Table of Contents
6 Best Debt Mutual Funds for Lump sum Investments 2020
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
Talk to our investment specialist
Best Lumpsum Debt Mutual Funds FY 20 - 21
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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Credit Risk Fund Growth ₹23.6953
↑ 0.02 ₹1,333 500 2.5 3.2 -7.5 0.1 1.9 12.66% 1Y 4M 6D 1Y 9M 4D Franklin India Low Duration Fund Growth ₹21.7695
↑ 0.02 ₹2,468 10,000 2.7 5.4 -2.8 4 5.2 10.67% 9M 14D 1Y 3M 3D Kotak Credit Risk Fund Growth ₹22.6747
↑ 0.02 ₹1,905 5,000 1.3 4.2 6.2 6.7 9 9.16% 2Y 1M 10D 2Y 11M 5D Aditya Birla Sun Life Credit Risk Fund Growth ₹14.7989
↑ 0.01 ₹1,742 1,000 3 6.4 5 5.5 2.1 8.7% 2Y 11D 2Y 8M 19D Axis Credit Risk Fund Growth ₹15.7923
↑ 0.01 ₹566 5,000 2.1 4.2 8.2 5.7 4.4 8.55% 1Y 4M 24D 2Y 6M Nippon India Ultra Short Duration Fund Growth ₹2,979.12
↑ 1.60 ₹577 100 2.1 2.5 5.3 4.3 0.9 7.95% 6M 1D 9M 26D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 19 Oct 20
(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 To provide regular income to investors through investment primarily in debt funds. Franklin India Low Duration Fund is a Debt - Low Duration fund was launched on 26 Jul 10. It is a fund with Moderate risk and has given a Below is the key information for Franklin India Low Duration 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 (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 (Erstwhile Axis Fixed Income Opportunities Fund) To generate stable returns by investing in debt & money market instruments across the yield curve & credit spectrum. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns Axis Credit Risk Fund is a Debt - Credit Risk fund was launched on 15 Jul 14. It is a fund with Moderate risk and has given a Below is the key information for Axis Credit Risk Fund Returns up to 1 year are on (Erstwhile Reliance Liquid Fund - Cash Plan) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Nippon India Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 7 Dec 01. It is a fund with Low risk and has given a Below is the key information for Nippon India Ultra Short Duration Fund Returns up to 1 year are on 1. Nippon India Credit Risk Fund
CAGR/Annualized return of 5.8% since its launch. Ranked 21 in Credit Risk category. Return for 2019 was 1.9% , 2018 was 6.1% and 2017 was 7% . Nippon India Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (19 Oct 20) ₹23.6953 ↑ 0.02 (0.08 %) Net Assets (Cr) ₹1,333 on 30 Sep 20 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.82 Sharpe Ratio -1.05 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 12.66% Effective Maturity 1 Year 9 Months 4 Days Modified Duration 1 Year 4 Months 6 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹10,993 30 Sep 17 ₹11,875 30 Sep 18 ₹12,444 30 Sep 19 ₹12,909 30 Sep 20 ₹11,859 Returns for Nippon India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20 Duration Returns 1 Month 1.4% 3 Month 2.5% 6 Month 3.2% 1 Year -7.5% 3 Year 0.1% 5 Year 3.5% 10 Year 15 Year Since launch 5.8% Historical performance (Yearly) on absolute basis
Year Returns 2019 1.9% 2018 6.1% 2017 7% 2016 10% 2015 8.8% 2014 11% 2013 8% 2012 9.6% 2011 8.4% 2010 4.7% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Kinjal Desai 25 May 18 2.35 Yr. Sushil Budhia 1 Feb 20 0.66 Yr. Data below for Nippon India Credit Risk Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 11.05% Debt 88.95% Debt Sector Allocation
Sector Value Corporate 81.53% Cash Equivalent 9.56% Securitized 8.9% Credit Quality
Rating Value A 38.67% AA 18.79% AAA 1.64% Below B 0% Top Securities Holdings / Portfolio
Name Holding Value Quantity Vineha Enterprises Private Limited
Debentures | -24% ₹317 Cr 22,500 Sanghi Industries Limited
Debentures | -12% ₹164 Cr 1,660 Mariposa Agri Ventures and Hospitalities Private Limited
