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6 Best Debt Mutual Funds for Lump sum Investments 2024
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 24 - 25
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 (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Credit Risk Fund Growth ₹32.7506
↓ 0.00 ₹1,028 500 2.3 4.2 8.1 6.5 7.9 8.84% 1Y 10M 6D 2Y 5M 5D ICICI Prudential Regular Savings Fund Growth ₹29.8856
↑ 0.01 ₹6,500 10,000 2.7 4.5 9 6.8 7.2 8.63% 1Y 9M 29D 2Y 4M 10D Kotak Credit Risk Fund Growth ₹27.7385
↓ -0.01 ₹779 5,000 1.4 3 8.1 4.7 6.4 8.59% 2Y 4M 6D 3Y SBI Credit Risk Fund Growth ₹42.8633
↓ -0.02 ₹2,363 5,000 2 4.2 7.9 6.5 8.3 8.45% 2Y 14D 2Y 8M 16D L&T Credit Risk Fund Growth ₹27.1806
↓ -0.02 ₹574 10,000 2.1 3.8 7.1 5.4 6.5 8.04% 2Y 3M 29D 2Y 11M 26D Nippon India Low Duration Fund Growth ₹3,541.65
↑ 0.94 ₹6,262 500 1.9 3.6 7.2 5.8 6.7 7.89% 10M 22D 1Y 2M 27D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Oct 24
(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 The fund’s objective is to provide reasonable returns, by maintaining an optimum balance of safety, liquidity and yield, through investments in a basket of debt and money market instruments with a view to delivering consistent performance. However, there can be no assurance that the investment objective of the Scheme will be realized. ICICI Prudential Regular Savings Fund is a Debt - Credit Risk fund was launched on 3 Dec 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Regular Savings 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 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 L&T Income Opportunities Fund) The Scheme seeks to generate regular returns and capital appreciation by investing in debt (including securitised debt), government and money market securities. L&T Credit Risk Fund is a Debt - Credit Risk fund was launched on 8 Oct 09. It is a fund with Moderate risk and has given a Below is the key information for L&T Credit Risk 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 6.3% since its launch. Ranked 21 in Credit Risk category. Return for 2023 was 7.9% , 2022 was 3.9% and 2021 was 13.5% . Nippon India Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (04 Oct 24) ₹32.7506 ↓ 0.00 (-0.01 %) Net Assets (Cr) ₹1,028 on 31 Aug 24 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.63 Sharpe Ratio 1.86 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 8.84% Effective Maturity 2 Years 5 Months 5 Days Modified Duration 1 Year 10 Months 6 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹9,187 30 Sep 21 ₹10,601 30 Sep 22 ₹10,978 30 Sep 23 ₹11,836 30 Sep 24 ₹12,791 Returns for Nippon India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month 0.8% 3 Month 2.3% 6 Month 4.2% 1 Year 8.1% 3 Year 6.5% 5 Year 5.1% 10 Year 15 Year Since launch 6.3% Historical performance (Yearly) on absolute basis
Year Returns 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% 2014 11% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Kinjal Desai 25 May 18 6.27 Yr. Sushil Budhia 1 Feb 20 4.58 Yr. Data below for Nippon India Credit Risk Fund as on 31 Aug 24
Asset Allocation
Asset Class Value Cash 10.21% Debt 89.53% Other 0.26% Debt Sector Allocation
Sector Value Corporate 74.69% Government 14.85% Cash Equivalent 10.21% Credit Quality
Rating Value A 18.72% AA 47.31% AAA 33.97% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2030
Sovereign Bonds | -7% ₹72 Cr 7,000,000 Summit Digitel Infrastructure Limited
Debentures | -6% ₹61 Cr 620 7.1% Govt Stock 2029
Sovereign Bonds | -5% ₹51 Cr 5,000,000 JSW Steel Limited
Debentures | -5% ₹50 Cr 500 Shriram Housing Finance Limited 9.25%
Debentures | -4% ₹40 Cr 4,000 DLF Cyber City Developers Limited 8.4%
Debentures | -4% ₹40 Cr 4,000 Prestige Projects Private Limited 11.75%
