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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Tata Liquid Fund Growth ₹3,174.43
↑ 0.31 ₹18,934 5,000 0.3 0.8 2.6 4.9 6.6 3.36% 1M 10D 1M 10D Aditya Birla Sun Life Liquid Fund Growth ₹324.135
↑ 0.03 ₹39,810 5,000 0.3 0.8 2.5 4.9 6.7 3.5% 1M 13D 1M 13D Nippon India Liquid Fund Growth ₹4,919.2
↑ 0.46 ₹26,900 100 0.3 0.8 2.5 4.9 6.7 3.31% 1M 10D 1M 12D ICICI Prudential Liquid Fund Growth ₹298.265
↑ 0.03 ₹54,052 500 0.3 0.8 2.5 4.9 6.6 3.36% 1M 8D 1M 11D Axis Liquid Fund Growth ₹2,237.06
↑ 0.22 ₹28,818 500 0.3 0.8 2 4.9 6.6 3.32% 1M 6D 1M 8D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹413.338
↑ 0.05 ₹16,218 1,000 1.6 5.5 7.6 7.7 8.5 4.52% 6M 6M 18D UTI Ultra Short Term Fund Growth ₹3,192.8
↑ 0.29 ₹1,539 5,000 1.1 3.8 6.1 5.2 3.3 5.33% 3M 24D 3M 26D ICICI Prudential Ultra Short Term Fund Growth ₹21.0651
↑ 0.00 ₹6,940 5,000 1.7 4.8 7.4 7.4 8.4 5.42% 3M 18D 4M 20D SBI Magnum Ultra Short Duration Fund Growth ₹4,589.95
↑ 0.37 ₹12,635 5,000 1.1 4.5 6.7 7.5 8 4.08% 5M 1D 5M 12D Kotak Savings Fund Growth ₹33.1166
↑ 0.00 ₹11,176 5,000 1.1 4.4 6.6 7.1 7.8 4.01% 5M 12D 5M 23D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20
Top and Best Floating Rate Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹260
↑ 0.02 ₹6,886 1,000 1.7 7 8.8 8.1 8.6 4.61% 1Y 25D 1Y 3M Nippon India Floating Rate Fund Growth ₹33.6345
↑ 0.00 ₹12,158 5,000 1.7 8.6 10.5 7.9 9 5.47% 2Y 2M 23D 2Y 9M 25D ICICI Prudential Floating Interest Fund Growth ₹315.173
↓ -0.09 ₹8,837 5,000 2.4 6.9 9.2 7.6 8.4 5.75% 1Y 4M 13D 1Y 10M 10D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20
Top 5 Best Money Market Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹279.123
↑ 0.03 ₹9,969 1,000 1.3 5.5 7.2 7.7 8 3.98% 5M 12D 5M 12D ICICI Prudential Money Market Fund Growth ₹287.349
↑ 0.02 ₹9,757 500 1.2 5.2 6.9 7.5 7.9 3.8% 5M 3D 5M 9D UTI Money Market Fund Growth ₹2,327.35
↑ 0.24 ₹7,004 10,000 1.2 4.4 6.7 7.5 8 3.78% 4M 28D 4M 29D Kotak Money Market Scheme Growth ₹3,398.79
↑ 0.29 ₹8,783 5,000 1.1 4.1 6.4 7.3 8 3.89% 5M 19D 5M 23D L&T Money Market Fund Growth ₹20.4504
↑ 0.00 ₹999 10,000 0.8 4.4 6.2 7.2 8.2 3.51% 4M 6D 4M 10D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20
Top 5 Short Term Bond Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹34.7394
↓ -0.01 ₹34 1.2 7.5 62.8 3.9 -0.5 4.71% 2Y 1M 24D 2Y 8M 5D UTI Short Term Income Fund Growth ₹22.8988
↑ 0.00 ₹1,947 1.5 8.2 10.6 3.5 -3.9 5.57% 2Y 10M 6D 3Y 5M 16D ICICI Prudential Short Term Fund Growth ₹44.5431
↓ -0.01 ₹17,228 2 8 10.5 7.9 9.7 5.86% 2Y 10M 6D 4Y 18D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹35.5691