Debentures | -9% ₹117 Cr 894 Renew Wind Energy (Rajasthan One) Private Limited
Debentures | -8% ₹110 Cr 1,285 Indiabulls Housing Finance Limited
Debentures | -8% ₹105 Cr 1,150,000
↓ -200,000 INDIAN RECEIVABLE TRUST 19 FEB - 2019
Unlisted bonds | -7% ₹90 Cr 1,330 INNOVATION TRUST XXX
Unlisted bonds | -6% ₹77 Cr 187 Mariposa Agri Ventures and Hospitalities Private Limited
Debentures | -4% ₹60 Cr 500 INNOVATION TRUST XXX
Unlisted bonds | -3% ₹41 Cr 172
↓ -56 Narmada Wind Energy Private Limited
Debentures | -3% ₹36 Cr 429
↓ -569 2. Franklin India Low Duration Fund
CAGR/Annualized return of 7.9% since its launch. Ranked 3 in Low Duration category. Return for 2019 was 5.2% , 2018 was 8.4% and 2017 was 8.3% . Franklin India Low Duration Fund
Growth Launch Date 26 Jul 10 NAV (19 Oct 20) ₹21.7695 ↑ 0.02 (0.09 %) Net Assets (Cr) ₹2,468 on 30 Sep 20 Category Debt - Low Duration AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆ Risk Moderate Expense Ratio 0.88 Sharpe Ratio -1.08 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load 0-3 Months (0.5%),3 Months and above(NIL) Yield to Maturity 10.67% Effective Maturity 1 Year 3 Months 3 Days Modified Duration 9 Months 14 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹10,953 30 Sep 17 ₹11,958 30 Sep 18 ₹12,795 30 Sep 19 ₹13,924 30 Sep 20 ₹13,457
Purchase not allowed Returns for Franklin India Low Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20 Duration Returns 1 Month 0.8% 3 Month 2.7% 6 Month 5.4% 1 Year -2.8% 3 Year 4% 5 Year 6.1% 10 Year 15 Year Since launch 7.9% Historical performance (Yearly) on absolute basis
Year Returns 2019 5.2% 2018 8.4% 2017 8.3% 2016 9.7% 2015 9.8% 2014 10.1% 2013 9.5% 2012 10.2% 2011 9.9% 2010 Fund Manager information for Franklin India Low Duration Fund
Name Since Tenure Santosh Kamath 15 Apr 14 6.47 Yr. Kunal Agrawal 15 Apr 14 6.47 Yr. Data below for Franklin India Low Duration Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 21.11% Debt 78.89% Debt Sector Allocation
Sector Value Corporate 78.89% Cash Equivalent 21.11% Credit Quality
Rating Value A 59.38% AA 39.01% BBB 1.51% Below B 0.1% Top Securities Holdings / Portfolio
Name Holding Value Quantity Renew Power Ventures Private Limited
Debentures | -9% ₹216 Cr 2,170 ESS Kay Fincorp Limited
Debentures | -8% ₹209 Cr 2,000 Renew Solar Power Private Limited
Debentures | -6% ₹151 Cr 1,498 JM Financial Asset Reconstruction Company Limited
Debentures | -6% ₹148 Cr 1,500 JM Financial Asset Reconstruction Company Limited
Debentures | -5% ₹128 Cr 1,300 Sterlite Power Grid Ventures Limited
Debentures | -5% ₹121 Cr 1,198
↓ -252 Edelweiss Commodities Services Limited
Debentures | -4% ₹99 Cr 2,000 Talwandi Sabo Power Limited
Debentures | -4% ₹97 Cr 1,000 The Tata Power Company Limited
Debentures | -3% ₹83 Cr 780 Clix Capital Services Private Limited
Debentures | -3% ₹65 Cr 650 3. Kotak Credit Risk Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 18 in Credit Risk category. Return for 2019 was 9% , 2018 was 6.2% and 2017 was 6.6% . Kotak Credit Risk Fund
Growth Launch Date 11 May 10 NAV (19 Oct 20) ₹22.6747 ↑ 0.02 (0.11 %) Net Assets (Cr) ₹1,905 on 30 Sep 20 Category Debt - Credit Risk AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.52 Sharpe Ratio 0.54 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 9.16% Effective Maturity 2 Years 11 Months 5 Days Modified Duration 2 Years 1 Month 10 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹11,088 30 Sep 17 ₹11,910 30 Sep 18 ₹12,488 30 Sep 19 ₹13,588 30 Sep 20 ₹14,569 Returns for Kotak Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20 Duration Returns 1 Month 0% 3 Month 1.3% 6 Month 4.2% 1 Year 6.2% 3 Year 6.7% 5 Year 7.6% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2019 9% 2018 6.2% 2017 6.6% 2016 10.4% 2015 9.1% 2014 11.1% 2013 7.3% 2012 9.8% 2011 8.9% 2010 Fund Manager information for Kotak Credit Risk Fund
