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Best Debt Mutual Funds 2021

Updated on January 14, 2021 , 36673 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 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.

FundNAVNet Assets (Cr)Min Investment1 MO (%)3 MO (%)6 MO (%)1 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Tata Liquid Fund Growth ₹3,203.71
↑ 0.15
₹18,528 5,000 0.20.71.54.24.30%1Y 4M 17D
Aditya Birla Sun Life Liquid Fund Growth ₹327.135
↑ 0.01
₹34,970 5,000 0.20.71.64.24.33.01%1M 2D1M 2D
ICICI Prudential Liquid Fund Growth ₹301.056
↑ 0.02
₹46,016 500 0.20.71.64.24.32.98%1M 5D1M 7D
Axis Liquid Fund Growth ₹2,257.6
↑ 0.11
₹27,868 500 0.20.71.64.24.32.94%26D1M 5D
Nippon India Liquid Fund  Growth ₹4,964.42
↑ 0.10
₹23,106 100 0.20.71.54.14.32.94%27D29D
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.

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Savings Fund Growth ₹419.332
↓ 0.00
₹17,295 1,000 12.46.87.673.76%5M 16D6M 7D
UTI Ultra Short Term Fund Growth ₹3,235.91
↑ 0.43
₹1,557 5,000 12.15.15.15.35.11%3M 27D3M 29D
ICICI Prudential Ultra Short Term Fund Growth ₹21.3752
↑ 0.00
₹9,030 5,000 12.56.37.46.54.61%4M 20D5M 12D
SBI Magnum Ultra Short Duration Fund Growth ₹4,643.07
↑ 0.28
₹14,533 5,000 0.81.95.77.25.90%
Kotak Savings Fund Growth ₹33.4974
↑ 0.00
₹13,560 5,000 0.81.85.675.83.56%5M 1D5M 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

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹264.625
↓ -0.14
₹7,492 1,000 1.12.68.18.18.64.06%1Y 1M 2D1Y 3M 11D
Nippon India Floating Rate Fund Growth ₹34.503
↓ -0.02
₹15,521 5,000 1.4310.88.511.34.63%2Y 11D2Y 8M 16D
ICICI Prudential Floating Interest Fund Growth ₹324.282
↑ 0.19
₹11,473 5,000 249.48.29.55.36%1Y 2M 8D3Y 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

FundNAVNet Assets (Cr)Min Investment3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Money Manager Fund Growth ₹282.58
↑ 0.03
₹12,717 1,000 0.92.16.57.56.63.47%4M 2D4M 2D
ICICI Prudential Money Market Fund Growth ₹290.72
↑ 0.04
₹12,412 500 0.826.17.26.23.32%3M 28D4M 3D
UTI Money Market Fund Growth ₹2,355.04
↑ 0.32
₹8,317 10,000 0.925.97.263.36%4M 10D4M 11D
Kotak Money Market Scheme Growth ₹3,439.21
↑ 0.29
₹11,040 5,000 0.91.95.57.15.73.39%4M 6D4M 10D
L&T Money Market Fund Growth ₹20.6518
↑ 0.00
₹1,032 10,000 0.71.55.26.95.43.42%4M 2D4M 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

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
PGIM India Short Maturity Fund Growth ₹35.3002
↓ -0.01
₹420.72847.84.38%2Y 2M 1D2Y 6M 14D
Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹36.432
↓ -0.02
₹8,5321.34.110.58.611.15.17%2Y 6M 7D3Y 1M 24D
ICICI Prudential Short Term Fund Growth ₹45.716
↓ -0.02
₹22,8021.63.110.48.610.65.11%2Y 4M 28D3Y 6M
UTI Short Term Income Fund Growth ₹23.3624
↓ -0.01
₹3,30212.49.93.910.54.9%1Y 11M 19D2Y 6M 4D
Nippon India Short Term Fund Growth ₹40.5109
↓ -0.02
₹8,9711.32.8989.55.11%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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
SBI Magnum Income Fund Growth ₹54.6901
↓ -0.08
₹1,7101.33.211.39.211.60%
Aditya Birla Sun Life Income Fund Growth ₹98.024
↓ -0.03
₹1,6851.82.412.79.212.86.36%5Y 6M 29D8Y 1M 10D
ICICI Prudential Bond Fund Growth ₹30.9311
↓ -0.03
₹4,3051.12.511.28.811.50%
Kotak Bond Fund Growth ₹61.2703
↓ -0.04
₹1,6462.53.112.89.312.35.59%5Y 5M 12D9Y 7M 17D
HDFC Income Fund Growth ₹46.8194
↓ -0.08
₹6881.32.49.47.29.36.34%5Y 8M 23D8Y 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

