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6 Best Debt Mutual Funds for Lump sum Investments 2019
Debt Mutual Fund schemes in India have grown over the years. As a result, the best performing mutual debt funds in the market keep on changing. There are various rating systems in place to judge a mutual fund scheme, namely CRISIL, Morning Star, ICRA. These systems evaluate a mutual fund in terms of returns, Standard Deviation, credit quality of securities, rate movement guidance by RBI, etc.
Why To Invest Lump Sum in Debt Mutual Funds?
- Better return than prevailing Fixed Deposit (FD) & Recurring deposit (RD) rates across banks
- Returns are linked to debt markets
- Immediate (T+1) redemption online
- Indexation (Debt Taxation benefits) benefits on returns over three years
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Best Lumpsum Debt Mutual Funds FY 19 - 20
Below are the top ranked funds from Debt Categories primarily funds having AUM > 500 Crore & are in Ultra-short, Corporate bond, Credit Risk, Low Duration sub categories && Having maturity of less than 3 years and providing highest yields.
Top 6 Lump sum Debt 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 BOI AXA Credit Risk Fund Growth ₹12.4076
↑ 0.00 ₹709 5,000 -5.6 -3.3 -7.5 3.4 -0.3 14% 1Y 9M 18D 2Y 8M 12D SBI Credit Risk Fund Growth ₹29.6794
↓ 0.00 ₹5,407 5,000 0.7 3 6.7 7.1 6.2 12.02% 1Y 10M 28D 2Y 7M 10D Reliance Credit Risk Fund Growth ₹25.2457
↑ 0.00 ₹9,292 500 -1 1.3 4.7 6.5 6.1 11.51% 1Y 6M 11D 1Y 11M 23D Aditya Birla Sun Life Credit Risk Fund Growth ₹13.7064
↓ -0.02 ₹7,088 1,000 1.5 2.8 6.1 7.7 6.6 11.33% 1Y 7M 13D 2Y 2M 12D Baroda Pioneer Treasury Advantage Fund Growth ₹2,157.64
↑ 0.70 ₹542 5,000 0.6 2.2 5.6 7 7 10.91% 9M 29D 1Y 27D DHFL Pramerica Credit Risk Fund Growth ₹14.3871
↑ 0.00 ₹796 5,000 0.6 2.3 5.1 6.6 5.1 10.84% 1Y 5M 1D 1Y 11M 8D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 21 May 19
(Erstwhile BOI AXA Corporate Credit Spectrum Fund) The Scheme’s investment objective is to generate capital appreciation over the long term by investing predominantly in corporate debt across the credit spectrum within the universe of investment grade rating. To achieve this objective, the Scheme will seek to make investments in rated, unrated instruments and structured obligations of public and private companies. BOI AXA Credit Risk Fund is a Debt - Credit Risk fund was launched on 27 Feb 15. It is a fund with Moderate risk and has given a Below is the key information for BOI AXA Credit Risk Fund Returns up to 1 year are on (Erstwhile SBI Corporate Bond Fund) The investment objective will be to actively manage a portfolio of good
quality corporate debt as well as Money Market Instruments so as to provide
reasonable returns and liquidity to the Unit holders. However there is no
guarantee or assurance that the investment objective of the scheme will
