Table of Contents
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.
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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.
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Credit Risk Fund Growth ₹34.9945
↑ 0.10 ₹1,000 500 3.5 5.4 10 8.3 8.3 8.34% 2Y 11D 2Y 4M 20D Kotak Credit Risk Fund Growth ₹29.4595
↑ 0.07 ₹709 5,000 3.7 5 8.4 7.1 7.1 8.25% 2Y 4M 10D 3Y Aditya Birla Sun Life Savings Fund Growth ₹547.154
↑ 0.89 ₹17,263 1,000 2.6 4.3 8.3 7.4 7.9 7.27% 5M 16D 6M 14D IDFC Low Duration Fund Growth ₹38.5683
↑ 0.07 ₹6,161 100 2.7 4.4 8.2 7.2 7.3 7.23% 10M 24D 11M 26D HDFC Low Duration Fund Growth ₹57.7382
↑ 0.14 ₹20,033 5,000 2.8 4.4 8.3 7.2 7.4 7.21% 10M 23D 1Y 10M 24D Nippon India Low Duration Fund Growth ₹3,742.85
↑ 8.06 ₹7,513 500 2.8 4.4 8.3 7.1 7.4 7.17% 11M 6D 1Y 2M 20D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 6 Jun 25
(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. Nippon India 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 Nippon India Credit Risk Fund Returns up to 1 year are on (Erstwhile Kotak Income Opportunities Fund) The investment objective of the scheme is to generate income by investing in debt/ and money market securities across the yield curve and credit spectrum. The scheme will also seek to maintain reasonable liquidity within the fund. Kotak Credit Risk Fund is a Debt - Credit Risk fund was launched on 11 May 10. It is a fund with Moderately Low risk and has given a Below is the key information for Kotak Credit Risk 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 (Erstwhile IDFC Ultra Short Term Fund) To offer an investment avenue for short term savings by looking to generate
stable returns with a low risk strategy. The scheme will have a portfolio that is
invested in good quality debt and money market instruments such that the fund will offer a blend of liquidity with stability of returns. There can be no assurance that the investment objective of the scheme will be realized IDFC Low Duration Fund is a Debt - Low Duration fund was launched on 17 Jan 06. It is a fund with Moderately Low risk and has given a Below is the key information for IDFC Low Duration Fund Returns up to 1 year are on (Erstwhile HDFC Cash Management Fund - Treasury Advantage Plan) To generate regular income through investment in debt securities and money market instruments. HDFC Low Duration Fund is a Debt - Low Duration fund was launched on 18 Nov 99. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Low Duration Fund Returns up to 1 year are on (Erstwhile Reliance Money Manager Fund) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities. Nippon India Low Duration Fund is a Debt - Low Duration fund was launched on 20 Mar 07. It is a fund with Moderately Low risk and has given a Below is the key information for Nippon India Low Duration Fund Returns up to 1 year are on 1. Nippon India Credit Risk Fund
CAGR/Annualized
return of 6.5% since its launch. Ranked 21 in Credit Risk
category. Return for 2024 was 8.3% , 2023 was 7.9% and 2022 was 3.9% . Nippon India Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (06 Jun 25) ₹34.9945 ↑ 0.10 (0.28 %) Net Assets (Cr) ₹1,000 on 30 Apr 25 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.63 Sharpe Ratio 3.13 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 8.34% Effective Maturity 2 Years 4 Months 20 Days Modified Duration 2 Years 11 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,992 31 May 22 ₹12,151 31 May 23 ₹13,028 31 May 24 ₹14,011 31 May 25 ₹15,366 Returns for Nippon India Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 1.2% 3 Month 3.5% 6 Month 5.4% 1 Year 10% 3 Year 8.3% 5 Year 9% 10 Year 15 Year Since launch 6.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 8.3% 2023 7.9% 2022 3.9% 2021 13.5% 2020 -5.9% 2019 1.9% 2018 6.1% 2017 7% 2016 10% 2015 8.8% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Kinjal Desai 25 May 18 7.02 Yr. Sushil Budhia 1 Feb 20 5.33 Yr. Data below for Nippon India Credit Risk Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 9.07% Debt 90.65% Other 0.28% Debt Sector Allocation
Sector Value Corporate 75.62% Government 15.03% Cash Equivalent 9.07% Credit Quality