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
HDFC Banking and PSU Debt Fund Growth ₹17.8271
↓ -0.01
₹10,6521.53.210.28.710.65.43%2Y 10M 6D3Y 10M 17D
UTI Banking & PSU Debt Fund Growth ₹16.0859
↓ 0.00
₹2630.728.54.78.94.13%1Y 8M 12D2Y 2M 6D
Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹283.096
↓ -0.14
₹15,0191.42.710.4910.94.93%2Y 10M 10D3Y 8M 1D
DSP BlackRock Banking and PSU Debt Fund Growth ₹18.6501
↓ -0.01
₹3,5760.92.310.18.810.94.63%2Y 9M 7D3Y 3M 18D
Kotak Banking and PSU Debt fund Growth ₹50.3808
↓ -0.01
₹10,2151.62.810.19.210.55.31%2Y 10M 13D3Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Axis Credit Risk Fund Growth ₹16.0873
↓ 0.00
₹5701.93.986.18.27.77%1Y 6M2Y 1M 6D
HDFC Credit Risk Debt Fund Growth ₹18.0638
↓ 0.00
₹6,4803.15.510.98.310.98.55%2Y 1M 2D2Y 7M 13D
SBI Credit Risk Fund Growth ₹34.0583
↓ -0.02
₹3,6991.84.29.27.39.80%
Kotak Credit Risk Fund Growth ₹23.1998
↓ 0.00
₹1,8511.33.66.47.26.67.49%1Y 9M 22D2Y 6M 11D
Nippon India Credit Risk Fund Growth ₹24.259
↑ 0.00
₹1,2842.54.7-5.90.6-5.911.69%1Y 4M 2D1Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
ICICI Prudential Long Term Plan Growth ₹27.8307
↓ -0.02
₹5,0391.63.311.99.311.86.57%4Y 4M 2D6Y 5M 8D
SBI Dynamic Bond Fund Growth ₹27.6239
↓ -0.05
₹2,4090.71.59.89.210.40%
IDFC Dynamic Bond Fund Growth ₹27.2426
↓ -0.05
₹2,97811.813.11012.95.97%6Y 29D8Y 22D
Axis Dynamic Bond Fund Growth ₹23.0238
↓ 0.00
₹1,3581.3212.29.712.36.41%6Y 2M 12D8Y 10M 24D
Aditya Birla Sun Life Dynamic Bond Fund Growth ₹34.2519
↓ -0.01
₹1,6901.13.19.54.99.76.75%3Y 2M 1D4Y 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
HDFC Corporate Bond Fund Growth ₹24.9142
↓ -0.01
₹26,2791.62.911.59.411.85.15%3Y 3M 11D4Y 7M 10D
Aditya Birla Sun Life Corporate Bond Fund Growth ₹85.5259
↓ -0.05
₹24,4241.4311.39.311.94.87%2Y 6M 11D3Y 1M 28D
ICICI Prudential Corporate Bond Fund Growth ₹22.5793
↓ 0.00
₹18,1551.42.810.28.810.44.93%2Y 11M 8D4Y 4M 28D
Kotak Corporate Bond Fund Standard Growth ₹2,893.69
↓ -1.86
₹7,9801.339.28.89.74.74%1Y 10M 24D2Y 4M 17D
Nippon India Prime Debt Fund Growth ₹45.0824
↓ -0.02
₹1,6931.63.597.99.54.95%1Y 8M 8D2Y 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 GILT funds with AUM/Net Assets > 500 Crore.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2020 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
ICICI Prudential Gilt Fund Growth ₹77.852
↓ -0.09
₹4,8411.321310.112.60%
Aditya Birla Sun Life Government Securities Fund Growth ₹63.4799
↓ -0.11
₹56711.811.89.912.15.96%6Y 7M 10D9Y 4M 17D
SBI Magnum Constant Maturity Fund Growth ₹49.715
↓ -0.13
₹8090.92.111.710.911.60%
Nippon India Gilt Securities Fund Growth ₹30.2784
↓ -0.04
₹2,1270.81.411.410.511.25.71%6Y 10M 13D10Y 7M 20D
SBI Magnum Gilt Fund Growth ₹50.2585
↓ -0.10
₹4,35611.811.49.811.70%
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

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 9.8% since its launch.  Ranked 1 in Dynamic Bond category.  Return for 2020 was 11.8% , 2019 was 10.2% and 2018 was 6.2% .