Debentures | -4% ₹40 Cr 4,000 Century Textiles & Industries Ltd. 8.55%
Debentures | -4% ₹40 Cr 4,000
↑ 4,000 Piramal Capital & Housing Finance Limited
Debentures | -4% ₹37 Cr 485,063 Greenlam Industries Limited
Debentures | -3% ₹36 Cr 360
↓ -45 2. ICICI Prudential Regular Savings Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 26 in Credit Risk category. Return for 2023 was 7.2% , 2022 was 5.1% and 2021 was 6.2% . ICICI Prudential Regular Savings Fund
Growth Launch Date 3 Dec 10 NAV (04 Oct 24) ₹29.8856 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹6,500 on 15 Sep 24 Category Debt - Credit Risk AMC ICICI Prudential Asset Management Company Limited Rating ☆ Risk Moderate Expense Ratio 1.54 Sharpe Ratio 1.61 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 100 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 8.63% Effective Maturity 2 Years 4 Months 10 Days Modified Duration 1 Year 9 Months 29 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹10,988 30 Sep 21 ₹11,850 30 Sep 22 ₹12,379 30 Sep 23 ₹13,237 30 Sep 24 ₹14,423 Returns for ICICI Prudential Regular Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month 0.8% 3 Month 2.7% 6 Month 4.5% 1 Year 9% 3 Year 6.8% 5 Year 7.6% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.2% 2022 5.1% 2021 6.2% 2020 9.8% 2019 9.5% 2018 6.6% 2017 6.8% 2016 9.5% 2015 9% 2014 11% Fund Manager information for ICICI Prudential Regular Savings Fund
Name Since Tenure Manish Banthia 7 Nov 16 7.82 Yr. Akhil Kakkar 22 Jan 24 0.61 Yr. Data below for ICICI Prudential Regular Savings Fund as on 15 Sep 24
Asset Allocation
Asset Class Value Cash 16.61% Equity 1.84% Debt 81.24% Other 0.31% Debt Sector Allocation
Sector Value Corporate 73.06% Government 10.28% Cash Equivalent 9.12% Securitized 5.39% Credit Quality
Rating Value A 14.34% AA 59.85% AAA 25.81% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -6% ₹363 Cr 35,630,230 Embassy Office Parks Reit
Unlisted bonds | -5% ₹301 Cr 7,756,117
↓ -700,000 Varroc Engineering Limited
Debentures | -4% ₹248 Cr 25,000 7.1% Govt Stock 2034
Sovereign Bonds | -4% ₹242 Cr 23,795,630 Millennia Realtors Private Limited
Debentures | -3% ₹210 Cr 2,100 Aadhar Housing Finance Ltd
Debentures | -3% ₹175 Cr 17,500 Nirma Limited
Debentures | -2% ₹151 Cr 15,000 Dlf Home Developers Limited
Debentures | -2% ₹150 Cr 15,000 Kalpataru Projects International Limited
Debentures | -2% ₹149 Cr 15,000 HDFC Bank Ltd.
Debentures | -2% ₹121 Cr 2,500 3. Kotak Credit Risk Fund
CAGR/Annualized return of 7.3% since its launch. Ranked 18 in Credit Risk category. Return for 2023 was 6.4% , 2022 was 0.9% and 2021 was 5.3% . Kotak Credit Risk Fund
Growth Launch Date 11 May 10 NAV (04 Oct 24) ₹27.7385 ↓ -0.01 (-0.02 %) Net Assets (Cr) ₹779 on 31 Aug 24 Category Debt - Credit Risk AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.7 Sharpe Ratio 1.56 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 8.59% Effective Maturity 3 Years Modified Duration 2 Years 4 Months 6 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹10,722 30 Sep 21 ₹11,417 30 Sep 22 ₹11,461 30 Sep 23 ₹12,100 30 Sep 24 ₹13,084 Returns for Kotak Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month -0.3% 3 Month 1.4% 6 Month 3% 1 Year 8.1% 3 Year 4.7% 5 Year 5.5% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 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% 2014 11.1% Fund Manager information for Kotak Credit Risk Fund
Name Since Tenure Deepak Agrawal 11 May 10 14.32 Yr. Sunit garg 1 Nov 22 1.83 Yr. Data below for Kotak Credit Risk Fund as on 31 Aug 24
Asset Allocation
Asset Class Value Cash 10.12% Equity 2.13% Debt 84.2% Other 3.55% Debt Sector Allocation
Sector Value Corporate 68.18% Government 10.93% Cash Equivalent 10.12% Securitized 5.09% Credit Quality