Name Since Tenure Deepak Agrawal 11 May 10 10.4 Yr. Data below for Kotak Credit Risk Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 8.2% Debt 91.8% Debt Sector Allocation
Sector Value Corporate 55.32% Government 36.48% Cash Equivalent 8.2% Credit Quality
Rating Value A 26.01% AA 38.25% AAA 30.14% BBB 5.61% Top Securities Holdings / Portfolio
Name Holding Value Quantity Talwandi Sabo Power Limited
Debentures | -10% ₹188 Cr 1,938 Punjab & Sind Bank
Debentures | -7% ₹137 Cr 1,384 Coastal Gujarat Power Limited
Debentures | -6% ₹107 Cr 1,000 Future Lifestyle Fashions Limited
Debentures | -5% ₹99 Cr 1,000 U.P. Power Corporation Limited
Debentures | -5% ₹94 Cr 940 Andhra Bank
Debentures | -5% ₹90 Cr 880 L&T Infrastructure Finance Company Limited
Debentures | -4% ₹83 Cr 800 Bahadur Chand Investments Private Limited
Debentures | -4% ₹75 Cr 750 Power Finance Corporation Limited
Debentures | -4% ₹67 Cr 620
↓ -230 Andhra Bank
Debentures | -3% ₹66 Cr 650 4. Aditya Birla Sun Life Credit Risk Fund
CAGR/Annualized return of 7.4% since its launch. Return for 2019 was 2.1% , 2018 was 6.6% and 2017 was 8.1% . Aditya Birla Sun Life Credit Risk Fund
Growth Launch Date 17 Apr 15 NAV (19 Oct 20) ₹14.7989 ↑ 0.01 (0.06 %) Net Assets (Cr) ₹1,742 on 30 Sep 20 Category Debt - Credit Risk AMC Birla Sun Life Asset Management Co Ltd Rating Risk Moderate Expense Ratio 1.72 Sharpe Ratio -0.28 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 8.7% Effective Maturity 2 Years 8 Months 19 Days Modified Duration 2 Years 11 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹11,011 30 Sep 17 ₹12,057 30 Sep 18 ₹12,631 30 Sep 19 ₹13,609 30 Sep 20 ₹14,041 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 19 Oct 20 Duration Returns 1 Month 1.5% 3 Month 3% 6 Month 6.4% 1 Year 5% 3 Year 5.5% 5 Year 7.1% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2019 2.1% 2018 6.6% 2017 8.1% 2016 10.3% 2015 2014 2013 2012 2011 2010 Fund Manager information for Aditya Birla Sun Life Credit Risk Fund
Name Since Tenure Sunaina Cunha 1 Apr 17 3.5 Yr. Mohit Sharma 6 Aug 20 0.15 Yr. Data below for Aditya Birla Sun Life Credit Risk Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 8.67% Equity 0.18% Debt 91.15% Debt Sector Allocation
Sector Value Corporate 69.63% Government 21.52% Cash Equivalent 8.67% Credit Quality
Rating Value A 19.07% AA 45.71% AAA 31.03% BBB 1.81% Below B 2.38% Top Securities Holdings / Portfolio
Name Holding Value Quantity L&T Vadodara Bharuch Tollway Limited
Debentures | -10% ₹170 Cr 170,850 Shriram - City Union Finance Limited
Debentures | -8% ₹139 Cr 1,400 L&T Infrastructure Finance Company Limited
Debentures | -5% ₹87 Cr 850 L&T Infrastructure Finance Company Limited
Debentures | -4% ₹67 Cr 650 Indusind Bank Limited
Debentures | -4% ₹63 Cr 700 Tata Housing Development Company Limited
Debentures | -3% ₹53 Cr 500 Coastal Gujarat Power Limited
Debentures | -3% ₹52 Cr 513 Tata Realty and Infrastructure Limited
Debentures | -3% ₹50 Cr 500 5.77% GOI 2030
Sovereign Bonds | -2% ₹39 Cr 4,000,000
↑ 2,000,000 Syndicate Bank
Debentures | -2% ₹34 Cr 330 5. Axis Credit Risk Fund
CAGR/Annualized return of 7.6% since its launch. Ranked 4 in Credit Risk category. Return for 2019 was 4.4% , 2018 was 5.9% and 2017 was 6.4% . Axis Credit Risk Fund
Growth Launch Date 15 Jul 14 NAV (19 Oct 20) ₹15.7923 ↑ 0.01 (0.08 %) Net Assets (Cr) ₹566 on 30 Sep 20 Category Debt - Credit Risk AMC Axis Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.78 Sharpe Ratio 1.31 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-12 Months (1%),12 Months and above(NIL) Yield to Maturity 8.55% Effective Maturity 2 Years 6 Months Modified Duration 1 Year 4 Months 24 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹10,908 30 Sep 17 ₹11,774 30 Sep 18 ₹12,261 30 Sep 19 ₹12,811 30 Sep 20 ₹13,854 Returns for Axis Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20 Duration Returns 1 Month 1% 3 Month 2.1% 6 Month 4.2% 1 Year 8.2% 3 Year 5.7% 5 Year 6.8% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2019 4.4% 2018 5.9% 2017 6.4% 2016 9.8% 2015 8.7% 2014 2013 2012 2011 2010 Fund Manager information for Axis Credit Risk Fund
