Table of Contents
- Why To Invest in Debt Mutual Funds?
- Risks In Debt Mutual Funds
- Debt Mutual Fund Taxation
- Best Debt Mutual Funds in India for Investments FY 20 - 21
- Top 5 Liquid Mutual Funds
- Top 5 Ultra Short Term Bond Mutual Funds
- Top and Best Floating Rate Mutual Funds
- Top 5 Best Money Market Mutual Funds
- Top 5 Short Term Bond Mutual Funds
- Top 5 Medium to Long Term Bond Mutual Funds
- Top 5 Banking and PSU Debt Mutual Funds
- Top 5 Credit Risk Mutual Funds
- Top 5 Dynamic Bond Mutual Funds
- Top 5 Corporate Bond Mutual Funds
- Top 5 Gilt Mutual Funds
- How to Evaluate Best Debt Mutual Funds
- Things to consider as an investor
- How to Invest in Best Debt Funds Online?
- Conclusion
Top 5 Funds
Best Debt Mutual Funds 2020
Best debt funds vary according to the tenor of investment of the investor. Investors need to be clear on their time horizon of investment when selecting the best Debt fund for their investment and also factor in the interest rate scenario.
For investors with a very short holding period, say for a couple of days to a month, Liquid Funds and ultra-short term funds may be relevant. When the time horizon is one to two years then short-term funds may be the desired vehicle. For longer tenors, for more than 3 years, long-term debt funds are the most preferred instruments by investors, especially during falling interest rates. Above all, debt funds have proved to be less risky than equities when looking for short-term investments, however, the volatility of long-term income funds may match that of equities.
As debt funds invest in fixed income instruments like government securities, treasury bills, corporate Bonds, etc., they have the capacity of generating consistent and regular returns over time. However, there are many qualitative and quantitative factors that one needs understand before selecting the best debt funds to invest, viz - AUM, Average Maturity, Taxation, the credit quality of the portfolio, etc. Below we have listed the top 5 best debt funds to invest across the various categories of debt funds - Best Liquid Funds, best ultra short-term funds, best short-term funds, best long-term funds and best Gilt Funds to invest in 2020 - 2021.
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 20 - 21
Top 5 Liquid Mutual Funds
Top Liquid funds with AUM/Net Assets > 10,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Liquid Fund Growth ₹4,772.81
↑ 0.66 ₹24,235 100 0.4 1.3 2.8 6.5 6.7 5.38% 1M 12D 1M 15D Aditya Birla Sun Life Liquid Fund Growth ₹314.393
↑ 0.04 ₹40,854 5,000 0.4 1.3 2.8 6.5 6.7 5.42% 1M 17D 1M 17D Axis Liquid Fund Growth ₹2,170.04
↑ 0.30 ₹29,119 500 0.4 1.3 2.8 6.5 6.6 5.29% 1M 27D 2M 1D ICICI Prudential Liquid Fund Growth ₹289.352
↑ 0.04 ₹55,665 500 0.4 1.3 2.8 6.4 6.6 5.32% 1M 16D 1M 18D Tata Liquid Fund Growth ₹3,078.57
↑ 0.43 ₹18,477 5,000 0.4 1.3 2.8 6.4 6.6 5.34% 1M 13D 1M 13D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Ultra Short Term Bond Mutual Funds
Top Ultra Short Bond funds with AUM/Net Assets > 1,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹393.497
↑ 0.11 ₹15,847 1,000 1.6 3.8 8.3 7.6 8.5 6.31% 5M 16D 6M 7D Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹27.0286
