 24D2Y 6M 29D
Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹32.8217
↑ 0.00
₹3,2202.35.6106.86.57.75%1Y 10M 24D2Y 5M 1D
UTI Short Term Income Fund Growth ₹21.0993
↑ 0.01
₹2,2022.6-6.3-3.32.667.23%2Y 1M 2D2Y 5M 1D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Medium to Long Term Bond Mutual Funds

Top Medium to Long Term Bond funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
SBI Magnum Income Fund Growth ₹48.1838
↑ 0.04
₹1,2152.5711.66.94.77.55%3Y 10M 10D5Y 6M 25D
UTI Bond Fund Growth ₹49.8904
↓ -0.03
₹557-1.4-3-5.10.549.68%4Y 7M 2D6Y 8M 9D
ICICI Prudential Bond Fund Growth ₹27.6246
↑ 0.02
₹3,3192.7712.16.54.67.26%3Y 3M 22D4Y 5M 5D
Aditya Birla Sun Life Income Fund Growth ₹86.8479
↑ 0.09
₹9681.56.711.95.35.16.46%3Y 11M 23D5Y 5M 26D
Kotak Bond Fund Growth ₹54.2357
↑ 0.06
₹1,8801.46.311.94.85.27.25%5Y 6M 4D8Y 6M 22D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Banking and PSU Debt Mutual Funds

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
HDFC Banking and PSU Debt Fund Growth ₹16.0376
↑ 0.01
₹3,8872.76.111.37.25.97.22%2Y 4D2Y 6M 25D
UTI Banking & PSU Debt Fund Growth ₹14.7273
↑ 0.01
₹1490.64.504.16.86.64%2Y 5M 19D3Y 2M 20D
Kotak Banking and PSU Debt fund Growth ₹45.3202
↑ 0.02
₹3,0682.66.611.87.76.77.11%2Y 11M 19D4Y 11D
DSP BlackRock Banking and PSU Debt Fund Growth ₹16.8467
↑ 0.01
₹2,0142.86.411.47.26.36.68%2Y 7M 20D3Y 3M 22D
Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹254.478
↑ 0.09
₹8,7202.36.311.17.26.66.52%2Y 14D2Y 9M
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Credit Risk Mutual Funds

Top Credit Risk funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Axis Credit Risk Fund Growth ₹14.7366
↑ 0.00
₹1,3372.30.855.45.99.17%1Y 6M1Y 9M 18D
SBI Credit Risk Fund Growth ₹31.0184
↑ 0.04
₹5,1552.54.77.76.56.28.75%1Y 10M 2D2Y 4M 24D
DSP BlackRock Credit Risk Fund Growth ₹28.4554
↓ 0.00
₹1,6491.81.50.42.5-2.68.08%1Y 2M 19D1Y 5M 16D
Kotak Credit Risk Fund Growth ₹21.5646
↑ 0.01
₹4,8152.75.49.476.29.08%1Y 9M 18D2Y 4M 20D
Franklin India Credit Risk Fund Growth ₹19.9086
↓ -0.01
₹6,6240.81.96.278.411.87%2Y 3M 14D3Y 3M 5D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Dynamic Bond Mutual Funds

Top Dynamic Bond funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
ICICI Prudential Long Term Plan Growth ₹24.5919
↑ 0.02
₹2,8882.15.810.86.86.28.55%3Y 3M 22D5Y 3M 14D
Franklin India Dynamic Accrual Fund Growth ₹69.104
↓ -0.01
₹4,0301.63.38.57.88.411.99%2Y 1M 28D3Y 5D
UTI Dynamic Bond Fund Growth ₹19.854
↑ 0.01
₹5360.2-1-2.81.95.28.58%4Y 6M 25D6Y 8M 11D
SBI Dynamic Bond Fund Growth ₹24.9098
↑ 0.02
₹1,1331.98.413.87.15.16.44%2Y 11M 1D4Y 22D
IDFC Dynamic Bond Fund Growth ₹24.129
↑ 0.03
₹2,0791.87.913.26.86.86.96%6Y 9M 22D10Y 5M 12D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Corporate Bond Mutual Funds