Rating Value A 21.54% AA 48.78% AAA 29.68% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.02% Govt Stock 2031
Sovereign Bonds | -8% ₹79 Cr 7,500,000 Summit Digitel Infrastructure Limited
Debentures | -6% ₹60 Cr 600 Renew Solar Energy (Jharkhand Five) Private Limited
Debentures | -5% ₹49 Cr 5,000 Century Textiles And Industries Limited
Debentures | -5% ₹46 Cr 4,500 Truhome Finance Ltd. 9.25%
Debentures | -4% ₹41 Cr 4,000 Prestige Projects Private Limited 11.75%
Debentures | -4% ₹40 Cr 4,000 Sandur Manganese And Iron Ores Limited (The) 11%
Debentures | -4% ₹39 Cr 4,000 Bamboo Hotel And Global Centre (Delhi) Private Limited
Debentures | -4% ₹38 Cr 3,800 Delhi International Airport Limited
Debentures | -4% ₹36 Cr 3,500 Vedanta Limited
Debentures | -3% ₹35 Cr 3,500 2. Kotak Credit Risk Fund
CAGR/Annualized
return of 7.4% since its launch. Ranked 18 in Credit Risk
category. Return for 2024 was 7.1% , 2023 was 6.4% and 2022 was 0.9% . Kotak Credit Risk Fund
Growth Launch Date 11 May 10 NAV (06 Jun 25) ₹29.4595 ↑ 0.07 (0.22 %) Net Assets (Cr) ₹709 on 30 Apr 25 Category Debt - Credit Risk AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.7 Sharpe Ratio 0.51 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 8.25% Effective Maturity 3 Years Modified Duration 2 Years 4 Months 10 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,873 31 May 22 ₹11,017 31 May 23 ₹11,602 31 May 24 ₹12,470 31 May 25 ₹13,490 Returns for Kotak Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 1.3% 3 Month 3.7% 6 Month 5% 1 Year 8.4% 3 Year 7.1% 5 Year 6.2% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.1% 2023 6.4% 2022 0.9% 2021 5.3% 2020 6.6% 2019 9% 2018 6.2% 2017 6.6% 2016 10.4% 2015 9.1% Fund Manager information for Kotak Credit Risk Fund
Name Since Tenure Deepak Agrawal 11 May 10 15.07 Yr. Sunit garg 1 Nov 22 2.58 Yr. Data below for Kotak Credit Risk Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 8.43% Equity 5.77% Debt 81.95% Other 3.85% Debt Sector Allocation
Sector Value Corporate 67.63% Government 14.33% Cash Equivalent 8.43% Credit Quality
Rating Value A 15.39% AA 61.53% AAA 23.08% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -9% ₹63 Cr 5,965,000 Godrej Industries Limited
Debentures | -7% ₹51 Cr 5,000 Tata Projects Ltd.
Debentures | -7% ₹51 Cr 5,000 Bamboo Hotel And Global Centre (Delhi) Private Limited
Debentures | -7% ₹50 Cr 5,000 Vedanta Limited
Debentures | -7% ₹50 Cr 5,000 Century Textiles And Industries Limited
Debentures | -7% ₹46 Cr 4,500 Aditya Birla Renewables Limited
Debentures | -6% ₹41 Cr 4,000 Indostar Capital Finance Limited
Debentures | -6% ₹40 Cr 4,000 Au Small Finance Bank Limited
Debentures | -4% ₹30 Cr 30 VAJRA 008 TRUST
Unlisted bonds | -4% ₹26 Cr 50 3. Aditya Birla Sun Life Savings Fund
CAGR/Annualized
return of 7.4% since its launch. Ranked 6 in Ultrashort Bond
category. Return for 2024 was 7.9% , 2023 was 7.2% and 2022 was 4.8% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (06 Jun 25) ₹547.154 ↑ 0.89 (0.16 %) Net Assets (Cr) ₹17,263 on 30 Apr 25 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.54 Sharpe Ratio 2.71 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.27% Effective Maturity 6 Months 14 Days Modified Duration 5 Months 16 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,553 31 May 22 ₹10,948 31 May 23 ₹11,646 31 May 24 ₹12,512 31 May 25 ₹13,520 Returns for Aditya Birla Sun Life Savings Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 0.9% 3 Month 2.6% 6 Month 4.3% 1 Year 8.3% 3 Year 7.4% 5 Year 6.3% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.9% 2023 7.2% 2022 4.8% 2021 3.9% 2020 7% 2019 8.5% 2018 7.6% 2017 7.2% 2016 9.2% 2015 8.9% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 20 Jun 14 10.95 Yr. Kaustubh Gupta 15 Jul 11 13.89 Yr. Monika Gandhi 22 Mar 21 4.2 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 39.18% Debt 60.56% Other 0.26% Debt Sector Allocation
Sector Value Corporate 65.93% Cash Equivalent 22.75% Government 11.05% Credit Quality
Rating Value AA 34.49% AAA 65.51% Top Securities Holdings / Portfolio
Name Holding Value Quantity Bank of Baroda
Debentures | -5% ₹827 Cr 17,000
↑ 17,000 Shriram Finance Company Limited
Debentures | -4% ₹611 Cr 60,000 Nirma Limited
Debentures | -3% ₹488 Cr 48,500 364 DTB