Below is the key information for ICICI Prudential Long Term Plan

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.

DateValue
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

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 ₹212,284.
Net Profit of ₹32,284
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 15 Jan 21

DurationReturns
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
YearReturns
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
NameSinceTenure
Manish Banthia28 Sep 128.26 Yr.
Anuj Tagra15 Jan 155.97 Yr.

Data below for ICICI Prudential Long Term Plan as on 30 Nov 20

Asset Allocation
Asset ClassValue
Cash20.7%
Debt79.3%
Debt Sector Allocation
SectorValue
Corporate47.98%
Government31.32%
Cash Equivalent20.7%
Credit Quality
RatingValue
AA52.1%
AAA47.9%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
6.22% Govt Stock 2035
Sovereign Bonds | -
13%₹677 Cr68,000,000
↑ 9,000,000
5.77% GOI 2030
Sovereign Bonds | -
8%₹406 Cr41,000,000
↓ -7,500,000
6.19% Govt Stock 2034
Sovereign Bonds | -
7%₹377 Cr37,900,000
↓ -27,500,000
Embassy Office Parks Reit
Debentures | -
4%₹227 Cr1,900
Godrej Industries Limited
Debentures | -
3%₹150 Cr1,500
ICICI Bank Limited
Debentures | -
2%₹132 Cr1,249
State Bank Of India
Debentures | -
2%₹123 Cr1,200
TMF Holdings Limited
Debentures | -
2%₹119 Cr1,000
Godrej Properties Limited
Debentures | -
2%₹111 Cr1,100
Tata Realty And Infrastructure Limited
Debentures | -
2%₹111 Cr1,100

2. 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 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% .

Below is the key information for HDFC Corporate Bond Fund

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.

DateValue
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

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 ₹209,201.
Net Profit of ₹29,201
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 15 Jan 21

DurationReturns
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
YearReturns
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
NameSinceTenure
Anupam Joshi27 Oct 155.18 Yr.
Anand Laddha21 Oct 200.2 Yr.

Data below for HDFC Corporate Bond Fund as on 30 Nov 20

Asset Allocation
Asset ClassValue
Cash9.34%
Debt90.66%
Debt Sector Allocation
SectorValue
Government45.74%
Corporate44.8%
Cash Equivalent9.34%
Securitized0.12%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
6.79% Govt Stock 2027
Sovereign Bonds | -
7%₹2,185 Cr205,000,000
↓ -34,000,000
6.97% Govt Stock 2026
Sovereign Bonds | -
5%₹1,449 Cr134,500,000
↓ -1,000,000
GOVT STOCK
Sovereign Bonds | -
3%₹1,001 Cr100,000,000
↑ 50,000,000
8.24% Govt Stock 2027
Sovereign Bonds | -
3%₹852 Cr75,000,000
State Bank of India
Debentures | -
2%₹706 Cr6,500
Housing Development Finance Corporation Limited
Debentures | -
2%₹629 Cr5,993
Reliance Industries Limited
Debentures | -
2%₹579 Cr5,000
Mangalore Refinery & Petrochemicals Ltd.
Debentures | -
2%₹572 Cr5,720
↑ 5,720
State Bank Of India
Debentures | -
2%₹554 Cr5,500
LIC Housing Finance Limited
Debentures | -
2%₹547 Cr5,000

3. 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 9.4% since its launch.  Ranked 1 in Corporate Bond category.  Return for 2020 was 11.9% , 2019 was 9.6% and 2018 was 7% .

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 (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.

DateValue
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

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 15 Jan 21

DurationReturns
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
YearReturns
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
NameSinceTenure
Maneesh Dangi1 Apr 173.75 Yr.
Kaustubh Gupta1 Apr 173.75 Yr.