↑ 0.01 ₹16,894 10,000 -2.2 0 4.7 7.2 9.6 10.37% 5M 19D 7M 2D UTI Ultra Short Term Fund Growth ₹3,084.54
↑ 0.53 ₹2,276 5,000 1.6 3.5 3.2 5.6 3.3 7.48% 3M 7D 4M 13D ICICI Prudential Ultra Short Term Fund Growth ₹20.15
↑ 0.01 ₹7,136 5,000 1.9 4 8.4 7.5 8.4 7.64% 4M 28D 5M 19D SBI Magnum Ultra Short Duration Fund Growth ₹4,401.53
↑ 1.03 ₹12,192 5,000 1.6 3.6 7.8 7.5 8 6.15% 5M 8D 6M Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top and Best Floating Rate Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹245.394
↑ 0.08 ₹8,715 1,000 1.8 4 8.6 7.6 8.6 6.23% 11M 1D 1Y 29D Nippon India Floating Rate Fund Growth ₹31.2423
↑ 0.01 ₹6,308 5,000 1.9 4 8.8 6.9 9 6.82% 8M 5D 8M 26D ICICI Prudential Floating Interest Fund Growth ₹297.342
↑ 0.14 ₹8,005 5,000 2 4.2 8.5 7.2 8.4 7.87% 1Y 22D 1Y 3M 22D PGIM India Floating Rate Fund Growth ₹10.8156
↑ 0.00 ₹13 5,000 -47.2 -46.2 -44.4 -14 15.04% 1M 6D 1M 13D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Best Money Market Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹265.833
↑ 0.05 ₹10,878 1,000 1.5 3.5 7.9 7.6 8 5.91% 4M 20D 4M 20D L&T Money Market Fund Growth ₹19.6617
↑ 0.00 ₹902 10,000 1.4 5.2 8.1 7.6 8.2 5.78% 4M 28D 5M 1D Kotak Money Market Scheme Growth ₹3,265.25
↑ 0.48 ₹8,899 5,000 1.5 3.5 7.8 7.5 8 5.84% 4M 24D 4M 24D UTI Money Market Fund Growth ₹2,227.27
↑ 0.37 ₹7,515 10,000 1.4 3.4 7.8 7.5 8 5.69% 3M 22D 3M 23D ICICI Prudential Money Market Fund Growth ₹274.431
↑ 0.04 ₹9,119 500 1.4 3.4 7.7 7.4 7.9 5.63% 4M 4D 4M 11D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Short Term Bond Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹32.7947
↑ 0.02 ₹46 0.2 7.3 -1.1 3.6 -0.5 7.98% 2Y 29D 2Y 6M 14D ICICI Prudential Short Term Fund Growth ₹41.5767
↑ 0.02 ₹12,354 2.1 4.4 9.8 7.1 9.7 7.4% 2Y 2M 12D 2Y 11M 8D Nippon India Short Term Fund Growth ₹37.2969
↑ 0.03 ₹7,027 1.8 4.5 9.4 6.8 9.4 7.25% 1Y 11M 8D 2Y 3M 18D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹32.9248
↑ 0.02 ₹3,141 0.9 3.1 8.4 6.6 8.5 8.57% 1Y 11M 12D 2Y 5M 26D UTI Short Term Income Fund Growth ₹21.3389
↑ 0.01 ₹2,049 1.9 4.5 -3.6 2.6 -3.9 7.3% 2Y 2Y 3M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Medium to Long Term Bond Mutual Funds
Top Medium to Long Term Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Income Fund Growth ₹49.4232
↑ 0.03 ₹1,239 3.4 5.3 12.5 7.4 11.7 7.64% 3Y 9M 11D 5Y 6M 11D UTI Bond Fund Growth ₹48.2762
↑ 0.02 ₹501 -3.6 -4.7 -7.4 -1.1 -5.8 10.25% 3Y 4M 20D 4Y 10M 6D ICICI Prudential Bond Fund Growth ₹27.9591
↑ 0.01 ₹3,366 2.2 4.6 11.1 6.8 10.9 7.39% 3Y 9M 29D 5Y 2M 12D Aditya Birla Sun Life Income Fund Growth ₹87.3867
↑ 0.04 ₹948 1.3 1.7 10.1 5.6 9.5 6.61% 4Y 2M 23D 5Y 11M 5D Kotak Bond Fund Growth ₹54.7684
↑ 0.06 ₹1,842 1.6 2.3 11.1 5.2 10.3 7.07% 5Y 6M 25D 9Y 8M 8D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Banking and PSU Debt Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Banking and PSU Debt Fund Growth ₹16.2463
↑ 0.01 ₹4,848 2.2 4.8 10.4 7.3 10.2 7.24% 2Y 3M 29D 3Y 18D UTI Banking & PSU Debt Fund Growth ₹14.8701
↑ 0.01 ₹146 1.7 1.9 1.4 3.9 -1 7.01% 2Y 8M 16D 3Y 6M 20D Kotak Banking and PSU Debt fund Growth ₹45.9523