Top Corporate Bond funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
HDFC Corporate Bond Fund Growth ₹22.185
↑ 0.01
₹11,9382.1611.47.66.57.24%3Y 1M 13D4Y 3M 7D
Aditya Birla Sun Life Corporate Bond Fund Growth ₹76.1475
↑ 0.03
₹16,8932.25.510.67.676.52%1Y 2M 12D1Y 6M 22D
Kotak Corporate Bond Fund Standard Growth ₹2,628.35
↑ 0.72
₹3,4322.55.510.487.56.56%1Y 2M 26D1Y 4M 24D
ICICI Prudential Corporate Bond Fund Growth ₹20.2992
↑ 0.01
₹10,5872.55.610.47.36.46.87%1Y 9M 11D2Y 5M 12D
Reliance Prime Debt Fund Growth ₹40.8547
↑ 0.02
₹9571.63.78.276.99.48%1Y 7M 20D1Y 11M 12D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

Top 5 Gilt Mutual Funds

Top GILT funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Reliance Gilt Securities Fund Growth ₹27.1825
↑ 0.03
₹1,0901.78.515.27.686.66%5Y 10M 24D8Y 4M 20D
SBI Magnum Gilt Fund Growth ₹44.8132
↑ 0.05
₹1,9441.69.1157.25.16.06%4Y 2M 19D6Y 1M 13D
UTI Gilt Fund Growth ₹44.7125
↑ 0.06
₹5701.38.614.37.76.36.48%4Y 6M 22D7Y 6M 24D
ICICI Prudential Gilt Fund Growth ₹68.3903
↑ 0.08
₹1,1481.46.911.666.87.01%6Y 2M 8D10Y 9M 14D
DSP BlackRock Government Securities Fund Growth ₹65.1851
↑ 0.08
₹5862.18.915.46.97.46.78%6Y 4M 17D10Y 4M 17D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Nov 19

1. HDFC Corporate Bond Fund

(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 CAGR/Annualized return of 8.9% since its launch.  Ranked 2 in Corporate Bond category.  Return for 2018 was 6.5% , 2017 was 6.5% and 2016 was 10.6% .

Below is the key information for HDFC Corporate Bond Fund

HDFC Corporate Bond Fund
Growth
Launch Date 29 Jun 10
NAV (19 Nov 19) ₹22.185 ↑ 0.01   (0.05 %)
Net Assets (Cr) ₹11,938 on 31 Oct 19
Category Debt - Corporate Bond
AMC HDFC Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.44
Sharpe Ratio 3.94
Information Ratio 0.26
Alpha Ratio 2.45
Min Investment 5,000
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 7.24%
Effective Maturity 4 Years 3 Months 7 Days
Modified Duration 3 Years 1 Month 13 Days

Growth of 10,000 investment over the years.

DateValue
31 Oct 14₹10,000
31 Oct 15₹10,921
31 Oct 16₹12,045
31 Oct 17₹12,994
31 Oct 18₹13,545
31 Oct 19₹15,132

HDFC Corporate Bond Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for HDFC Corporate Bond Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Nov 19

DurationReturns
1 Month 1%
3 Month 2.1%
6 Month 6%
1 Year 11.4%
3 Year 7.6%
5 Year 8.6%
10 Year
15 Year
Since launch 8.9%
Historical performance (Yearly) on absolute basis
YearReturns
2018 6.5%
2017 6.5%
2016 10.6%
2015 8.6%
2014 10.9%
2013 7.6%
2012 10.5%
2011 8.7%
2010
2009
Fund Manager information for HDFC Corporate Bond Fund
NameSinceTenure
Anupam Joshi27 Oct 153.93 Yr.
Chirag Dagli31 Jul 190.17 Yr.

Data below for HDFC Corporate Bond Fund as on 31 Oct 19

Asset Allocation
Asset ClassValue
Cash10.66%
Debt89.34%
Debt Sector Allocation
SectorValue
Corporate51.75%
Government39.14%
Cash Equivalent9.11%
Credit Quality
RatingValue
AA3.34%
AAA96.66%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Net Current Assets
Net Current Assets | -
5%₹688 Cr
6.79% Govt Stock 2027
Sovereign Bonds | -
5%₹590 Cr59,000,000
↑ 13,500,000
Reliance Industries Limited
Debentures | -
4%₹529 Cr5,000
LIC HOUSING FINANCE LIMITED
Debentures | -
4%₹518 Cr5,000
LIC Housing Finance Limited
Debentures | -
3%₹408 Cr4,000
National Highways Authority Of India
Debentures | -
3%₹387 Cr3,750
7.17% Govt Stock 2028
Sovereign Bonds | -
3%₹383 Cr37,500,000
↑ 2,500,000
Housing Development Finance Corporation Limited
Debentures | -
3%₹342 Cr3,343
6.79% Govt Stock 2029
Sovereign Bonds | -
2%₹298 Cr30,000,000
POWER GRID CORPORATION OF INDIA LIMITED
Debentures | -
2%₹264 Cr2,500

2. HDFC Banking and PSU Debt Fund

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 CAGR/Annualized return of 8.7% since its launch.  Ranked 6 in Banking & PSU Debt category.  Return for 2018 was 5.9% , 2017 was 6.3% and 2016 was 10.8% .