Sovereign Bonds | -3% ₹475 Cr 47,500,000 Small Industries Development Bank of India
Debentures | -2% ₹425 Cr 9,000 182 DTB 29082025
Sovereign Bonds | -2% ₹343 Cr 35,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹316 Cr 3,150
↑ 500 Mankind Pharma Ltd
Debentures | -2% ₹308 Cr 30,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹305 Cr 30,000 Avanse Financial Services Ltd 9.40%
Debentures | -2% ₹301 Cr 30,000 4. IDFC Low Duration Fund
CAGR/Annualized
return of 7.2% since its launch. Ranked 18 in Low Duration
category. Return for 2024 was 7.3% , 2023 was 6.9% and 2022 was 4% . IDFC Low Duration Fund
Growth Launch Date 17 Jan 06 NAV (06 Jun 25) ₹38.5683 ↑ 0.07 (0.18 %) Net Assets (Cr) ₹6,161 on 30 Apr 25 Category Debt - Low Duration AMC IDFC Asset Management Company Limited Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.57 Sharpe Ratio 1.96 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.23% Effective Maturity 11 Months 26 Days Modified Duration 10 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,509 31 May 22 ₹10,810 31 May 23 ₹11,493 31 May 24 ₹12,288 31 May 25 ₹13,269 Returns for IDFC Low Duration Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 0.9% 3 Month 2.7% 6 Month 4.4% 1 Year 8.2% 3 Year 7.2% 5 Year 5.9% 10 Year 15 Year Since launch 7.2% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.3% 2023 6.9% 2022 4% 2021 3.5% 2020 6.9% 2019 8.3% 2018 7.2% 2017 7% 2016 8.8% 2015 8.7% Fund Manager information for IDFC Low Duration Fund
Name Since Tenure Harshal Joshi 28 Jul 21 3.84 Yr. Brijesh Shah 10 Jun 24 0.97 Yr. Data below for IDFC Low Duration Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 40.72% Debt 59.02% Other 0.26% Debt Sector Allocation
Sector Value Corporate 60.38% Government 22.01% Cash Equivalent 17.35% Credit Quality
Rating Value AA 4.98% AAA 95.02% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹228 Cr 22,500,000 National Bank For Agriculture And Rural Development
Debentures | -4% ₹226 Cr 22,500,000
↑ 22,500,000 Bank of Baroda
Debentures | -3% ₹219 Cr 22,500,000
↑ 12,500,000 Bajaj Housing Finance Ltd. 7.14%
Debentures | -3% ₹200 Cr 20,000,000
↑ 20,000,000 Bajaj Housing Finance Limited
Debentures | -3% ₹190 Cr 18,900,000 Small Industries Development Bank Of India
Debentures | -3% ₹175 Cr 17,500,000
↑ 5,000,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹160 Cr 16,000,000 HDFC Bank Limited
Debentures | -2% ₹150 Cr 15,000,000 LIC Housing Finance Ltd
Debentures | -2% ₹149 Cr 15,000,000 Bajaj Finance Limited
Debentures | -2% ₹126 Cr 12,500,000
↓ -5,000,000 5. HDFC Low Duration Fund
CAGR/Annualized
return of 7.1% since its launch. Return for 2024 was 7.4% , 2023 was 7% and 2022 was 4.1% . HDFC Low Duration Fund
Growth Launch Date 18 Nov 99 NAV (06 Jun 25) ₹57.7382 ↑ 0.14 (0.24 %) Net Assets (Cr) ₹20,033 on 30 Apr 25 Category Debt - Low Duration AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.03 Sharpe Ratio 1.53 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.21% Effective Maturity 1 Year 10 Months 24 Days Modified Duration 10 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,642 31 May 22 ₹10,979 31 May 23 ₹11,665 31 May 24 ₹12,495 31 May 25 ₹13,493 Returns for HDFC Low Duration Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 1% 3 Month 2.8% 6 Month 4.4% 1 Year 8.3% 3 Year 7.2% 5 Year 6.2% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.4% 2023 7% 2022 4.1% 2021 3.7% 2020 8.1% 2019 8% 2018 6.5% 2017 6.4% 2016 8.6% 2015 7.7% Fund Manager information for HDFC Low Duration Fund
Name Since Tenure Anupam Joshi 27 Oct 15 9.6 Yr. Praveen Jain 6 Oct 22 2.65 Yr. Dhruv Muchhal 22 Jun 23 1.94 Yr. Data below for HDFC Low Duration Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 8.88% Debt 90.87% Other 0.25% Debt Sector Allocation
Sector Value Corporate 73.04% Government 20.88% Cash Equivalent 5.83% Credit Quality
Rating Value AA 9.21% AAA 90.79% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.81% Govt Stock 2033
Sovereign Bonds | -5% ₹1,039 Cr 100,000,000 7.59% Govt Stock 2031
Sovereign Bonds | -4% ₹920 Cr 90,000,000
↑ 5,000,000 Sikka Ports & Terminals Limited
Debentures | -3% ₹694 Cr 6,950 Mangalore Refinery And Petrochemicals Limited
Debentures | -3% ₹642 Cr 6,450 Punjab National Bank
Domestic Bonds | -2% ₹497 Cr 10,500 Bajaj Housing Finance Limited