↑ 0.01 ₹4,204 2.2 4.5 11.1 7.9 10.8 7.09% 2Y 10M 10D 3Y 9M 22D ICICI Prudential Banking and PSU Debt Fund Growth ₹22.9409
↑ 0.01 ₹8,317 2.4 4.1 10.2 7 10.1 7.01% 2Y 7M 24D 4Y 1M 20D Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹257.273
↑ 0.13 ₹9,845 1.9 3.9 10.2 7.3 9.9 6.7% 2Y 3M 14D 2Y 11M 16D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Credit Risk Mutual Funds
Top Credit Risk funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Credit Risk Fund Growth ₹14.9343
↑ 0.01 ₹1,260 2.1 4.2 4.4 5.5 4.4 9.2% 1Y 8M 12D 2Y 1M 6D SBI Credit Risk Fund Growth ₹31.2799
↑ 0.01 ₹5,076 1.7 4 6.7 6.4 6.5 8.69% 1Y 11M 1D 2Y 5M 26D DSP BlackRock Credit Risk Fund Growth ₹28.782
↑ 0.02 ₹1,396 1.9 2 4.4 2.6 4.4 8.46% 1Y 2M 5D 1Y 5M 5D Kotak Credit Risk Fund Growth ₹21.8843
↑ 0.01 ₹5,043 2.3 5 9.2 7.2 9 8.94% 2Y 14D 2Y 8M 12D L&T Credit Risk Fund Growth ₹21.2873
↑ 0.01 ₹1,807 2.2 1.1 2.5 4.8 2.3 9.67% 1Y 6M 25D 2Y 3M 4D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Dynamic Bond Mutual Funds
Top Dynamic Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Long Term Plan Growth ₹25.0445
↑ 0.03 ₹3,071 2.7 4.1 10.6 7 10.2 8.24% 4Y 25D 6Y 4M 13D Franklin India Dynamic Accrual Fund Growth ₹66.9185
↑ 0.04 ₹3,851 -2.6 -1.5 2 6.1 6.3 12.54% 1Y 9M 14D 2Y 5M 19D SBI Dynamic Bond Fund Growth ₹25.2603
↑ 0.01 ₹1,196 2.2 3.4 13.7 7.2 12.7 6.22% 2Y 8M 5D 3Y 9M 25D IDFC Dynamic Bond Fund Growth ₹24.3618
↑ 0.04 ₹2,025 1.5 3 11.9 6.9 11 7.06% 7Y 7M 2D 11Y 8M 16D HDFC Dynamic Debt Fund Growth ₹62.8885
↑ 0.03 ₹621 1.9 3.5 6.1 3.2 3.2 6.94% 3Y 3M 11D 4Y 4M 16D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Corporate Bond Mutual Funds
Top Corporate Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Corporate Bond Fund Growth ₹22.4374
↑ 0.01 ₹12,320 1.9 3.9 10.4 7.6 10.3 6.95% 3Y 1M 17D 4Y 2M 19D Aditya Birla Sun Life Corporate Bond Fund Growth ₹77.0681
↑ 0.05 ₹17,587 1.9 4 9.7 7.6 9.6 6.68% 1Y 7M 2D 1Y 11M 23D ICICI Prudential Corporate Bond Fund Growth ₹20.5645
↑ 0.01 ₹11,339 2.1 4.4 9.9 7.4 9.9 6.96% 1Y 9M 2Y 4M 24D Kotak Corporate Bond Fund Standard Growth ₹2,658.55
↑ 1.58 ₹4,418 1.9 4.5 9.6 7.9 9.6 6.82% 1Y 6M 1Y 8M 19D Nippon India Prime Debt Fund Growth ₹41.4917
↑ 0.04 ₹908 2.1 4 7.8 7.1 7.8 8.68% 1Y 3M 7D 1Y 5M 19D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
Top 5 Gilt Mutual Funds
Top To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity. ICICI Prudential Long Term Plan is a Debt - Dynamic Bond fund was launched on 20 Jan 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Long Term Plan Returns up to 1 year are on To generate regular income through investments in debt and money market instruments consisting predominantly of securities issued by entities such as Scheduled Commercial Banks and Public Sector undertakings. There is no assurance that the investment objective of the Scheme will be realized. HDFC Banking and PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 26 Mar 14. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Banking and PSU Debt Fund Returns up to 1 year are on (Erstwhile HDFC Medium Term Opportunities Fund) To generate regular income through investments in Debt/
Money Market Instruments and Government Securities with