Below is the key information for HDFC Banking and PSU Debt Fund

HDFC Banking and PSU Debt Fund
Growth
Launch Date 26 Mar 14
NAV (19 Nov 19) ₹16.0376 ↑ 0.01   (0.03 %)
Net Assets (Cr) ₹3,887 on 31 Oct 19
Category Debt - Banking & PSU Debt
AMC HDFC Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.26
Sharpe Ratio 4.08
Information Ratio -0.21
Alpha Ratio -2.16
Min Investment 5,000
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 7.22%
Effective Maturity 2 Years 6 Months 25 Days
Modified Duration 2 Years 4 Days

Growth of 10,000 investment over the years.

DateValue
31 Oct 14₹10,000
31 Oct 15₹11,020
31 Oct 16₹12,187
31 Oct 17₹13,150
31 Oct 18₹13,549
31 Oct 19₹15,123

HDFC Banking and PSU Debt Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for HDFC Banking and PSU Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Nov 19

DurationReturns
1 Month 1.1%
3 Month 2.7%
6 Month 6.1%
1 Year 11.3%
3 Year 7.2%
5 Year 8.6%
10 Year
15 Year
Since launch 8.7%
Historical performance (Yearly) on absolute basis
YearReturns
2018 5.9%
2017 6.3%
2016 10.8%
2015 9.8%
2014
2013
2012
2011
2010
2009
Fund Manager information for HDFC Banking and PSU Debt Fund
NameSinceTenure
Anil Bamboli26 Mar 145.6 Yr.
Chirag Dagli31 Jul 190.25 Yr.

Data below for HDFC Banking and PSU Debt Fund as on 31 Oct 19

Asset Allocation
Asset ClassValue
Cash15.82%
Debt84.18%
Debt Sector Allocation
SectorValue
Government49.51%
Corporate34.67%
Cash Equivalent15.82%
Credit Quality
RatingValue
A10.88%
AA20.28%
AAA68.72%
Below B0.13%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
National Highways Authority Of India
Debentures | -
6%₹206 Cr2,050
Food Corporation Of India
Debentures | -
5%₹191 Cr1,800
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
Debentures | -
5%₹181 Cr1,750
IDFC First Bank Limited
Certificate of Deposit | -
4%₹150 Cr15,500
Syndicate Bank
Debentures | -
4%₹135 Cr1,350
Net Current Assets
Net Current Assets | -
4%₹129 Cr
Housing Development Finance Corporation Limited
Debentures | -
4%₹128 Cr1,250
Power Grid Corporation Of India Limited
Debentures | -
4%₹127 Cr1,250
Tata International Limited
Debentures | -
4%₹125 Cr1,250
Union Bank Of India
Debentures | -
3%₹119 Cr1,220

3. ICICI Prudential Long Term Plan

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 CAGR/Annualized return of 9.6% since its launch.  Ranked 1 in Dynamic Bond category.  Return for 2018 was 6.2% , 2017 was 5.1% and 2016 was 16.9% .

Below is the key information for ICICI Prudential Long Term Plan

ICICI Prudential Long Term Plan
Growth
Launch Date 20 Jan 10
NAV (19 Nov 19) ₹24.5919 ↑ 0.02   (0.08 %)
Net Assets (Cr) ₹2,888 on 31 Oct 19
Category Debt - Dynamic Bond
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderate
Expense Ratio 1.32
Sharpe Ratio 3.07
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 8.55%
Effective Maturity 5 Years 3 Months 14 Days
Modified Duration 3 Years 3 Months 22 Days

Growth of 10,000 investment over the years.

DateValue
31 Oct 14₹10,000
31 Oct 15₹11,134
31 Oct 16₹12,581
31 Oct 17₹13,632
31 Oct 18₹14,098
31 Oct 19₹15,625

ICICI Prudential Long Term Plan SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹209,201.
Net Profit of ₹29,201
Invest Now

Returns for ICICI Prudential Long Term Plan

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Nov 19

DurationReturns
1 Month 1.1%
3 Month 2.1%
6 Month 5.8%
1 Year 10.8%
3 Year 6.8%
5 Year 9.1%
10 Year
15 Year
Since launch 9.6%
Historical performance (Yearly) on absolute basis
YearReturns
2018 6.2%
2017 5.1%
2016 16.9%
2015 5.7%
2014 19.4%
2013 9.6%
2012 9.9%
2011 8.9%
2010
2009
Fund Manager information for ICICI Prudential Long Term Plan
NameSinceTenure
Manish Banthia28 Sep 127.01 Yr.
Anuj Tagra15 Jan 154.71 Yr.