Rating Value A 10.34% AA 64.77% AAA 24.89% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -10% ₹75 Cr 7,365,000 The Tata Power Company Limited
Debentures | -9% ₹69 Cr 650 Godrej Industries Limited
Debentures | -6% ₹50 Cr 5,000 Tata Projects Limited
Debentures | -6% ₹50 Cr 5,000
↑ 5,000 Aadhar Housing Finance Limited
Debentures | -6% ₹45 Cr 900 Century Textiles And Industried Limited
Debentures | -5% ₹42 Cr 4,200 VAJRA 008 TRUST
Unlisted bonds | -5% ₹41 Cr 50 Prestige Projects Private Limited 0.1175%
Debentures | -5% ₹40 Cr 4,000 Indostar Capital Finance Limited
Debentures | -5% ₹40 Cr 4,000 India Grid Trust 0.0788%
Debentures | -5% ₹35 Cr 3,500 4. SBI Credit Risk Fund
CAGR/Annualized return of 7.5% since its launch. Ranked 3 in Credit Risk category. Return for 2023 was 8.3% , 2022 was 4.2% and 2021 was 5% . SBI Credit Risk Fund
Growth Launch Date 19 Jul 04 NAV (04 Oct 24) ₹42.8633 ↓ -0.02 (-0.05 %) Net Assets (Cr) ₹2,363 on 15 Sep 24 Category Debt - Credit Risk AMC SBI Funds Management Private Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.56 Sharpe Ratio 0.9 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 8.45% Effective Maturity 2 Years 8 Months 16 Days Modified Duration 2 Years 14 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹10,840 30 Sep 21 ₹11,622 30 Sep 22 ₹12,021 30 Sep 23 ₹13,014 30 Sep 24 ₹14,038 Returns for SBI Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month 0.6% 3 Month 2% 6 Month 4.2% 1 Year 7.9% 3 Year 6.5% 5 Year 7% 10 Year 15 Year Since launch 7.5% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.3% 2022 4.2% 2021 5% 2020 9.8% 2019 6.5% 2018 6.2% 2017 6.9% 2016 10.5% 2015 9.7% 2014 10.6% Fund Manager information for SBI Credit Risk Fund
Name Since Tenure Lokesh Mallya 1 Feb 17 7.59 Yr. Pradeep Kesavan 1 Dec 23 0.75 Yr. Adesh Sharma 1 Dec 23 0.75 Yr. Data below for SBI Credit Risk Fund as on 15 Sep 24
Asset Allocation
Asset Class Value Cash 10.67% Equity 2.66% Debt 86.36% Other 0.31% Debt Sector Allocation
Sector Value Corporate 69.62% Government 16.73% Cash Equivalent 10.67% Credit Quality
Rating Value A 11.14% AA 65.42% AAA 23.44% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2034
Sovereign Bonds | -12% ₹290 Cr 28,500,000 Aadhar Housing Finance Limited
Debentures | -5% ₹112 Cr 11,200 Nirma Limited
Debentures | -5% ₹111 Cr 11,000 Infopark Properties Limited
Debentures | -4% ₹105 Cr 10,500 Jindal Stainless Limited
Debentures | -4% ₹88 Cr 900 Avanse Financial Services Limited
Debentures | -3% ₹80 Cr 8,000 Renserv Global Pvt Ltd.
Debentures | -3% ₹80 Cr 8,000 JSW Steel Limited
Debentures | -3% ₹75 Cr 750 Rural Electrification Corporation Limited
Debentures | -3% ₹75 Cr 7,500 Nuvoco Vistas Corporation Limited
Debentures | -3% ₹75 Cr 750 5. L&T Credit Risk Fund
CAGR/Annualized return of 6.9% since its launch. Ranked 12 in Credit Risk category. Return for 2023 was 6.5% , 2022 was 3.2% and 2021 was 5.7% . L&T Credit Risk Fund
Growth Launch Date 8 Oct 09 NAV (04 Oct 24) ₹27.1806 ↓ -0.02 (-0.09 %) Net Assets (Cr) ₹574 on 31 Aug 24 Category Debt - Credit Risk AMC L&T Investment Management Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 1.65 Sharpe Ratio -0.65 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 1,000 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 8.04% Effective Maturity 2 Years 11 Months 26 Days Modified Duration 2 Years 3 Months 29 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹10,434 30 Sep 21 ₹11,174 30 Sep 22 ₹11,458 30 Sep 23 ₹12,212 30 Sep 24 ₹13,079 Returns for L&T Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month 0.7% 3 Month 2.1% 6 Month 3.8% 1 Year 7.1% 3 Year 5.4% 5 Year 5.5% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2023 6.5% 2022 3.2% 2021 5.7% 2020 5% 2019 2.3% 2018 5.6% 2017 7.2% 2016 10.1% 2015 9.4% 2014 11.4% Fund Manager information for L&T Credit Risk Fund