maturities not exceeding 60 months. HDFC Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 29 Jun 10. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Corporate Bond Fund Returns up to 1 year are on (Erstwhile Aditya Birla Sun Life Short Term Fund) An Open-ended income scheme with the objective to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities. Aditya Birla Sun Life Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 3 Mar 97. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Corporate Bond Fund Returns up to 1 year are on The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on GILT funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Gilt Fund Growth ₹45.3496
↑ 0.04 ₹1,945 1.9 2.6 14.1 7.2 13.1 5.87% 3Y 9M 29D 5Y 11M 19D SBI Magnum Constant Maturity Fund Growth ₹44.9293
↑ 0.07 ₹500 1.6 2.6 13.3 9.3 11.9 6.67% 6Y 4M 24D 9Y 10M 2D Nippon India Gilt Securities Fund Growth ₹27.4105
↑ 0.04 ₹1,118 1.5 2.6 13.1 7.6 12.4 6.86% 6Y 8M 23D 10Y 14D UTI Gilt Fund Growth ₹44.8629
↑ 0.03 ₹531 0.9 1.5 12.5 6.9 11.8 6.35% 3Y 8M 26D 5Y 4M 17D ICICI Prudential Gilt Fund Growth ₹69.5169
↑ 0.10 ₹1,417 2.2 2.7 11.2 6.3 10.8 6.73% 5Y 3M 8Y 8M 5D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20 1. ICICI Prudential Long Term Plan
CAGR/Annualized return of 9.6% since its launch. Ranked 1 in Dynamic Bond category. Return for 2019 was 10.2% , 2018 was 6.2% and 2017 was 5.1% . ICICI Prudential Long Term Plan
Growth Launch Date 20 Jan 10 NAV (24 Jan 20) ₹25.0445 ↑ 0.03 (0.12 %) Net Assets (Cr) ₹3,071 on 31 Dec 19 Category Debt - Dynamic Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.32 Sharpe Ratio 2.91 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 8.24% Effective Maturity 6 Years 4 Months 13 Days Modified Duration 4 Years 25 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,574 31 Dec 16 ₹12,357 31 Dec 17 ₹12,988 31 Dec 18 ₹13,796 31 Dec 19 ₹15,198 Returns for ICICI Prudential Long Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.8% 3 Month 2.7% 6 Month 4.1% 1 Year 10.6% 3 Year 7% 5 Year 8.4% 10 Year 15 Year Since launch 9.6% Historical performance (Yearly) on absolute basis
Year Returns 2018 10.2% 2017 6.2% 2016 5.1% 2015 16.9% 2014 5.7% 2013 19.4% 2012 9.6% 2011 9.9% 2010 8.9% 2009 Fund Manager information for ICICI Prudential Long Term Plan
Name Since Tenure Manish Banthia 28 Sep 12 7.26 Yr. Anuj Tagra 15 Jan 15 4.96 Yr. Data below for ICICI Prudential Long Term Plan as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 3.69% Debt 96.31% Debt Sector Allocation
Sector Value Corporate 58.73% Government 37.05% Cash Equivalent 3.69% Securitized 0.52% Credit Quality
Rating Value AA 42.31% AAA 57.69% Top Securities Holdings / Portfolio
Name Holding Value Quantity GOVT STOCK
Sovereign Bonds | -32% ₹949 Cr 90,550,000
↑ 32,100,000 EMBASSY OFFICE PARKS REIT
Debentures | -7% ₹202 Cr 1,900 Rural Electrification Corporation Limited
Debentures | -5% ₹159 Cr 1,500 TMF HOLDINGS LIMITED
Debentures | -3% ₹102 Cr 1,000 Essar Oil Limited
Debentures | -3% ₹101 Cr 100 Aspire Home Finance Corporation Limited
Debentures | -3% ₹100 Cr 1,000 Promont Hillside Private Limited
Debentures | -3% ₹100 Cr 1,000 Vedanta Limited
Debentures | -3% ₹99 Cr 1,000 Net Current Assets
