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Best Debt Mutual Funds 2023

Updated on March 22, 2023 , 60734 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 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.

FundNAVNet Assets (Cr)Min Investment1 MO (%)3 MO (%)6 MO (%)1 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Axis Liquid Fund Growth ₹2,479.89
↑ 0.33
₹27,226 500 0.61.73.35.64.97.23%1M 7D1M 8D
Aditya Birla Sun Life Liquid Fund Growth ₹359.119
↑ 0.03
₹28,072 5,000 0.61.73.25.64.87.22%1M 2D1M 2D
ICICI Prudential Liquid Fund Growth ₹330.076
↑ 0.04
₹47,246 500 0.51.63.25.54.87.22%1M 7D1M 10D
Nippon India Liquid Fund  Growth ₹5,443.71
↑ 0.59
₹25,358 100 0.51.63.25.54.87.35%1M 13D1M 16D
Tata Liquid Fund Growth ₹3,512.51
↑ 0.49
₹18,212 5,000 0.51.63.25.54.87.21%1M 7D1M 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.

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Savings Fund Growth ₹463.058
↑ 0.00
₹14,457 1,000 1.73.25.35.74.87.83%5M 19D6M
UTI Ultra Short Term Fund Growth ₹3,625.45
↑ 0.36
₹2,131 5,000 1.634.95.64.27.51%4M 25D4M 30D
ICICI Prudential Ultra Short Term Fund Growth ₹23.5603
↑ 0.00
₹12,447 5,000 1.63.15.25.44.57.81%4M 28D5M 23D
Kotak Savings Fund Growth ₹36.6187
↑ 0.00
₹12,325 5,000 1.63.15.14.94.57.69%4M 20D6M 18D
SBI Magnum Ultra Short Duration Fund Growth ₹5,085.03
↑ 1.16
₹8,908 5,000 1.63.25.154.57.53%5M 5D5M 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

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹292.265
↑ 0.04
₹12,365 1,000 1.73.35.46.44.87.86%8M 23D9M 22D
ICICI Prudential Floating Interest Fund Growth ₹354.81
↑ 0.00
₹11,651 5,000 1.42.95.56.44.37.88%6M 11D8Y 4M 24D
Nippon India Floating Rate Fund Growth ₹37.7293
↑ 0.01
₹7,288 5,000 1.43.14.36.83.87.73%2Y 3M 29D3Y 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

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Money Manager Fund Growth ₹312.258
↑ 0.02
₹13,095 1,000 1.83.45.55.74.87.76%5M 19D5M 19D
UTI Money Market Fund Growth ₹2,601.64
↑ 0.33
₹7,898 10,000 1.83.45.65.34.97.28%4M 6D4M 6D
Kotak Money Market Scheme Growth ₹3,794.64
↑ 0.33
₹14,248 5,000 1.73.35.55.14.97.68%5M 16D5M 16D
ICICI Prudential Money Market Fund Growth ₹320.285
↑ 0.04
₹11,476 500 1.73.35.45.44.77.57%5M 29D6M 14D
L&T Money Market Fund Growth ₹22.4127
↑ 0.00
₹717 10,000 1.634.74.647.57%7M 22D7M 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

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
PGIM India Short Maturity Fund Growth ₹38.1045
↑ 0.02
₹291.42.945.73.37.12%11M 26D1Y 2M 12D
ICICI Prudential Short Term Fund Growth ₹50.4003
↑ 0.01
₹14,5611.53.35.76.94.78.1%1Y 5M 12D4Y 11M 19D
Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹40.0172
↑ 0.02
₹5,0451.53.14.87.34.28.02%2Y 7D2Y 6M 14D
UTI Short Term Income Fund Growth ₹26.702
↑ 0.01
₹2,2701.53.14.58.13.87.77%1Y 7M 28D2Y 3M
Nippon India Short Term Fund Growth ₹44.2674
↑ 0.02
₹5,1471.333.66.13.27.91%2Y 3M 29D2Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
SBI Magnum Income Fund Growth ₹59.3548
↑ 0.08
₹1,5111.63.64.46.437.87%5Y 5M 1D8Y 4M 17D
ICICI Prudential Bond Fund Growth ₹33.3283
↑ 0.03
₹2,2231.53.34.86.53.17.75%2Y 9M 4D5Y 9M 22D
Aditya Birla Sun Life Income Fund Growth ₹105.908
↑ 0.08
₹1,4971.53.53.16.92.47.63%3Y 9M 4D4Y 9M 18D
Kotak Bond Fund Growth ₹64.7033
↑ 0.07
₹1,5851.43.13.25.61.77.89%3Y 1M 17D7Y 8M 16D
HDFC Income Fund Growth ₹48.8477
↑ 0.05
₹5291.22.92.44.20.97.55%5Y 4M 5D9Y 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