Data below for ICICI Prudential Long Term Plan as on 31 Oct 19

Asset Allocation
Asset ClassValue
Cash3.23%
Debt96.77%
Debt Sector Allocation
SectorValue
Corporate65.39%
Government30.1%
Cash Equivalent3.92%
Securitized0.59%
Credit Quality
RatingValue
AA43.85%
AAA56.15%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
GOVT STOCK
Sovereign Bonds | -
19%₹545 Cr51,950,000
↑ 27,450,000
EMBASSY OFFICE PARKS REIT
Debentures | -
7%₹199 Cr1,900
Rural Electrification Corporation Limited
Debentures | -
6%₹155 Cr1,500
RELIANCE INDUSTRIES LIMITED
Debentures | -
4%₹104 Cr1,000
TMF HOLDINGS LIMITED
Debentures | -
4%₹100 Cr1,000
↑ 1,000
Essar Oil Limited
Debentures | -
4%₹100 Cr100
Aspire Home Finance Corporation Limited
Debentures | -
4%₹100 Cr1,000
Promont Hillside Private Limited
Debentures | -
4%₹99 Cr1,000
Vedanta Limited
Debentures | -
3%₹99 Cr1,000
LIC HOUSING FINANCE LIMITED
Debentures | -
3%₹76 Cr750

4. Aditya Birla Sun Life Corporate Bond Fund

(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 CAGR/Annualized return of 9.3% since its launch.  Ranked 1 in Corporate Bond category.  Return for 2018 was 7% , 2017 was 6.5% and 2016 was 10.2% .

Below is the key information for Aditya Birla Sun Life Corporate Bond Fund

Aditya Birla Sun Life Corporate Bond Fund
Growth
Launch Date 3 Mar 97
NAV (19 Nov 19) ₹76.1475 ↑ 0.03   (0.04 %)
Net Assets (Cr) ₹16,893 on 31 Oct 19
Category Debt - Corporate Bond
AMC Birla Sun Life Asset Management Co Ltd
Rating
Risk Moderately Low
Expense Ratio 0.39
Sharpe Ratio 5.12
Information Ratio 0
Alpha Ratio 0
Min Investment 1,000
Min SIP Investment 100
Exit Load NIL
Yield to Maturity 6.52%
Effective Maturity 1 Year 6 Months 22 Days
Modified Duration 1 Year 2 Months 12 Days

Growth of 10,000 investment over the years.

DateValue
31 Oct 14₹10,000
31 Oct 15₹10,957
31 Oct 16₹12,042
31 Oct 17₹12,968
31 Oct 18₹13,632
31 Oct 19₹15,103

Aditya Birla Sun Life Corporate Bond Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for Aditya Birla Sun Life Corporate Bond Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Nov 19

DurationReturns
1 Month 0.8%
3 Month 2.2%
6 Month 5.5%
1 Year 10.6%
3 Year 7.6%
5 Year 8.5%
10 Year
15 Year
Since launch 9.3%
Historical performance (Yearly) on absolute basis
YearReturns
2018 7%
2017 6.5%
2016 10.2%
2015 8.9%
2014 10.9%
2013 8.4%
2012 10.6%
2011 9.5%
2010 3.8%
2009 -5.6%
Fund Manager information for Aditya Birla Sun Life Corporate Bond Fund
NameSinceTenure
Maneesh Dangi1 Apr 172.5 Yr.
Kaustubh Gupta1 Apr 172.5 Yr.

Data below for Aditya Birla Sun Life Corporate Bond Fund as on 31 Oct 19

Asset Allocation
Asset ClassValue
Cash11.87%
Debt88.13%
Debt Sector Allocation
SectorValue
Corporate55.31%
Government31.32%
Cash Equivalent12.01%
Securitized1.35%
Credit Quality
RatingValue
AA4.39%
AAA95.61%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ONGC Petro Additions Limited
Debentures | -
4%₹741 Cr741
Clearing Corporation Of India Limited
CBLO | -
4%₹594 Cr
MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED
Debentures | -
3%₹450 Cr4,450
POWER FINANCE CORPORATION LIMITED
Debentures | -
3%₹427 Cr4,200
Reliance Industries Limited
Debentures | -
3%₹426 Cr4,250
↑ 1,500
ORIENTAL BANK OF COMMERCE
Certificate of Deposit | -
2%₹359 Cr36,000
Power Finance Corporation Ltd.
Debentures | -
2%₹358 Cr3,550
↑ 3,550
Power Finance Corporation Ltd.
Debentures | -
2%₹353 Cr3,500
8.24% Govt Stock 2027
Sovereign Bonds | -
2%₹341 Cr31,500,000
↑ 10,000,000
Net Receivables / (Payables)
Net Current Assets | -
2%₹326 Cr