Net Current Assets | -3% ₹90 Cr The Great Eastern Shipping Company Limited
Debentures | -2% ₹71 Cr 750 2. HDFC Banking and PSU Debt Fund
CAGR/Annualized return of 8.7% since its launch. Ranked 6 in Banking & PSU Debt category. Return for 2019 was 10.2% , 2018 was 5.9% and 2017 was 6.3% . HDFC Banking and PSU Debt Fund
Growth Launch Date 26 Mar 14 NAV (24 Jan 20) ₹16.2463 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹4,848 on 31 Dec 19 Category Debt - Banking & PSU Debt AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.26 Sharpe Ratio 3.44 Information Ratio 0.06 Alpha Ratio -0.99 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.24% Effective Maturity 3 Years 18 Days Modified Duration 2 Years 3 Months 29 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,976 31 Dec 16 ₹12,164 31 Dec 17 ₹12,933 31 Dec 18 ₹13,692 31 Dec 19 ₹15,093 Returns for HDFC Banking and PSU Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.8% 3 Month 2.2% 6 Month 4.8% 1 Year 10.4% 3 Year 7.3% 5 Year 8.6% 10 Year 15 Year Since launch 8.7% Historical performance (Yearly) on absolute basis
Year Returns 2018 10.2% 2017 5.9% 2016 6.3% 2015 10.8% 2014 9.8% 2013 2012 2011 2010 2009 Fund Manager information for HDFC Banking and PSU Debt Fund
Name Since Tenure Anil Bamboli 26 Mar 14 5.6 Yr. Chirag Dagli 31 Jul 19 0.25 Yr. Data below for HDFC Banking and PSU Debt Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 12.95% Debt 87.05% Debt Sector Allocation
Sector Value Government 50.31% Corporate 36.74% Cash Equivalent 12.95% Credit Quality
Rating Value A 9.32% AA 17.28% AAA 73.29% Below B 0.11% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Highways Authority Of India
Debentures | -5% ₹209 Cr 2,050 Food Corporation Of India
Debentures | -5% ₹193 Cr 1,800 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
Debentures | -4% ₹184 Cr 1,750 Treps - Tri-Party Repo
CBLO/Reverse Repo | -4% ₹155 Cr IDFC First Bank Limited
Certificate of Deposit | -4% ₹152 Cr 15,500 Syndicate Bank
Debentures | -3% ₹137 Cr 1,350 Net Current Assets
Net Current Assets | -3% ₹134 Cr Housing Development Finance Corporation Limited
Debentures | -3% ₹129 Cr 1,250 Power Grid Corporation Of India Limited
Debentures | -3% ₹128 Cr 1,250 Tata International Limited
Debentures | -3% ₹125 Cr 1,250 3. HDFC Corporate Bond Fund
CAGR/Annualized return of 8.8% since its launch. Ranked 2 in Corporate Bond category. Return for 2019 was 10.3% , 2018 was 6.5% and 2017 was 6.5% . HDFC Corporate Bond Fund
Growth Launch Date 29 Jun 10 NAV (24 Jan 20) ₹22.4374 ↑ 0.01 (0.06 %) Net Assets (Cr) ₹12,320 on 31 Dec 19 Category Debt - Corporate Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.44 Sharpe Ratio 3.23 Information Ratio 0.37 Alpha Ratio 2.28 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 6.95% Effective Maturity 4 Years 2 Months 19 Days Modified Duration 3 Years 1 Month 17 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,861 31 Dec 16 ₹12,016 31 Dec 17 ₹12,799 31 Dec 18 ₹13,630 31 Dec 19 ₹15,037 Returns for HDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.7% 3 Month 1.9% 6 Month 3.9% 1 Year 10.4% 3 Year 7.6% 5 Year 8.4% 10 Year 15 Year Since launch 8.8% Historical performance (Yearly) on absolute basis