↓ -0.01 ₹4,769 3.5 9.8 10.1 8 8.5 5.82% 2Y 6M 4D 3Y 1M 24D Nippon India Short Term Fund Growth ₹39.5924
↑ 0.00 ₹7,619 1.7 6.8 9.3 7.4 9.4 5.63% 2Y 25D 2Y 8M 1D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Income Fund Growth ₹53.2095
↓ -0.06 ₹1,473 1.9 8.1 12.6 8.2 11.7 7.05% 5Y 5M 12D 8Y 2M 1D ICICI Prudential Bond Fund Growth ₹30.1765
↓ -0.04 ₹3,976 1.8 9.5 11.6 8 10.9 6.19% 4Y 10M 20D 7Y 1M 6D Aditya Birla Sun Life Income Fund Growth ₹94.8877
↓ -0.10 ₹1,352 1.3 9.5 10.9 7.5 9.5 6.69% 5Y 4M 28D 8Y 4D Kotak Bond Fund Growth ₹59.0229
↓ -0.10 ₹1,265 0.6 7.5 10.5 7.2 10.3 6.59% 6Y 9M 9Y 7M 17D HDFC Income Fund Growth ₹45.6502
↓ -0.02 ₹615 1.3 5.9 8.8 5.7 8.7 6.85% 5Y 9M 4D 8Y 1M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20
Top 5 Banking and PSU Debt Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Banking and PSU Debt Fund Growth ₹17.3598
↓ -0.01 ₹8,173 2 8.4 10.4 8.3 10.2 6.09% 2Y 7M 20D 3Y 7M 13D UTI Banking & PSU Debt Fund Growth ₹15.8182
↑ 0.01 ₹231 1.1 7.5 9.2 4.6 -1 4.96% 2Y 6M 11D 3Y 4M 18D DSP BlackRock Banking and PSU Debt Fund Growth ₹18.255
↓ 0.00 ₹3,522 1.1 8.8 10.8 8.3 9.9 5.11% 2Y 9M 7D 3Y 3M 22D Kotak Banking and PSU Debt fund Growth ₹49.0821
↓ -0.01 ₹9,132 1.7 8.1 10.5 8.6 10.8 0% 3Y 11M 23D Aditya Birla Sun Life Banking & PSU Debt Fund Growth ₹275.828
↓ -0.07 ₹13,519 1.5 8.5 10.4 8.4 9.9 5.51% 2Y 11M 16D 3Y 9M 22D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Credit Risk Fund Growth ₹15.6672
↑ 0.00 ₹593 2.4 5.6 8.1 5.6 4.4 8.18% 1Y 7M 6D 2Y 9M 18D HDFC Credit Risk Debt Fund Growth ₹17.3093
↑ 0.01 ₹6,181 3.1 6.4 9.3 7.2 8.6 9.79% 2Y 22D 2Y 10M 6D SBI Credit Risk Fund Growth ₹33.076
↑ 0.00 ₹3,765 2.4 6.5 8.5 6.7 6.5 8.09% 2Y 1M 24D 2Y 8M 19D Kotak Credit Risk Fund Growth ₹22.7023
↓ 0.00 ₹1,911 2.9 6.1 7.3 6.9 9 9.33% 2Y 29D 2Y 11M 19D Nippon India Credit Risk Fund Growth ₹23.4719
↑ 0.01 ₹1,489 2.3 4.8 -7.9 -0.1 1.9 12.94% 1Y 5M 8D 1Y 11M 12D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Long Term Plan Growth ₹27.056
↓ -0.03 ₹4,287 2 7.3 12 8.1 10.2 7.21% 5Y 8M 19D 9Y 2M 19D SBI Dynamic Bond Fund Growth ₹27.0092
↓ -0.04 ₹2,161 0.3 5.9 10.2 8 12.7 6.44% 8Y 4M 2D 13Y 10M 13D Axis Dynamic Bond Fund Growth ₹22.372
↓ -0.03 ₹893 1.2 8.9 11.8 8.5 11 6.55% 5Y 10M 24D 8Y 6M IDFC Dynamic Bond Fund Growth ₹26.5473
↑ 0.00 ₹2,647 0.7 7.3 11.8 8.4 11 6.26% 5Y 6M 11D 7Y 2M 12D Aditya Birla Sun Life Dynamic Bond Fund Growth ₹33.4341
↓ -0.01 ₹1,710 3.1 7.8 1 3.3 -0.9 7.72% 3Y 7M 10D 5Y Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Corporate Bond Fund Growth ₹83.3843
↓ 0.00 ₹20,205 1.8 9 11.2 8.8 9.6 5.6% 2Y 8M 1D 3Y 4M 10D HDFC Corporate Bond Fund Growth ₹24.2168