5. Franklin India Ultra Short Bond Fund - Super Institutional Plan

To provide a combination of regular income and high liquidity by investing primarily in a mix of short term debt and money market instruments.

Franklin India Ultra Short Bond Fund - Super Institutional Plan is a Debt - Ultrashort Bond fund was launched on 18 Dec 07. It is a fund with Moderate risk and has given a CAGR/Annualized return of 9% since its launch.  Return for 2018 was 8.7% , 2017 was 8.2% and 2016 was 9.7% .

Below is the key information for Franklin India Ultra Short Bond Fund - Super Institutional Plan

Franklin India Ultra Short Bond Fund - Super Institutional Plan
Growth
Launch Date 18 Dec 07
NAV (19 Nov 19) ₹27.789 ↑ 0.01   (0.02 %)
Net Assets (Cr) ₹19,950 on 31 Oct 19
Category Debt - Ultrashort Bond
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderate
Expense Ratio 0.42
Sharpe Ratio 10.31
Information Ratio 0
Alpha Ratio 0
Min Investment 10,000
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 9.44%
Effective Maturity 6 Months 25 Days
Modified Duration 5 Months 16 Days

Growth of 10,000 investment over the years.

DateValue
31 Oct 14₹10,000
31 Oct 15₹10,980
31 Oct 16₹12,038
31 Oct 17₹13,098
31 Oct 18₹14,100
31 Oct 19₹15,516

Franklin India Ultra Short Bond Fund - Super Institutional Plan SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹209,201.
Net Profit of ₹29,201
Invest Now

Returns for Franklin India Ultra Short Bond Fund - Super Institutional Plan

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Nov 19

DurationReturns
1 Month 0.7%
3 Month 2.1%
6 Month 4.6%
1 Year 9.9%
3 Year 8.7%
5 Year 9.2%
10 Year
15 Year
Since launch 9%
Historical performance (Yearly) on absolute basis
YearReturns
2018 8.7%
2017 8.2%
2016 9.7%
2015 9.7%
2014 10%
2013 10%
2012 10.3%
2011 9.4%
2010 5.9%
2009 6.1%
Fund Manager information for Franklin India Ultra Short Bond Fund - Super Institutional Plan
NameSinceTenure
Santosh Kamath25 Oct 180.85 Yr.
Pallab Roy1 Jun 0811.26 Yr.

Data below for Franklin India Ultra Short Bond Fund - Super Institutional Plan as on 31 Oct 19

Asset Allocation
Asset ClassValue
Cash19.59%
Debt65.54%
Other14.87%
Debt Sector Allocation
SectorValue
Corporate71.17%
Cash Equivalent13.09%
Government0.87%
Credit Quality
RatingValue
A30.75%
AA57.92%
AAA11.32%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Call, Cash & Other Assets
Receivables | -
15%₹2,993 Cr
Vedanta Limited
Debentures | -
4%₹790 Cr7,900
Vodafone Mobile Services Limited
Debentures | -
4%₹744 Cr7,990
DOLVI Minerals & Metals Private Limited
Debentures | -
4%₹707 Cr3,910
Renew Power Ventures Private Limited
Debentures | -
3%₹674 Cr6,740
JM FINANCIAL CREDIT SOLUTIONS LIMITED
Debentures | -
3%₹540 Cr5,400
REC LIMITED
Commercial Paper | -
2%₹465 Cr9,500
Indostar Capital Finance Limited
Debentures | -
2%₹440 Cr4,400
Bharti Airtel Limited
Debentures | -
2%₹399 Cr4,000
↑ 500
INDOSTAR CAPITAL FINANCE LIMITED
Debentures | -
2%₹390 Cr3,900
↑ 3,900

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.

How-to-select-best-debt-funds

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?

  1. Open Free Investment Account for Lifetime at Fincash.com.

  2. Complete your Registration and KYC Process

  3. Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

    Get Started

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 2019 - 2020 and start investing!_

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.
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Amol Vyas, posted on 14 Jan 19 5:50 PM

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

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