be achieved. SBI Credit Risk Fund is a Debt - Credit Risk fund was launched on 19 Jul 04. It is a fund with Moderate risk and has given a Below is the key information for SBI Credit Risk Fund Returns up to 1 year are on (Erstwhile Reliance Regular Savings Fund - Debt Plan) The primary investment objective of this option is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. Reliance Credit Risk Fund is a Debt - Credit Risk fund was launched on 8 Jun 05. It is a fund with Moderate risk and has given a Below is the key information for Reliance Credit Risk Fund Returns up to 1 year are on (Erstwhile Aditya Birla Sun Life Corporate Bond Fund) The investment objective of the Scheme is to generate returns by predominantly investing in a portfolio of corporate debt securities with short to medium term maturities across the credit spectrum within the investment grade. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved. Aditya Birla Sun Life Credit Risk Fund is a Debt - Credit Risk fund was launched on 17 Apr 15. It is a fund with Moderate risk and has given a Below is the key information for Aditya Birla Sun Life Credit Risk Fund Returns up to 1 year are on The main objective of the scheme is to provide optimal returns and liquidity through a portfolio comprising of debt securities and money market instruments. Baroda Pioneer Treasury Advantage Fund is a Debt - Low Duration fund was launched on 24 Jun 09. It is a fund with Moderately Low risk and has given a Below is the key information for Baroda Pioneer Treasury Advantage Fund Returns up to 1 year are on (Erstwhile DHFL Pramerica Credit Opportunities Fund) The investment objective of the Scheme is to generate income and capital appreciation by investing predominantly in corporate debt. There can be no assurance that the investment objective of the Scheme will be realized. DHFL Pramerica Credit Risk Fund is a Debt - Credit Risk fund was launched on 29 Sep 14. It is a fund with Moderate risk and has given a Below is the key information for DHFL Pramerica Credit Risk Fund Returns up to 1 year are on 1. BOI AXA Credit Risk Fund
CAGR/Annualized return of 5.2% since its launch. Return for 2018 was -0.3% , 2017 was 9.3% and 2016 was 11.2% . BOI AXA Credit Risk Fund
Growth Launch Date 27 Feb 15 NAV (21 May 19) ₹12.4076 ↑ 0.00 (0.02 %) Net Assets (Cr) ₹709 on 30 Apr 19 Category Debt - Credit Risk AMC BOI AXA Investment Mngrs Private Ltd Rating Risk Moderate Expense Ratio 2.17 Sharpe Ratio -0.75 Information Ratio -0.41 Alpha Ratio -8.38 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-12 Months (4%),12-24 Months (3%),24-36 Months (2%),36 Months and above(NIL) Yield to Maturity 14% Effective Maturity 2 Years 8 Months 12 Days Modified Duration 1 Year 9 Months 18 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,115 30 Apr 16 ₹11,100 30 Apr 17 ₹12,338 30 Apr 18 ₹13,358 30 Apr 19 ₹13,151 Returns for BOI AXA Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month -6% 3 Month -5.6% 6 Month -3.3% 1 Year -7.5% 3 Year 3.4% 5 Year 10 Year 15 Year Since launch 5.2% Historical performance (Yearly) on absolute basis
Year Returns 2018 -0.3% 2017 9.3% 2016 11.2% 2015 2014 2013 2012 2011 2010 2009 Fund Manager information for BOI AXA Credit Risk Fund
Name Since Tenure Alok Singh 27 Feb 15 4.09 Yr. Data below for BOI AXA Credit Risk Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 20.05% Debt 79.95% Debt Sector Allocation
Sector Value Corporate 79.95% Cash Equivalent 20.05% Credit Quality
Rating Value A 46.76% BBB 16.13% Below B 3.53% Top Securities Holdings / Portfolio
Name Holding Value Quantity SINTEX-BAPL Limited
Debentures | -15% ₹109 Cr 1,000,000,000 Cblo
CBLO | -15% ₹105 Cr Karuna Healthcare Private Limited
Debentures | -14% ₹98 Cr 8,656,000
↓ -1,469,000 DRSR Logistics Services Private Limited