Data below for Aditya Birla Sun Life Corporate Bond Fund as on 30 Nov 20

Asset Allocation
Asset ClassValue
Cash7.45%
Debt92.55%
Debt Sector Allocation
SectorValue
Corporate49.21%
Government43.19%
Cash Equivalent7.45%
Securitized0.15%
Credit Quality
RatingValue
AA3.68%
AAA96.32%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
8.24% Govt Stock 2027
Sovereign Bonds | -
2%₹602 Cr53,000,000
5.77% GOI 2030
Sovereign Bonds | -
2%₹574 Cr57,949,000
↑ 20,500,000
Larsen and Toubro Limited
Debentures | -
2%₹544 Cr5,150
Reliance Industries Limited
Debentures | -
2%₹541 Cr5,150
National Bank For Agriculture and Rural Development
Debentures | -
2%₹495 Cr4,750
Power Finance Corporation Limited
Debentures | -
2%₹425 Cr4,050
8.15% Govt Stock 2026
Sovereign Bonds | -
2%₹425 Cr37,500,000
Rural Electrification Corporation Limited
Debentures | -
2%₹421 Cr4,000
Reliance Industries Limited
Debentures | -
2%₹420 Cr4,000
Housing Development Finance Corporation Limited
Debentures | -
2%₹419 Cr4,050

4. 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 8.9% 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% .

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 (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.

DateValue
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

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 15 Jan 21

DurationReturns
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
YearReturns
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
NameSinceTenure
Anil Bamboli26 Mar 146.77 Yr.
Anand Laddha21 Oct 200.2 Yr.

Data below for HDFC Banking and PSU Debt Fund as on 30 Nov 20

Asset Allocation
Asset ClassValue
Cash8.23%
Debt91.77%
Debt Sector Allocation
SectorValue
Government57.76%
Corporate35.76%
Cash Equivalent6.48%
Credit Quality
RatingValue
AA15.29%
AAA84.67%
Below B0.04%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
6.79% Govt Stock 2027
Sovereign Bonds | -
3%₹320 Cr30,000,000
State Bank Of India
Debentures | -
2%₹276 Cr2,700
National Bank For Agriculture and Rural Development
Debentures | -
2%₹270 Cr2,500
5.77% GOI 2030
Sovereign Bonds | -
2%₹253 Cr25,500,000
Food Corporation of India
Debentures | -
2%₹246 Cr2,300
NHPC Limited (National Hydroelectric Power Corporation Limited)
Debentures | -
2%₹235 Cr2,100
5.22% GOI 2025
Sovereign Bonds | -
2%₹227 Cr22,500,000
Housing and Urban Development Corporation Limited
Debentures | -
2%₹225 Cr2,000
National Highways Authority of India
Debentures | -
2%₹212 Cr2,050
State Bank of India
Debentures | -
2%₹207 Cr2,015

5. 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 7.1% since its launch.  Ranked 3 in Banking & PSU Debt category.  Return for 2020 was 8.9% , 2019 was -1% and 2018 was 6.8% .

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

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.

DateValue
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

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 ₹200,132.
Net Profit of ₹20,132
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 15 Jan 21

DurationReturns
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
YearReturns
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
NameSinceTenure
Sudhir Agarwal3 Feb 146.91 Yr.

Data below for UTI Banking & PSU Debt Fund as on 30 Nov 20

Asset Allocation
Asset ClassValue
Cash33.96%
Debt66.04%
Debt Sector Allocation
SectorValue
Government50.51%
Corporate32.51%
Cash Equivalent16.98%
Credit Quality
RatingValue
AAA96.09%
Below B3.91%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Food Corporation of India
Debentures | -
7%₹21 Cr200
Small Industries Development Bank Of India
Debentures | -
5%₹15 Cr150
↑ 150
Chennai Petroleum Corporation Limited
Debentures | -
5%₹15 Cr150
6.19% Govt Stock 2034
Sovereign Bonds | -
5%₹15 Cr150,000,000
↑ 50,000,000
REC Limited
Debentures | -
5%₹14 Cr130
Housing and Urban Development Corporation Limited (Hudco)
Debentures | -
5%₹13 Cr125
NTPC Limited
Debentures | -
4%₹11 Cr100
Indian Railway Finance Corporation Limited
Debentures | -
4%₹11 Cr103
Hindustan Petroleum Corporation Limited
Debentures | -
4%₹10 Cr100
Small Industries Development Bank of India
Debentures | -
4%₹10 Cr100

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 2021 - 2022 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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