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
UTI Banking & PSU Debt Fund Growth ₹18.5085
↑ 0.00
₹5251.43.410.87.910.37.56%3Y 2M 23D3Y 11M 5D
HDFC Banking and PSU Debt Fund Growth ₹19.3538
↑ 0.00
₹4,8061.42.946.53.37.64%1Y 11M 20D3Y 1M 28D
ICICI Prudential Banking and PSU Debt Fund Growth ₹27.4505
↓ 0.00
₹7,2661.53.15.36.74.37.99%2Y 18D7Y 2M 12D
Kotak Banking and PSU Debt fund Growth ₹54.9609
↑ 0.01
₹5,2571.43.24.36.63.68.15%2Y 7M 2D6Y 10M 17D
Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹308.486
↑ 0.04
₹7,9941.53.14.26.73.77.76%2Y 4M 10D3Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Axis Credit Risk Fund Growth ₹17.9771
↑ 0.01
₹6211.73.34.66.648.69%1Y 7M 10D1Y 11M 12D
SBI Credit Risk Fund Growth ₹37.7861
↑ 0.02
₹2,7831.53.14.76.84.28.33%1Y 11M 8D3Y 7M 2D
HDFC Credit Risk Debt Fund Growth ₹20.2194
↑ 0.02
₹8,4381.434.17.53.78.6%1Y 11M 5D2Y 6M 10D
Kotak Credit Risk Fund Growth ₹24.8493
↑ 0.08
₹1,2051.12.40.95.10.98.29%1Y 8M 8D2Y 11M 23D
Nippon India Credit Risk Fund Growth ₹28.924
↑ 0.00
₹9271.33.24.28.93.98.71%1Y 10M 2D2Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
ICICI Prudential Long Term Plan Growth ₹30.7897
↑ 0.01
₹6,7551.53.45.86.94.58.19%2Y 1M 10D5Y 10M 24D
SBI Dynamic Bond Fund Growth ₹29.8874
↑ 0.04
₹2,4081.53.55.45.44.27.47%6Y 11D10Y 8M 23D
Aditya Birla Sun Life Dynamic Bond Fund Growth ₹38.6125
↑ 0.03
₹1,7951.53.277.667.91%2Y 8M 19D3Y 6M 29D
HDFC Dynamic Debt Fund Growth ₹75.46
↑ 0.07
₹5281.433.46.51.67.52%2Y 7M 12D6Y 4M 28D
Axis Dynamic Bond Fund Growth ₹24.7111
↑ 0.02
₹1,7331.13.23.26.42.17.69%5Y 11D6Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Corporate Bond Fund Growth ₹94.1193
↑ 0.02
₹12,1211.53.44.67.24.18%1Y 8M 23D2Y 2M 1D
HDFC Corporate Bond Fund Growth ₹27.1019
↑ 0.01
₹23,4871.43.13.96.73.37.6%2Y 7M 6D5Y 22D
ICICI Prudential Corporate Bond Fund Growth ₹24.8993
↓ -0.01
₹16,9981.53.25.56.84.57.98%1Y 1M 17D4Y 5M 16D
Nippon India Prime Debt Fund Growth ₹49.9613
↑ 0.01
₹1,7021.53.54.86.54.37.92%2Y 7M 24D3Y 4M 6D
Kotak Corporate Bond Fund Standard Growth ₹3,153.72
↓ -0.11
₹8,8811.334.26.23.78.02%1Y 8M 23D3Y 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 GILT funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2022 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
ICICI Prudential Gilt Fund Growth ₹85.0375
↑ 0.03
₹2,6931.535.76.33.77.56%1Y 7M 6D8Y 8M 19D
SBI Magnum Gilt Fund Growth ₹55.0026
↑ 0.08
₹4,3011.63.75.664.27.45%6Y 4M 10D11Y 9M 11D
UTI Gilt Fund Growth ₹52.7494
↑ 0.06
₹5171.53.355.12.97.05%3Y 8M 26D5Y 3M 18D
SBI Magnum Constant Maturity Fund Growth ₹52.6345
↑ 0.09
₹8711.73.83.84.91.37.58%6Y 9M 7D9Y 8M 1D
Nippon India Gilt Securities Fund Growth ₹32.0317
↑ 0.05
₹1,1591.43.23.74.82.17.58%4Y 6M 18D6Y 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