Debentures | -2% ₹408 Cr 40,000 Aditya Birla Renewables Limited
Debentures | -2% ₹407 Cr 40,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹376 Cr 3,750 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹373 Cr 3,750
↑ 3,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹358 Cr 35,500 6. Nippon India Low Duration Fund
CAGR/Annualized
return of 7.5% since its launch. Ranked 31 in Low Duration
category. Return for 2024 was 7.4% , 2023 was 6.7% and 2022 was 4.2% . Nippon India Low Duration Fund
Growth Launch Date 20 Mar 07 NAV (06 Jun 25) ₹3,742.85 ↑ 8.06 (0.22 %) Net Assets (Cr) ₹7,513 on 30 Apr 25 Category Debt - Low Duration AMC Nippon Life Asset Management Ltd. Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.94 Sharpe Ratio 1.87 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.17% Effective Maturity 1 Year 2 Months 20 Days Modified Duration 11 Months 6 Days Growth of 10,000 investment over the years.
Date Value 31 May 20 ₹10,000 31 May 21 ₹10,615 31 May 22 ₹10,967 31 May 23 ₹11,634 31 May 24 ₹12,427 31 May 25 ₹13,420 Returns for Nippon India Low Duration Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 6 Jun 25 Duration Returns 1 Month 1% 3 Month 2.8% 6 Month 4.4% 1 Year 8.3% 3 Year 7.1% 5 Year 6.1% 10 Year 15 Year Since launch 7.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.4% 2023 6.7% 2022 4.2% 2021 4.1% 2020 7.3% 2019 7% 2018 7.4% 2017 6.6% 2016 8.5% 2015 8.4% Fund Manager information for Nippon India Low Duration Fund
Name Since Tenure Vivek Sharma 1 Feb 20 5.33 Yr. Kinjal Desai 25 May 18 7.02 Yr. Data below for Nippon India Low Duration Fund as on 30 Apr 25
Asset Allocation
Asset Class Value Cash 35.38% Debt 64.32% Other 0.3% Debt Sector Allocation
Sector Value Corporate 67.75% Government 19.17% Cash Equivalent 12.78% Credit Quality
Rating Value AA 13.96% AAA 86.04% Top Securities Holdings / Portfolio
Name Holding Value Quantity 9.35% Telangana State Industrial Infrastructure Corporation Limited
Debentures | -3% ₹203 Cr 20,000 Indinfravit Trust
Debentures | -2% ₹173 Cr 18,000 Highways Infrastructure Trust
Debentures | -2% ₹172 Cr 1,750 182 DTB 12062025
Sovereign Bonds | -2% ₹169 Cr 17,000,000 Ncd Small Industries Development Bank Of India
Debentures | -2% ₹153 Cr 15,000 Rec Limited
Debentures | -2% ₹152 Cr 15,000
↓ -500 NAOMI 05 2024
Unlisted bonds | -2% ₹150 Cr 10,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹146 Cr 14,500
↓ -5,000 Hinduja Leyland Finance Limited
Debentures | -2% ₹143 Cr 14,000 Shriram Finance Limited
Debentures | -2% ₹136 Cr 13,500
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.
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.
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
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.
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A: Debt fund managers have their techniques for evaluating each bond and assessing the debtor's chances of defaulting to pay the bond. Usually, the higher the credit rating lesser is the chance for the creditor defaulting.
A: Debt mutual funds deal with securities and bonds along other money market instruments. The chances of these instruments failing are usually less, and hence, your investment will remain secure, thereby making debt mutual funds low-risk investments.
A: Yes, sometimes fund managers do invest in low-quality securities if chances of good ROI exist. However, this will be a calculated risk taken by your fund manager and only if the portfolio of investment already has stable, high-quality securities.
A: Yes, if you opt for a Liquid Fund in which investments are made in money market instruments that have a maturity of 91 days, then you can realize your investment in a matter of three months. This is a short-term investment that you can undertake to get a better understanding of debt mutual funds.
A: Yes, you can invest long-term in debt mutual funds. For example, suppose you invest in the Nippon India Credit Risk Fund or the ICICI Prudential Regular Savings Fund. In that case, it is better that you hold your investment at least for one year, 5 months, and 19 days and 2 years, one month, and 2 days respectively, to get maximum ROI. But you can keep investing beyond that for 3 years.