Name Since Tenure Kapil Punjabi 26 Nov 22 1.76 Yr. Shriram Ramanathan 24 Nov 12 11.78 Yr. Data below for L&T Credit Risk Fund as on 31 Aug 24
Asset Allocation
Asset Class Value Cash 14.54% Debt 85.2% Other 0.26% Debt Sector Allocation
Sector Value Corporate 52.8% Government 32.4% Cash Equivalent 14.54% Credit Quality
Rating Value AA 56.6% AAA 43.4% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -11% ₹61 Cr 6,000,000
↓ -500,000 7.32% Govt Stock 2030
Sovereign Bonds | -8% ₹47 Cr 4,500,000 Godrej Housing Finance Limited
Debentures | -6% ₹32 Cr 300 Godrej Industries Limited
Debentures | -5% ₹28 Cr 275 Nirma Limited
Debentures | -5% ₹26 Cr 2,500 Small Industries Development Bank Of India
Debentures | -5% ₹26 Cr 2,500 7.1% Govt Stock 2029
Sovereign Bonds | -5% ₹26 Cr 2,500,000 JSW Steel Limited
Debentures | -5% ₹26 Cr 250 National Bank for Agriculture and Rural Development
Domestic Bonds | -4% ₹26 Cr 2,500
↑ 2,500 Nuvoco Vistas Corporation Limited
Debentures | -4% ₹25 Cr 250 6. Nippon India Low Duration Fund
CAGR/Annualized return of 7.5% since its launch. Ranked 31 in Low Duration category. Return for 2023 was 6.7% , 2022 was 4.2% and 2021 was 4.1% . Nippon India Low Duration Fund
Growth Launch Date 20 Mar 07 NAV (04 Oct 24) ₹3,541.65 ↑ 0.94 (0.03 %) Net Assets (Cr) ₹6,262 on 31 Aug 24 Category Debt - Low Duration AMC Nippon Life Asset Management Ltd. Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.94 Sharpe Ratio -0.25 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.89% Effective Maturity 1 Year 2 Months 27 Days Modified Duration 10 Months 22 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 19 ₹10,000 30 Sep 20 ₹10,789 30 Sep 21 ₹11,312 30 Sep 22 ₹11,699 30 Sep 23 ₹12,480 30 Sep 24 ₹13,377 Returns for Nippon India Low Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 24 Duration Returns 1 Month 0.7% 3 Month 1.9% 6 Month 3.6% 1 Year 7.2% 3 Year 5.8% 5 Year 6% 10 Year 15 Year Since launch 7.5% Historical performance (Yearly) on absolute basis
Year Returns 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% 2014 9% Fund Manager information for Nippon India Low Duration Fund
Name Since Tenure Vivek Sharma 1 Feb 20 4.58 Yr. Kinjal Desai 25 May 18 6.27 Yr. Data below for Nippon India Low Duration Fund as on 31 Aug 24
Asset Allocation
Asset Class Value Cash 26.01% Debt 73.74% Other 0.25% Debt Sector Allocation
Sector Value Corporate 73.32% Government 15.39% Cash Equivalent 11.03% Credit Quality
Rating Value AA 14.93% AAA 85.07% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹244 Cr 24,500 Highways Infrastructure Trust
Debentures | -3% ₹172 Cr 1,750 NAOMI 05 2024
Unlisted bonds | -3% ₹171 Cr 10,000 Canara Bank
Domestic Bonds | -3% ₹169 Cr 3,500 India Grid Trust
Debentures | -2% ₹151 Cr 15,000 91 DTB 121122024
Sovereign Bonds | -2% ₹148 Cr 15,000,000
↑ 15,000,000 India (Republic of)
- | -2% ₹140 Cr 14,500,000
↑ 14,500,000 Union Bank of India
Domestic Bonds | -2% ₹120 Cr 2,500 08.67 MH Sdl 2026
Sovereign Bonds | -2% ₹113 Cr 11,000,000 Small Industries Development Bank Of India
Debentures | -2% ₹105 Cr 10,500
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.
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FAQs
1. How do debt fund managers identify which is high-quality security?
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.
2. Why is debt mutual funds low-risk?
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.
3. Do fund managers invest in low-quality securities?
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.
4. Is there any short-term debt mutual fund?
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.
5. Can I invest long-term in a debt mutual fund?
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.
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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