Year Returns 2018 10.3% 2017 6.5% 2016 6.5% 2015 10.6% 2014 8.6% 2013 10.9% 2012 7.6% 2011 10.5% 2010 8.7% 2009 Fund Manager information for HDFC Corporate Bond Fund
Name Since Tenure Anupam Joshi 27 Oct 15 4.01 Yr. Chirag Dagli 31 Jul 19 0.25 Yr. Data below for HDFC Corporate Bond Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 9.13% Debt 90.87% Debt Sector Allocation
Sector Value Corporate 53.02% Government 38.44% Cash Equivalent 8.54% Credit Quality
Rating Value AA 1.91% AAA 98.09% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.59% Govt Stock 2026
Sovereign Bonds | -5% ₹630 Cr 60,000,000
↑ 10,000,000 Reliance Industries Limited
Debentures | -4% ₹534 Cr 5,000 LIC HOUSING FINANCE LIMITED
Debentures | -4% ₹522 Cr 5,000 6.79% Govt Stock 2027
Sovereign Bonds | -4% ₹503 Cr 50,000,000
↑ 7,500,000 LIC Housing Finance Limited
Debentures | -3% ₹411 Cr 4,000 Net Current Assets
Net Current Assets | -3% ₹396 Cr National Highways Authority Of India
Debentures | -3% ₹392 Cr 3,750 Housing Development Finance Corporation Limited
Debentures | -3% ₹345 Cr 3,343 Treps - Tri-Party Repo
CBLO/Reverse Repo | -3% ₹326 Cr Reliance Jio Infocomm Limited
Debentures | -2% ₹276 Cr 2,697 4. Aditya Birla Sun Life Corporate Bond Fund
CAGR/Annualized return of 9.3% since its launch. Ranked 1 in Corporate Bond category. Return for 2019 was 9.6% , 2018 was 7% and 2017 was 6.5% . Aditya Birla Sun Life Corporate Bond Fund
Growth Launch Date 3 Mar 97 NAV (24 Jan 20) ₹77.0681 ↑ 0.05 (0.06 %) Net Assets (Cr) ₹17,587 on 31 Dec 19 Category Debt - Corporate Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.39 Sharpe Ratio 4.35 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 6.68% Effective Maturity 1 Year 11 Months 23 Days Modified Duration 1 Year 7 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,889 31 Dec 16 ₹12,004 31 Dec 17 ₹12,786 31 Dec 18 ₹13,682 31 Dec 19 ₹14,995 Returns for Aditya Birla Sun Life Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.7% 3 Month 1.9% 6 Month 4% 1 Year 9.7% 3 Year 7.6% 5 Year 8.4% 10 Year 15 Year Since launch 9.3% Historical performance (Yearly) on absolute basis
Year Returns 2018 9.6% 2017 7% 2016 6.5% 2015 10.2% 2014 8.9% 2013 10.9% 2012 8.4% 2011 10.6% 2010 9.5% 2009 3.8% Fund Manager information for Aditya Birla Sun Life Corporate Bond Fund
Name Since Tenure Maneesh Dangi 1 Apr 17 2.58 Yr. Kaustubh Gupta 1 Apr 17 2.58 Yr. Data below for Aditya Birla Sun Life Corporate Bond Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 10.91% Debt 89.09% Debt Sector Allocation
Sector Value Corporate 55.33% Government 33.98% Cash Equivalent 9.39% Securitized 1.31% Credit Quality
Rating Value AA 3.51% AAA 96.49% Top Securities Holdings / Portfolio
Name Holding Value Quantity ONGC Petro Additions Limited
Debentures | -4% ₹743 Cr 741 Net Receivables / (Payables)
Net Current Assets | -4% ₹683 Cr MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED
Debentures | -3% ₹450 Cr 4,450 Reliance Industries Limited
Debentures | -2% ₹427 Cr 4,250 POWER FINANCE CORPORATION LIMITED
Debentures | -2% ₹427 Cr 4,200 8.24% Govt Stock 2027
Sovereign Bonds | -2% ₹418 Cr 38,500,000
↑ 7,000,000 Power Finance Corporation Ltd.