Debentures | -9% ₹66 Cr 5,070,000 RKV Enterprises Private Limited
Debentures | -6% ₹46 Cr 4,000,000 Marck Remedies Private Limited
Debentures | -6% ₹42 Cr 366,700,000 Coffee Day Natural Resources Private Limited
Debentures | -6% ₹39 Cr 3,460,000
↓ -5,140,000 Accelarating Education And Development Private Limited
Debentures | -5% ₹38 Cr 400,000,000 Accelarating Education And Development Private Limited
Debentures | -5% ₹38 Cr 400,000,000 SINTEX-BAPL Limited
Debentures | -3% ₹22 Cr 2,134,000 2. SBI Credit Risk Fund
CAGR/Annualized return of 7.6% since its launch. Ranked 3 in Credit Risk category. Return for 2018 was 6.2% , 2017 was 6.9% and 2016 was 10.5% . SBI Credit Risk Fund
Growth Launch Date 19 Jul 04 NAV (21 May 19) ₹29.6794 ↓ 0.00 (-0.02 %) Net Assets (Cr) ₹5,407 on 30 Apr 19 Category Debt - Credit Risk AMC SBI Funds Management Private Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.62 Sharpe Ratio 1.11 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-12 Months (3%),12-24 Months (1.5%),24-36 Months (0.75%),36 Months and above(NIL) Yield to Maturity 12.02% Effective Maturity 2 Years 7 Months 10 Days Modified Duration 1 Year 10 Months 28 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 14 ₹10,000 30 Apr 15 ₹11,098 30 Apr 16 ₹12,174 30 Apr 17 ₹13,325 30 Apr 18 ₹14,100 30 Apr 19 ₹14,935 Returns for SBI Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month -0.6% 3 Month 0.7% 6 Month 3% 1 Year 6.7% 3 Year 7.1% 5 Year 8.3% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6.9% 2016 10.5% 2015 9.7% 2014 10.6% 2013 10.1% 2012 9.8% 2011 9.4% 2010 5.6% 2009 4.5% Fund Manager information for SBI Credit Risk Fund
Name Since Tenure Lokesh Mallya 1 Feb 17 2.24 Yr. Mansi Sajeja 1 Feb 17 2.24 Yr. Data below for SBI Credit Risk Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 15.97% Debt 84.03% Debt Sector Allocation
Sector Value Corporate 78.51% Cash Equivalent 15.97% Government 5.53% Credit Quality
Rating Value A 26.61% AA 51.65% AAA 20.38% BBB 1.36% Top Securities Holdings / Portfolio
Name Holding Value Quantity Muthoot Finance Limited
Debentures | -5% ₹272 Cr 2,750,000 Sterlite Grid 2 Ltd.
Debentures | -5% ₹250 Cr 2,500 Net Receivable / Payable
CBLO | -5% ₹249 Cr Greenko Energies Private Limited
Debentures | -4% ₹197 Cr 19,700 SADBHAV ENGINEERING LIMITED
Debentures | -4% ₹189 Cr 1,900 Treps
CBLO/Reverse Repo | -3% ₹177 Cr Dalmia Cement (Bharat) Limited
Debentures | -3% ₹138 Cr 1,370 Tata Realty And Infrastructure Limited
Debentures | -2% ₹135 Cr 1,250 L & T Vadodara Bharuch Tollway Limited
Debentures | -2% ₹127 Cr 130,000 Pune Solapur Expressways Pvt. Ltd
Debentures | -2% ₹127 Cr 13,182 3. Reliance Credit Risk Fund
CAGR/Annualized return of 6.9% since its launch. Ranked 21 in Credit Risk category. Return for 2018 was 6.1% , 2017 was 7% and 2016 was 10% . Reliance Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (21 May 19) ₹25.2457 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹9,292 on 30 Apr 19 Category Debt - Credit Risk AMC Reliance Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 2.13 Sharpe Ratio 0.29 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 100 Exit Load 0-12 Months (1%),12 Months and above(NIL) Yield to Maturity 11.51% Effective Maturity 1 Year 11 Months 23 Days Modified Duration 1 Year 6 Months 11 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 14 ₹10,000 30 Apr 15 ₹11,058 30 Apr 16 ₹12,037 30 Apr 17 ₹13,178 30 Apr 18 ₹13,949 30 Apr 19 ₹14,555 Returns for Reliance Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month -2.2% 3 Month -1% 6 Month 1.3% 1 Year 4.7% 3 Year 6.5% 5 Year 7.7% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.1% 2017 7% 2016 10% 2015 8.8% 2014 11% 2013 8% 2012 9.6% 2011 8.4% 2010 4.7% 2009 8% Fund Manager information for Reliance Credit Risk Fund