↓ -0.01 ₹21,052 1.7 8.7 10.9 8.7 10.3 5.71% 3Y 3M 11D 4Y 6M 14D ICICI Prudential Corporate Bond Fund Growth ₹22.0304
↓ -0.01 ₹16,162 1.7 7.9 10.4 8.3 9.9 5.41% 2Y 10M 17D 4Y 11D Kotak Corporate Bond Fund Standard Growth ₹2,828
↑ 0.04 ₹6,586 1.8 7.3 9.5 8.5 9.6 5.04% 1Y 11M 5D 2Y 3M Sundaram Corporate Bond Fund Growth ₹30.4333
↑ 0.00 ₹1,041 1.4 9.1 11.1 8 11.3 5.1% 2Y 2M 26D 2Y 6M 25D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20
Top 5 Gilt Mutual Funds
Top To generate steady returns with low to medium market risk for investors by investing in a portfolio of short -medium term debt and money market securities. PGIM India Short Maturity Fund is a Debt - Short term Bond fund was launched on 21 Jan 03. It is a fund with Moderate risk and has given a Below is the key information for PGIM India Short Maturity Fund Returns up to 1 year are on To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity. ICICI Prudential Long Term Plan is a Debt - Dynamic Bond fund was launched on 20 Jan 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Long Term Plan Returns up to 1 year are on (Erstwhile 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 (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 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 GILT funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Gilt Fund Growth ₹75.7225
↓ -0.16 ₹4,232 0.6 7.1 12.3 8.2 10.8 6.31% 8Y 18D 12Y 10M 24D SBI Magnum Gilt Fund Growth ₹48.9923
↓ -0.09 ₹3,838 0.4 6 11 8.3 13.1 6.41% 8Y 2M 19D 13Y 8M 26D Nippon India Gilt Securities Fund Growth ₹29.615
↓ -0.04 ₹1,496 0.4 6.4 10.8 8.9 12.4 6.1% 6Y 11M 12D 10Y 4M 20D SBI Magnum Constant Maturity Fund Growth ₹48.513
↓ -0.01 ₹733 0.8 6.4 10.7 10.4 11.9 6.31% 6Y 9M 9Y 9M 18D Aditya Birla Sun Life Government Securities Fund Growth ₹61.9375
↓ -0.04 ₹571 0.6 7 10.6 8.2 11 6.22% 6Y 7D 8Y 4M 20D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 25 Sep 20 1. PGIM India Short Maturity Fund
CAGR/Annualized return of 7.3% since its launch. Ranked 5 in Short term Bond category. Return for 2019 was -0.5% , 2018 was 5.5% and 2017 was 6.8% . PGIM India Short Maturity Fund
Growth Launch Date 21 Jan 03 NAV (25 Sep 20) ₹34.7394 ↓ -0.01 (-0.02 %) Net Assets (Cr) ₹34 on 31 Aug 20 Category Debt - Short term Bond AMC Pramerica Asset Managers Private Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.02 Sharpe Ratio 1.22 Information Ratio -0.67 Alpha Ratio -2.29 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-6 Months (0.5%),6 Months and above(NIL) Yield to Maturity 4.71% Effective Maturity 2 Years 8 Months 5 Days Modified Duration 2 Years 1 Month 24 Days Growth of 10,000 investment over the years.