Debentures | -2% ₹359 Cr 3,550 Reliance Industries Limited
Debentures | -2% ₹342 Cr 3,400
↑ 250 National Bank For Agriculture And Rural Development
Debentures | -2% ₹326 Cr 3,250
↑ 3,250 Rural Electrification Corporation Limited
Debentures | -2% ₹315 Cr 3,100 5. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.8% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2019 was 8.5% , 2018 was 7.6% and 2017 was 7.2% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (24 Jan 20) ₹393.497 ↑ 0.11 (0.03 %) Net Assets (Cr) ₹15,847 on 31 Dec 19 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.35 Sharpe Ratio 9.33 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.31% Effective Maturity 6 Months 7 Days Modified Duration 5 Months 16 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,889 31 Dec 16 ₹11,895 31 Dec 17 ₹12,751 31 Dec 18 ₹13,724 31 Dec 19 ₹14,885 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.6% 3 Month 1.6% 6 Month 3.8% 1 Year 8.3% 3 Year 7.6% 5 Year 8.3% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2018 8.5% 2017 7.6% 2016 7.2% 2015 9.2% 2014 8.9% 2013 9.7% 2012 9.5% 2011 9.7% 2010 9.2% 2009 5.8% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 11 Oct 14 4.98 Yr. Kaustubh Gupta 15 Jul 11 8.22 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 53.03% Debt 46.97% Debt Sector Allocation
Sector Value Corporate 54.16% Cash Equivalent 25.93% Government 19.16% Securitized 0.76% Credit Quality
Rating Value AA 11.55% AAA 88.45% Top Securities Holdings / Portfolio
Name Holding Value Quantity IndusInd Bank Limited
Certificate of Deposit | -4% ₹639 Cr 65,000
↑ 65,000 8.39% RJ SDL Spl 2020
Domestic Bonds | -3% ₹553 Cr 54,845,000
↑ 48,345,000 Steel Authority Of India Limited
Commercial Paper | -3% ₹495 Cr 10,000
↑ 10,000 Power Finance Corporation Ltd.
Debentures | -3% ₹469 Cr 4,650 IndusInd Bank Limited
Certificate of Deposit | -3% ₹439 Cr 45,000
↑ 45,000 Net Receivables / (Payables)
Net Current Assets | -3% ₹435 Cr Rural Electrification Corporation Limited
Debentures | -3% ₹429 Cr 4,263 Bharti Telecom Limited
Debentures | -3% ₹404 Cr 3,500 Reliance Jio Infocomm Limited
Commercial Paper | -2% ₹397 Cr 8,000
↑ 8,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹387 Cr 3,850
↓ -1,500
How to Evaluate Best Debt Mutual Funds
In order to select the best debt funds you wish to invest in, it is necessary to consider some of the important parameters such as average maturity, credit quality, AUM, expense ratio, tax implication., etc. Let's have an in-depth look-
1. Average Maturity/Duration
Average maturity is an essential parameter in debt funds that is sometimes overlooked by investors, who tend to invest for a long period without considering the risks involved. Investors need to decide their debt fund investment based on its maturity period, Matching the time period of investment with the maturity period of the debt fund is a good way to ensure you don't end up taking unnecessary risk. Thus, it is advisable to know the average maturity of a debt fund, before investing, in order to aim for optimum risk returns in debt funds. Looking at the average maturity (duration is a similar factor) is important, for example, a liquid fund may have an average maturity of a couple of days to maybe a month, this would mean it is a great option for an investor who is looking to invest money for a couple of days. Similarly, if you are looking at the time frame of one-year Investment plan then, a short-term debt fund can be ideal.
2. Interest Rate Scenario
Understanding the market environment is very important in debt funds which are affected by interest rates and its fluctuations. When the interest rate rises in the economy, the bond price falls and vice-versa. Also, during the time when the interest rates rise, new bonds are issued in the market with a higher yield than the older bonds, making those older bonds of lower value. Therefore, investors are more attracted towards newer bonds in the market and also a re-pricing of older bonds takes place. In case a debt fund is having an exposure to such "older bonds" then when the interest rates rise, the NAV of the debt fund would be impacted negatively. Furthermore, as debt funds are exposed to interest rate fluctuations, it disturbs the prices of the underlying bonds in the fund portfolio. For instance, long-term debt funds are at a higher risk during times of rising interest rates. During this time making a short-term investment plan will lower your interest rate risks.