Name Since Tenure Prashant Pimple 9 Oct 09 9.48 Yr. Kinjal Desai 25 May 18 0.85 Yr. Data below for Reliance Credit Risk Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 12.99% Debt 87.01% Other 0% Debt Sector Allocation
Sector Value Corporate 78.42% Cash Equivalent 12.98% Securitized 7.28% Government 1.31% Credit Quality
Rating Value A 36.94% AA 37.22% AAA 8.43% BBB 10.92% Top Securities Holdings / Portfolio
Name Holding Value Quantity RMZ Buildcon Private Limited
Debentures | -9% ₹808 Cr 10,100 Yes Bank Limited
Debentures | -6% ₹601 Cr 6,500 Renew Power Ventures Private Limited
Debentures | -4% ₹330 Cr 3,300 MARIPOSA AGRI VENTURES AND HOSPITALITIES PRIVATE LIMITED
Debentures | -3% ₹324 Cr 3,000 Vodafone Mobile Services Limited
Debentures | -3% ₹298 Cr 3,000
↓ -1,000 Nirma Limited
Debentures | -3% ₹294 Cr 3,000 Indiabulls Housing Finance Limited
Debentures | -3% ₹290 Cr 2,960 Renew Wind Energy (Rajasthan One) Private Limited
Debentures | -3% ₹286 Cr 3,060 Vineha Enterprises Private Limited
Debentures | -3% ₹256 Cr 22,500 Net Current Assets
Net Current Assets | -3% ₹250 Cr 4. Aditya Birla Sun Life Credit Risk Fund
CAGR/Annualized return of 8% since its launch. Return for 2018 was 6.6% , 2017 was 8.1% and 2016 was 10.3% . Aditya Birla Sun Life Credit Risk Fund
Growth Launch Date 17 Apr 15 NAV (21 May 19) ₹13.7064 ↓ -0.02 (-0.15 %) Net Assets (Cr) ₹7,088 on 30 Apr 19 Category Debt - Credit Risk AMC Birla Sun Life Asset Management Co Ltd Rating Risk Moderate Expense Ratio 2 Sharpe Ratio 1.3 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 100 Exit Load 0-365 Days (1%),365 Days and above(NIL) Yield to Maturity 11.33% Effective Maturity 2 Years 2 Months 12 Days Modified Duration 1 Year 7 Months 13 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,000 30 Apr 16 ₹10,913 30 Apr 17 ₹12,022 30 Apr 18 ₹12,875 30 Apr 19 ₹13,644 Returns for Aditya Birla Sun Life Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month 0.2% 3 Month 1.5% 6 Month 2.8% 1 Year 6.1% 3 Year 7.7% 5 Year 10 Year 15 Year Since launch 8% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.6% 2017 8.1% 2016 10.3% 2015 2014 2013 2012 2011 2010 2009 Fund Manager information for Aditya Birla Sun Life Credit Risk Fund
Name Since Tenure Maneesh Dangi 17 Apr 15 3.96 Yr. Sunaina Cunha 1 Apr 17 2 Yr. Data below for Aditya Birla Sun Life Credit Risk Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 10.74% Equity 0.09% Debt 89.17% Debt Sector Allocation
Sector Value Corporate 75.67% Cash Equivalent 10.39% Government 8.6% Securitized 5.26% Credit Quality
Rating Value A 28.6% AA 26.91% AAA 35.38% B 0.09% BBB 2.86% Below B 1.8% Top Securities Holdings / Portfolio
Name Holding Value Quantity Sprit Textiles Private Limited
Debentures | -6% ₹421 Cr 2,785 Adilink Infra & Multitrading Private Limited
Debentures | -4% ₹300 Cr 2,650 SP Imperial Star Private Limited