Date Value 31 Aug 15 ₹10,000 31 Aug 16 ₹10,945 31 Aug 17 ₹11,925 31 Aug 18 ₹12,452 31 Aug 19 ₹12,340 31 Aug 20 ₹13,340 Returns for PGIM India Short Maturity Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Sep 20 Duration Returns 1 Month 0.4% 3 Month 1.2% 6 Month 7.5% 1 Year 62.8% 3 Year 3.9% 5 Year 5.9% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 2019 -0.5% 2018 5.5% 2017 6.8% 2016 10% 2015 8.3% 2014 10.6% 2013 8.1% 2012 9.8% 2011 8.9% 2010 4.9% Fund Manager information for PGIM India Short Maturity Fund
Name Since Tenure Kumaresh Ramakrishnan 13 Dec 17 2.72 Yr. Puneet Pal 13 Dec 17 2.72 Yr. Data below for PGIM India Short Maturity Fund as on 31 Aug 20
Asset Allocation
Asset Class Value Cash 28.28% Debt 71.72% Debt Sector Allocation
Sector Value Government 47.08% Cash Equivalent 28.28% Corporate 24.64% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.77% GOI 2030
Sovereign Bonds | -15% ₹5 Cr 500,000
↑ 500,000 Power Finance Corporation Limited
Debentures | -9% ₹3 Cr 300,000
↑ 300,000 Housing Development Finance Corporation Limited
Debentures | -9% ₹3 Cr 290,000 Power Grid Corporation of India Limited
Debentures | -9% ₹3 Cr 300,000
↑ 300,000 Indian Oil Corporation Limited
Debentures | -7% ₹3 Cr 250,000 Housing and Urban Development Corporation Limited (Hudco)
Debentures | -6% ₹2 Cr 200,000
↑ 200,000 Indian Railway Finance Corporation Limited
Debentures | -6% ₹2 Cr 200,000 Rural Electrification Corporation Limited
Debentures | -6% ₹2 Cr 200,000 Small Industries Development Bank of India
Debentures | -5% ₹2 Cr 150,000
↑ 150,000 National Bank For Agriculture and Rural Development
Debentures | -3% ₹1 Cr 110,000
↑ 110,000 2. ICICI Prudential Long Term Plan
CAGR/Annualized return of 9.8% 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 (25 Sep 20) ₹27.056 ↓ -0.03 (-0.09 %) Net Assets (Cr) ₹4,287 on 31 Aug 20 Category Debt - Dynamic Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.32 Sharpe Ratio 1.7 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 7.21% Effective Maturity 9 Years 2 Months 19 Days Modified Duration 5 Years 8 Months 19 Days Growth of 10,000 investment over the years.
Date Value 31 Aug 15 ₹10,000 31 Aug 16 ₹11,327 31 Aug 17 ₹12,600 31 Aug 18 ₹12,911 31 Aug 19 ₹14,218 31 Aug 20 ₹15,743 Returns for ICICI Prudential Long Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Sep 20 Duration Returns 1 Month 1.1% 3 Month 2% 6 Month 7.3% 1 Year 12% 3 Year 8.1% 5 Year 9.5% 10 Year 15 Year Since launch 9.8% Historical performance (Yearly) on absolute basis
Year Returns 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% 2010 Fund Manager information for ICICI Prudential Long Term Plan
Name Since Tenure Manish Banthia 28 Sep 12 7.93 Yr. Anuj Tagra 15 Jan 15 5.63 Yr. Data below for ICICI Prudential Long Term Plan as on 31 Aug 20
Asset Allocation
Asset Class Value Cash 2.05% Debt 97.95% Debt Sector Allocation
Sector Value Government 63.01% Corporate 34.94% Cash Equivalent 2.05% Credit Quality
Rating Value AA 28.73% AAA 71.27% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.19% Govt Stock 2034
Sovereign Bonds | -27% ₹1,174 Cr 120,400,000
↑ 20,000,000 7.57% Govt Stock 2033
Sovereign Bonds | -13% ₹560 Cr 51,346,300 5.77% GOI 2030