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 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% .

Below is the key information for UTI Dynamic Bond Fund

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.

DateValue
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

UTI Dynamic 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 ₹197,169.
Net Profit of ₹17,169
Invest Now

Returns for UTI Dynamic 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 24 Mar 23

DurationReturns
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
YearReturns
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
NameSinceTenure
Sudhir Agarwal1 Dec 211.17 Yr.

Data below for UTI Dynamic Bond Fund as on 28 Feb 23

Asset Allocation
Asset ClassValue
Cash47.85%
Debt52.15%
Debt Sector Allocation
SectorValue
Government54.4%
Cash Equivalent31.34%
Corporate14.26%
Credit Quality
RatingValue
AA6.91%
AAA93.09%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -
22%₹100 Cr1,000,000,000
↑ 500,000,000
7.26 8/22/2032 12:00:00 Am
Sovereign Bonds | -
13%₹60 Cr600,000,000
↓ -350,000,000
7.64% MP Sdl 2033
Sovereign Bonds | -
6%₹25 Cr250,000,000
↑ 250,000,000
Indian Railway Finance Corporation Limited
Debentures | -
6%₹25 Cr2,500
182 DTB 23032023
Sovereign Bonds | -
3%₹15 Cr150,000,000
Punjab National Bank
Debentures | -
2%₹10 Cr100
Can Fin Homes Limited
Debentures | -
2%₹10 Cr100
Tata Capital Limited
Debentures | -
1%₹5 Cr50
Net Current Assets
Net Current Assets | -
28%₹124 Cr
Canara Bank
Certificate of Deposit | -
6%₹25 Cr250,000,000

2. UTI Banking & PSU Debt Fund

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 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% .

Below is the key information for UTI Banking & PSU Debt Fund

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.

DateValue
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

UTI Banking & 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 ₹197,169.
Net Profit of ₹17,169
Invest Now

Returns for UTI Banking & 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 24 Mar 23

DurationReturns
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
YearReturns
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
NameSinceTenure
Anurag Mittal1 Dec 211.17 Yr.

Data below for UTI Banking & PSU Debt Fund as on 28 Feb 23

Asset Allocation
Asset ClassValue
Cash5.77%
Debt94.23%
Debt Sector Allocation
SectorValue
Government47.38%
Corporate46.85%
Cash Equivalent5.77%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -
21%₹110 Cr1,100,000,000
↓ -150,000,000
Power Finance Corporation Ltd.
Debentures | -
7%₹40 Cr400
↑ 50
National Housing Bank
Debentures | -
7%₹40 Cr400
Axis Bank Limited
Debentures | -
6%₹30 Cr300
National Bank For Agriculture And Rural Development
Debentures | -
5%₹26 Cr250
Export Import Bank Of India
Debentures | -
5%₹25 Cr250
Indian Railway Finance Corporation Limited
Debentures | -
5%₹25 Cr250
Small Industries Development Bank Of India
Debentures | -
5%₹25 Cr250
Rec Limited
Debentures | -
5%₹25 Cr250
ICICI Bank Limited
Debentures | -
4%₹24 Cr250

3. PGIM India Credit Risk Fund

(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 CAGR/Annualized return of 6.3% since its launch.  Ranked 2 in Credit Risk category. .

Below is the key information for PGIM India Credit Risk Fund

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.