If one has good knowledge of interest rates and can monitor the same, one can even take advantage of this. In a falling interest rate market, long-term debt funds would be a good choice. However, during the times of rising interest rates then it would be wise to be in funds with shorter average maturities like short-term funds, Ultra Short Term fund or even liquid funds.
3. Current Yield or Portfolio Yield
The yield is a measure of the interest income generated by the bonds in the portfolio. Funds that invest in debt or bonds that have a higher coupon rate (or yield) would have a higher overall portfolio yield. The yield to maturity(ytm) of a debt mutual fund indicates the running yield of the fund. When comparing debt funds on the basis of YTM, one should also look at that fact that how is the extra yield being generated. Is this at the cost of as lower portfolio quality? Investing in not so good quality instruments has its own issues. You don't want to end up investing in a debt fund which has such bonds or securities that may default later on. So, always look at the portfolio yield and balance it off with the credit quality.
4. Credit Quality of Portfolio
In order to invest in best debt funds, checking the credit quality of the bonds and debt securities is an essential parameter. Bonds are assigned a credit rating by various agencies based on their ability to pay the money back. A bond with AAA rating is considered to be the best credit rating and also implies a safe and secure investment. If one truly wants safety and considers this as the paramount parameter in selecting the best debt fund, then getting into a fund with very high-quality debt instruments (AAA or AA+) may be the desired option.
5. Assets Under Management (AUM)
This is the foremost parameter to consider while choosing the best debt funds. AUM is the total amount invested in a particular scheme by all investors. Since, most Mutual Funds’ total AUM is invested in debt funds, investors need to select scheme assets that have a considerable AUM. Being in a fund which has a large exposure to corporates may be risky, since their withdrawals may be large which may affect the overall fund performance.
6. Expense Ratio
An important factor to be considered in debt funds is its expense ratio. A higher expense ratio creates a larger impact on the funds’ performance. For example, liquid funds have the lowest expense ratios which are up to 50 bps (BPS is a unit to measure interest rates wherein one bps is equal to 1/100th of 1%) whereas, other debt funds could charge up to 150 bps. So to make a choice between one debt mutual fund, it is important to consider the management fee or the fund running expense.
7. Taxation Impacts
Debt funds offer the benefit of long-term capital gains (more than 3 years) with indexation benefits. And the short term capital gains (less than 3 years) is taxed at 30%.
Things to consider as an investor
1. Fund Objectives
Debt Fund aims to earn optimal returns by maintaining a diversified portfolio of various types of securities. You can expect them to perform in a predictable manner. It is because of this reason, that debt funds are popular among conservative investors.
2. Fund Types
Debt funds are further divided into various categories like liquid funds, Monthly Income Plan (MIP), fixed maturity plans (FMP), Dynamic Bond Funds, income funds, credit opportunities funds, GILT funds, short-term funds and ultra short-term funds.
3. Risks
Debt funds are basically exposed to interest rate risk, credit risk, and liquidity risk. The fund value may fluctuate due to the overall interest rate movements. There’s a risk of default in the payment of interest and principal by the issuer. Liquidity risk happens when the fund manager is unable to sell the underlying security due to lack of demand.
4. Cost
Debt funds charge an expense ratio to manage your money. Till now SEBI had mandated the upper limit of expense ratio to be 2.25% (Might change time to time with regulations.).
5. Investment Horizon
An investment of 3 months to 1 year would be ideal for liquid funds. If you have a longer horizon of say 2 to 3 years, you may go for short-term bond funds.
6. Financial Goals
Debt funds can be used to achieve a variety of goals like earning additional income or for purpose of liquidity.
How to Invest in Best Debt Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
Conclusion
Debt funds are one of the best ways to invest your money and generate income on a regular basis by choosing the relevant product matching your risk profile. So, investors looking to generate steady income or take advantage of the debt markets, can consider the above best debt funds for 2020 - 2021 and start investing!_
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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The article is nice and informative but it could be in more simple words because lot of people have much less knowledge in such sector