Sovereign Bonds | -10% ₹424 Cr 43,500,000
↑ 43,500,000 Embassy Office Parks Reit
Debentures | -5% ₹220 Cr 1,900
↑ 1,900 7.59% Govt Stock 2026
Sovereign Bonds | -3% ₹140 Cr 13,000,000 ICICI Bank Limited
Debentures | -3% ₹130 Cr 1,249 TMF Holdings Limited
Debentures | -3% ₹114 Cr 1,000
↑ 1,000 Godrej Properties Limited
Debentures | -3% ₹109 Cr 1,100 7.19% Govt Stock 2060
Sovereign Bonds | -2% ₹101 Cr 9,500,000
↑ 500,000 Aspire Home Finance Corporation Limited
Debentures | -2% ₹101 Cr 1,000 3. Aditya Birla Sun Life Corporate Bond Fund
CAGR/Annualized return of 9.4% since its launch. Ranked 1 in Corporate Bond category. Return for 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 (25 Sep 20) ₹83.3843 ↓ 0.00 (0.00 %) Net Assets (Cr) ₹20,205 on 31 Aug 20 Category Debt - Corporate Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.39 Sharpe Ratio 2.48 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 5.6% Effective Maturity 3 Years 4 Months 10 Days Modified Duration 2 Years 8 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Aug 15 ₹10,000 31 Aug 16 ₹10,994 31 Aug 17 ₹11,939 31 Aug 18 ₹12,513 31 Aug 19 ₹13,829 31 Aug 20 ₹15,341 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 25 Sep 20 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 9% 1 Year 11.2% 3 Year 8.8% 5 Year 8.9% 10 Year 15 Year Since launch 9.4% Historical performance (Yearly) on absolute basis
Year Returns 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% 2010 3.8% Fund Manager information for Aditya Birla Sun Life Corporate Bond Fund
Name Since Tenure Maneesh Dangi 1 Apr 17 3.42 Yr. Kaustubh Gupta 1 Apr 17 3.42 Yr. Data below for Aditya Birla Sun Life Corporate Bond Fund as on 31 Aug 20
Asset Allocation
Asset Class Value Cash 3.33% Debt 96.67% Debt Sector Allocation
Sector Value Corporate 54.2% Government 42.29% Cash Equivalent 3.33% Securitized 0.18% Credit Quality
Rating Value AA 2.18% AAA 97.82% Top Securities Holdings / Portfolio
Name Holding Value Quantity Larsen And Toubro Limited
Debentures | -3% ₹539 Cr 5,150 Reliance Industries Limited
Debentures | -3% ₹538 Cr 5,150 National Bank For Agriculture And Rural Development
Debentures | -2% ₹490 Cr 4,700 8.24% Govt Stock 2027
Sovereign Bonds | -2% ₹472 Cr 42,500,000
↑ 2,000,000 Power Finance Corporation Ltd.
Debentures | -2% ₹423 Cr 4,050 Rural Electrification Corporation Limited
Debentures | -2% ₹418 Cr 4,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹418 Cr 4,050 Reliance Industries Limited
Debentures | -2% ₹417 Cr 4,000 Reliance Industries Limited
Debentures | -2% ₹377 Cr 3,581 8.15% Govt Stock 2026
Sovereign Bonds | -2% ₹371 Cr 33,500,000
↑ 4,500,000 4. HDFC Corporate Bond Fund
CAGR/Annualized return of 9% 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 (25 Sep 20) ₹24.2168 ↓ -0.01 (-0.05 %) Net Assets (Cr) ₹21,052 on 31 Aug 20 Category Debt - Corporate Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.44 Sharpe Ratio 1.92 Information Ratio 0.23 Alpha Ratio 0.6 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 5.71% Effective Maturity 4 Years 6 Months 14 Days Modified Duration 3 Years 3 Months 11 Days Growth of 10,000 investment over the years.