Name Since Tenure Devang Shah 15 Jul 14 6.22 Yr. Dhaval Patel 4 Sep 20 0.07 Yr. Data below for Axis Credit Risk Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 5.93% Debt 94.07% Debt Sector Allocation
Sector Value Corporate 87.37% Securitized 6.57% Cash Equivalent 5.93% Government 0.13% Credit Quality
Rating Value A 8.1% AA 61.19% AAA 30.72% Top Securities Holdings / Portfolio
Name Holding Value Quantity Essel Mining & Industries Limited
Debentures | -6% ₹35 Cr 350 Embassy Office Parks Reit
Debentures | -6% ₹32 Cr 270 Bahadur Chand Investments Private Limited
Debentures | -5% ₹30 Cr 300 India Grid Trust
Debentures | -5% ₹26 Cr 250 MFL SECURITISATION TRUST LXXIX
Unlisted bonds | -4% ₹25 Cr 576 Nirma Limited
Debentures | -4% ₹24 Cr 250 Narmada Wind Energy Private Limited
Debentures | -4% ₹23 Cr 266 Tata Steel Limited
Debentures | -4% ₹21 Cr 120 Northern Arc Capital Limited
Debentures | -4% ₹20 Cr 200 PVR Limited
Debentures | -4% ₹20 Cr 200 6. Nippon India Ultra Short Duration Fund
CAGR/Annualized return of 6% since its launch. Ranked 62 in Ultrashort Bond category. Return for 2019 was 0.9% , 2018 was 7.3% and 2017 was 5.8% . Nippon India Ultra Short Duration Fund
Growth Launch Date 7 Dec 01 NAV (19 Oct 20) ₹2,979.12 ↑ 1.60 (0.05 %) Net Assets (Cr) ₹577 on 30 Sep 20 Category Debt - Ultrashort Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Low Expense Ratio 1.09 Sharpe Ratio 0.21 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.95% Effective Maturity 9 Months 26 Days Modified Duration 6 Months 1 Day Growth of 10,000 investment over the years.
Date Value 30 Sep 15 ₹10,000 30 Sep 16 ₹10,712 30 Sep 17 ₹11,335 30 Sep 18 ₹12,067 30 Sep 19 ₹12,209 30 Sep 20 ₹12,843 Returns for Nippon India Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20 Duration Returns 1 Month 0.7% 3 Month 2.1% 6 Month 2.5% 1 Year 5.3% 3 Year 4.3% 5 Year 5.2% 10 Year 15 Year Since launch 6% Historical performance (Yearly) on absolute basis
Year Returns 2019 0.9% 2018 7.3% 2017 5.8% 2016 6.8% 2015 7.6% 2014 8.4% 2013 8.5% 2012 9.2% 2011 9% 2010 4.5% Fund Manager information for Nippon India Ultra Short Duration Fund
Name Since Tenure Vivek Sharma 1 Oct 13 7 Yr. Kinjal Desai 25 May 18 2.35 Yr. Data below for Nippon India Ultra Short Duration Fund as on 30 Sep 20
Asset Allocation
Asset Class Value Cash 49.64% Debt 50.36% Debt Sector Allocation
Sector Value Cash Equivalent 49.64% Corporate 45.86% Government 4.51% Credit Quality
Rating Value A 27.71% AA 46.05% AAA 26.25% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 DTB 22102020
Sovereign Bonds | -13% ₹75 Cr 7,500,000
↑ 7,500,000 U.P. Power Corporation Limited
Debentures | -11% ₹65 Cr 650 Vedanta Limited
Debentures | -10% ₹57 Cr 600 Piramal Enterprises Limited
Debentures | -8% ₹47 Cr 468
↓ -30 Ahmedabad-Maliya Tollway Limited
Debentures | -7% ₹38 Cr 380 Asirvad Micro Finance Private Limited
Debentures | -6% ₹34 Cr 335 INDIAN RECEIVABLE TRUST 18 FEB 2019
Unlisted bonds | -5% ₹28 Cr 900 8.86 %Tamil Nadu SDL 2022
Sovereign Bonds | -5% ₹27 Cr 2,500,000
↑ 2,500,000 Indinfravit Trust
Unlisted bonds | -4% ₹25 Cr 250 Clix Finance India Private Limited
Debentures | -3% ₹15 Cr 150
↓ -150
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
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
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.
You Might Also Like
AMFI Registration No. 112358 | CIN: U74999MH2016PTC282153
Shepard Technologies Pvt. Ltd. (with ARN code 112358) makes no warranties or representations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable.
©2020 Shepard Technologies Private Limited. All Rights Reserved