Unlisted bonds | -3% ₹240 Cr 185 ASIRVAD MICRO FINANCE LIMITED
Debentures | -3% ₹214 Cr 2,500 SPANDANA SPHOORTY FINANCIAL LIMITED
Debentures | -3% ₹209 Cr 3,200 STATE BANK OF INDIA
Debentures | -3% ₹180 Cr 1,788
↓ -100 Net Receivables / (Payables)
Net Current Assets | -2% ₹168 Cr L & T Vadodara Bharuch Tollway Limited
Debentures | -2% ₹167 Cr 170,850 Tata Motors Finance Limited
Debentures | -2% ₹161 Cr 1,330 ADANI PROPERTIES PRIVATE LIMITED
Debentures | -2% ₹160 Cr 150 5. Baroda Pioneer Treasury Advantage Fund
CAGR/Annualized return of 8.1% since its launch. Ranked 4 in Low Duration category. Return for 2018 was 7% , 2017 was 7.6% and 2016 was 9.2% . Baroda Pioneer Treasury Advantage Fund
Growth Launch Date 24 Jun 09 NAV (21 May 19) ₹2,157.64 ↑ 0.70 (0.03 %) Net Assets (Cr) ₹542 on 30 Apr 19 Category Debt - Low Duration AMC Baroda Pioneer Asset Management Co. Ltd. Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.84 Sharpe Ratio 3.15 Information Ratio 0.46 Alpha Ratio -8.08 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 10.91% Effective Maturity 1 Year 27 Days Modified Duration 9 Months 29 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 14 ₹10,000 30 Apr 15 ₹10,922 30 Apr 16 ₹11,918 30 Apr 17 ₹12,977 30 Apr 18 ₹13,878 30 Apr 19 ₹14,802 Returns for Baroda Pioneer Treasury Advantage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month -0.6% 3 Month 0.6% 6 Month 2.2% 1 Year 5.6% 3 Year 7% 5 Year 7.9% 10 Year 15 Year Since launch 8.1% Historical performance (Yearly) on absolute basis
Year Returns 2018 7% 2017 7.6% 2016 9.2% 2015 9% 2014 9.4% 2013 9.3% 2012 10.1% 2011 9.2% 2010 5.8% 2009 Fund Manager information for Baroda Pioneer Treasury Advantage Fund
Name Since Tenure Hetal Shah 24 Jun 09 9.61 Yr. Alok Sahoo 24 Jun 09 9.61 Yr. Data below for Baroda Pioneer Treasury Advantage Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 24.88% Debt 75.12% Debt Sector Allocation
Sector Value Corporate 78.87% Cash Equivalent 21.11% Government 0.02% Credit Quality
Rating Value A 30.17% AA 31.5% AAA 38.33% Top Securities Holdings / Portfolio
Name Holding Value Quantity Indiabulls Housing Finance Limited
Debentures | -21% ₹120 Cr 1,200
↓ -100 Dewan Housing Finance Corporation Limited
Debentures | -13% ₹74 Cr 750,000 ARM INFRA & UTILITIES PRIVATE LIMITED
Debentures | -9% ₹49 Cr 750 Yes Bank Limited
Debentures | -8% ₹46 Cr 495 Edelweiss Commodities Services Limited
Debentures | -8% ₹44 Cr 440 Baroda Liquid B Dir Gr
Investment Fund | -6% ₹34 Cr 158,210
↑ 158,210 Aspire Home Finance Corporation Limited
Debentures | -6% ₹33 Cr 330 Net Receivable / Payable
Net Current Assets | -5% ₹31 Cr IndusInd Bank Limited
Debentures | -4% ₹24 Cr 250 Dewan Housing Finance Corporation Limited
Debentures | -4% ₹23 Cr 265,000 6. DHFL Pramerica Credit Risk Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 2 in Credit Risk category. Return for 2018 was 5.1% , 2017 was 7.3% and 2016 was 10% . DHFL Pramerica Credit Risk Fund