Date Value 31 Aug 15 ₹10,000 31 Aug 16 ₹11,014 31 Aug 17 ₹11,986 31 Aug 18 ₹12,505 31 Aug 19 ₹13,896 31 Aug 20 ₹15,351 Returns for HDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Sep 20 Duration Returns 1 Month 0.6% 3 Month 1.7% 6 Month 8.7% 1 Year 10.9% 3 Year 8.7% 5 Year 9% 10 Year 15 Year Since launch 9% Historical performance (Yearly) on absolute basis
Year Returns 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% 2010 Fund Manager information for HDFC Corporate Bond Fund
Name Since Tenure Anupam Joshi 27 Oct 15 4.85 Yr. Chirag Dagli 31 Jul 19 1.09 Yr. Data below for HDFC Corporate Bond Fund as on 31 Aug 20
Asset Allocation
Asset Class Value Cash 3.83% Debt 96.17% Debt Sector Allocation
Sector Value Corporate 49.19% Government 46.81% Cash Equivalent 3.83% Securitized 0.16% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.79% Govt Stock 2027
Sovereign Bonds | -9% ₹1,933 Cr 186,500,000
↑ 16,500,000 6.97% Govt Stock 2026
Sovereign Bonds | -5% ₹1,103 Cr 105,000,000
↑ 41,000,000 7.59% Govt Stock 2026
Sovereign Bonds | -3% ₹707 Cr 65,500,000
↓ -4,500,000 State Bank Of India
Debentures | -3% ₹701 Cr 6,500 Housing Development Finance Corporation Limited
Debentures | -3% ₹631 Cr 5,993 Reliance Industries Limited
Debentures | -3% ₹566 Cr 5,000 LIC HOUSING FINANCE LIMITED
Debentures | -3% ₹545 Cr 5,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹515 Cr 5,000 Food Corporation Of India
Debentures | -2% ₹445 Cr 4,124
↑ 1,500 LIC Housing Finance Limited
Debentures | -2% ₹432 Cr 4,000 5. HDFC Banking and PSU Debt Fund
CAGR/Annualized return of 8.8% 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 (25 Sep 20) ₹17.3598 ↓ -0.01 (-0.04 %) Net Assets (Cr) ₹8,173 on 31 Aug 20 Category Debt - Banking & PSU Debt AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.26 Sharpe Ratio 1.77 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 6.09% Effective Maturity 3 Years 7 Months 13 Days Modified Duration 2 Years 7 Months 20 Days Growth of 10,000 investment over the years.
Date Value 31 Aug 15 ₹10,000 31 Aug 16 ₹11,048 31 Aug 17 ₹11,992 31 Aug 18 ₹12,470 31 Aug 19 ₹13,751 31 Aug 20 ₹15,179 Returns for HDFC Banking and PSU Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 25 Sep 20 Duration Returns 1 Month 0.6% 3 Month 2% 6 Month 8.4% 1 Year 10.4% 3 Year 8.3% 5 Year 8.7% 10 Year 15 Year Since launch 8.8% Historical performance (Yearly) on absolute basis
Year Returns 2019 10.2% 2018 5.9% 2017 6.3% 2016 10.8% 2015 9.8% 2014 2013 2012 2011 2010 Fund Manager information for HDFC Banking and PSU Debt Fund
Name Since Tenure Anil Bamboli 26 Mar 14 6.44 Yr. Chirag Dagli 31 Jul 19 1.09 Yr. Data below for HDFC Banking and PSU Debt Fund as on 31 Aug 20
Asset Allocation
Asset Class Value Cash 8.81% Debt 91.19% Debt Sector Allocation
Sector Value Government 59.09% Corporate 32.09% Cash Equivalent 8.81% Credit Quality
Rating Value A 4.89% AA 15.29% AAA 79.76% Below B 0.06% Top Securities Holdings / Portfolio
Name Holding Value Quantity NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
Debentures | -3% ₹270 Cr 2,500 Food Corporation Of India
Debentures | -3% ₹248 Cr 2,300
↑ 500 Housing And Urban Development Corporation Ltd.
Debentures | -3% ₹224 Cr 2,000
↑ 1,000 National Highways Authority Of India
Debentures | -3% ₹213 Cr 2,050 State Bank Of India
Debentures | -3% ₹206 Cr 2,015 INDIAN RAILWAY FINANCE CORPORATION LIMITED
Debentures | -2% ₹184 Cr 1,750
↑ 750 Union Bank Of India
Debentures | -2% ₹173 Cr 1,720
↑ 50 5.79% Govt Stock 2030
Sovereign Bonds | -2% ₹157 Cr 16,000,000 State Bank Of India
Debentures | -2% ₹138 Cr 1,250 Syndicate Bank
Debentures | -2% ₹137 Cr 1,350
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