DateValue
28 Feb 18₹10,000
28 Feb 19₹10,549
29 Feb 20₹10,960
28 Feb 21₹10,713

PGIM India Credit Risk Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹194,235.
Net Profit of ₹14,235
Invest Now

Returns for PGIM India Credit Risk Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23

DurationReturns
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
YearReturns
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
Fund Manager information for PGIM India Credit Risk Fund
NameSinceTenure

Data below for PGIM India Credit Risk Fund as on 31 Dec 21

Asset Allocation
Asset ClassValue
Debt Sector Allocation
SectorValue
Credit Quality
RatingValue
Top Securities Holdings / Portfolio
NameHoldingValueQuantity

4. 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 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% .

Below is the key information for ICICI Prudential Long Term Plan

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.

DateValue
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

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 ₹203,125.
Net Profit of ₹23,125
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 24 Mar 23

DurationReturns
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
YearReturns
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
NameSinceTenure
Manish Banthia28 Sep 1210.35 Yr.
Anuj Tagra15 Jan 158.05 Yr.

Data below for ICICI Prudential Long Term Plan as on 28 Feb 23

Asset Allocation
Asset ClassValue
Cash13.55%
Debt86.45%
Debt Sector Allocation
SectorValue
Government45.32%
Corporate43.63%
Cash Equivalent11.06%
Credit Quality
RatingValue
AA35.62%
AAA64.38%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.42 9/22/2033 12:00:00 Am
Sovereign Bonds | -
12%₹770 Cr77,450,350
7.26 8/22/2032 12:00:00 Am
Sovereign Bonds | -
11%₹705 Cr70,932,300
↓ -20,000,000
7.01 10/4/2028 12:00:00 Am
Sovereign Bonds | -
7%₹481 Cr48,878,150
7.69 10/30/2034 12:00:00 Am
Sovereign Bonds | -
7%₹448 Cr45,960,800
7.38 6/20/2027 12:00:00 Am
Sovereign Bonds | -
6%₹419 Cr41,735,270
Embassy Office Parks Reit
Debentures | -
2%₹122 Cr1,250
Motilal Oswal Finvest Limited
Debentures | -
2%₹119 Cr1,200
↑ 1,200
Tata Realty And Infrastructure Limited
Debentures | -
2%₹109 Cr1,100
Varanasi Sangam Expressway Private Limited
Debentures | -
2%₹101 Cr1,080
Tata Housing Development Company Limited
Debentures | -
2%₹100 Cr10,000

5. Principal Cash Management Fund

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 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% .

Below is the key information for Principal Cash Management Fund

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.

DateValue
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

Principal Cash Management Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹191,330.
Net Profit of ₹11,330
Invest Now

Returns for Principal Cash Management Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Mar 23

DurationReturns
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
YearReturns
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
NameSinceTenure
Dwijendra Srivastava1 Jan 221.08 Yr.
Sandeep Agarwal16 May 220.71 Yr.

Data below for Principal Cash Management Fund as on 28 Feb 23

Asset Allocation
Asset ClassValue
Cash98.05%
Debt1.95%
Debt Sector Allocation
SectorValue
Cash Equivalent70.22%
Corporate19.24%
Government10.54%
Credit Quality
RatingValue
AA1.71%
AAA98.29%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Treps
CBLO/Reverse Repo | -
27%₹1,013 Cr
Axis Bank Limited
Certificate of Deposit | -
4%₹150 Cr3,000
Dbs Bank India Limited
Certificate of Deposit | -
4%₹139 Cr2,800
Small Industries Development Bank Of India
Commercial Paper | -
3%₹100 Cr2,000
Birla Group Holdings Private Limited
Commercial Paper | -
3%₹100 Cr2,000
Julius Baer Capital (India) Private Limited
Commercial Paper | -
3%₹100 Cr2,000
ICICI Home Finance Company Limited
Commercial Paper | -
3%₹100 Cr2,000
Redington Limited
Commercial Paper | -
3%₹100 Cr2,000
Reliance Jio Infocomm Limited
Commercial Paper | -
3%₹99 Cr2,000
91 DTB 13042023
Sovereign Bonds | -
3%₹99 Cr10,000,000

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.

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 2023 - 2024 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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