Growth Launch Date 29 Sep 14 NAV (21 May 19) ₹14.3871 ↑ 0.00 (0.02 %) Net Assets (Cr) ₹796 on 30 Apr 19 Category Debt - Credit Risk AMC DHFL Pramerica Asset Managers Private Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.93 Sharpe Ratio 1.15 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 10.84% Effective Maturity 1 Year 11 Months 8 Days Modified Duration 1 Year 5 Months 1 Day Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,729 30 Apr 16 ₹11,824 30 Apr 17 ₹12,928 30 Apr 18 ₹13,699 30 Apr 19 ₹14,421 Returns for DHFL Pramerica Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 May 19 Duration Returns 1 Month -0.5% 3 Month 0.6% 6 Month 2.3% 1 Year 5.1% 3 Year 6.6% 5 Year 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2018 5.1% 2017 7.3% 2016 10% 2015 10.8% 2014 2013 2012 2011 2010 2009 Fund Manager information for DHFL Pramerica Credit Risk Fund
Name Since Tenure Kumaresh Ramakrishnan 8 Mar 16 3.06 Yr. Data below for DHFL Pramerica Credit Risk Fund as on 30 Apr 19
Asset Allocation
Asset Class Value Cash 16.1% Debt 83.9% Debt Sector Allocation
Sector Value Corporate 74.46% Cash Equivalent 16.1% Government 9.43% Credit Quality
Rating Value A 34.23% AA 50.92% AAA 12.45% BBB 2.4% Top Securities Holdings / Portfolio
Name Holding Value Quantity Net Receivables / (Payables)
Net Current Assets | -10% ₹77 Cr Green Infra Wind Energy Limited
Debentures | -6% ₹50 Cr 5,000,000 Punjab and Sind Bank
Debentures | -6% ₹50 Cr 5,000,000 Business Broadcast News Holdings Limited
Debentures | -6% ₹46 Cr 4,900,000 U.P. Power Corporation Limited
Debentures | -6% ₹44 Cr 4,500,000 Hansdeep Industries & Trading Company Limited
Debentures | -5% ₹41 Cr 4,020,000 NIRCHEM Cement Limited
Debentures | -5% ₹40 Cr 4,000,000 Tata Housing Development Company Limited
Debentures | -4% ₹35 Cr 3,570,000 Oriental Hotels Limited
Debentures | -4% ₹34 Cr 2,350,000 Reliance Mediaworks Limited
Debentures | -4% ₹32 Cr 3,420,000
Smart Tips to Look for in Debt Funds
1. Yield
The yield is a measure of the interest income generated by the Bonds in the portfolio.
For instance, let's assume that a bond has a Face Value of INR 100 with an 8 percent coupon rate. This means that the investor will earn INR 8 p.a., on each bond that he invests in. As the bonds are traded in the open market, the price will fluctuate each business day. The interest rates rise and fall and demand for the bonds moves up and down. And this impacts the price of the bond. Let’s assume interest rates rise to 10 percent. Even then the investor will continue to earn INR 8. So to increase the yield to 10 percent, which is the current market rate of interest, the price of the bond will have to drop to INR 80.
In another instance, lets assume that the interest rates fall to 6 percent. Again, the investor will continue to earn INR 8. This time the price of the bond will have to go up to INR 133.
If we look at these assumptions, there are two aspects to it- the one is that the yield is not fixed, but fluctuates to changes in the interest rate. The second one is the price of the bond moves inversely to interest rates. It moves to maintain a level where it will attract buyers.
2. Yield to Maturity
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.
3. Modified Duration
Modified duration provides a fair indication of a bond’s sensitivity to a change in interest rates. The higher the duration, the more volatility the bond exhibits with a change in interest rates
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.
How to Invest in Debt Lump Sum Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
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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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