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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
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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 (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity UTI Credit Risk Fund Growth ₹13.9406
↑ 0.00 ₹1,447 5,000 -10.6 -15.1 -15.7 -1.8 -4.8 15.85% 9M 29D 1Y 2M 6D Nippon India Credit Risk Fund Growth ₹25.7825
↑ 0.01 ₹5,283 500 0.4 1.7 1.4 4.7 1.9 13.75% 1Y 6M 7D 2Y 6M 22D Franklin India Credit Risk Fund Growth ₹19.1685
↑ 0.03 ₹5,899 5,000 -3.4 -2.7 -0.8 5.1 4 12.64% 1Y 11M 1D 2Y 9M 7D Franklin India Low Duration Fund Growth ₹20.9924
↑ 0.02 ₹4,627 10,000 -6.5 -5.1 -1.9 4.9 5.2 12.34% 11M 12D 1Y 2M 26D Aditya Birla Sun Life Credit Risk Fund Growth ₹13.8882
↑ 0.00 ₹5,362 1,000 -1.1 -0.3 2.5 5.5 2.1 11.2% 1Y 6M 22D 1Y 11M 26D Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹27.0577
↑ 0.01 ₹16,894 10,000 -2.1 0 4.7 7.2 9.6 10.37% 5M 19D 7M 2D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 28 Jan 20
(Erstwhile UTI Income Opportunities Fund) The investment objective of the scheme is to generate reasonable income and capital appreciation by investing in debt and money market instruments across different maturities and credit ratings. There is no assurance that the investment objective of the scheme will be achieved. UTI Credit Risk Fund is a Debt - Credit Risk fund was launched on 19 Nov 12. It is a fund with Moderate risk and has given a Below is the key information for UTI 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. 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 Franklin India Corporate Bond Opportunities Fund) The Fund seeks to provide regular income and capital appreciation through a focus on corporate securities. Franklin India Credit Risk Fund is a Debt - Credit Risk fund was launched on 30 Nov 11. It is a fund with Moderate risk and has given a Below is the key information for Franklin 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 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 To provide a combination of regular income and high liquidity by investing primarily in a mix of short term debt and money market instruments. Franklin India Ultra Short Bond Fund - Super Institutional Plan is a Debt - Ultrashort Bond fund was launched on 18 Dec 07. It is a fund with Moderate risk and has given a Below is the key information for Franklin India Ultra Short Bond Fund - Super Institutional Plan Returns up to 1 year are on 1. UTI Credit Risk Fund
CAGR/Annualized return of 4.7% since its launch. Ranked 20 in Credit Risk category. Return for 2019 was -4.8% , 2018 was 5.5% and 2017 was 6.9% . UTI Credit Risk Fund
Growth Launch Date 19 Nov 12 NAV (28 Jan 20) ₹13.9406 ↑ 0.00 (0.00 %) Net Assets (Cr) ₹1,447 on 31 Dec 19 Category Debt - Credit Risk AMC UTI Asset Management Company Ltd Rating ☆☆ Risk Moderate Expense Ratio 1.7 Sharpe Ratio -1.23 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-12 Months (1%),12 Months and above(NIL) Yield to Maturity 15.85% Effective Maturity 1 Year 2 Months 6 Days Modified Duration 9 Months 29 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,886 31 Dec 16 ₹12,008 31 Dec 17 ₹12,836 31 Dec 18 ₹13,539 31 Dec 19 ₹12,891 Returns for UTI Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 20 Duration Returns 1 Month -10.8% 3 Month -10.6% 6 Month -15.1% 1 Year -15.7% 3 Year -1.8% 5 Year 2.6% 10 Year 15 Year Since launch 4.7% Historical performance (Yearly) on absolute basis
Year Returns 2018 -4.8% 2017 5.5% 2016 6.9% 2015 10.3% 2014 8.9% 2013 11.5% 2012 7.7% 2011 2010 2009 Fund Manager information for UTI Credit Risk Fund
Name Since Tenure Ritesh Nambiar 9 Nov 12 7.15 Yr. Data below for UTI Credit Risk Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 0.06% Debt 83.13% Other 16.8% Debt Sector Allocation
Sector Value Corporate 88.89% Cash Equivalent 10.1% Government 1.01% Credit Quality
Rating Value A 13.75% AA 62.01% BBB 24.24% Top Securities Holdings / Portfolio
Name Holding Value Quantity Net Current Assets
Net Current Assets | -17% ₹268 Cr 00 Vodafone Mobile Services Limited
Debentures | -8% ₹134 Cr 1,500 DMI FINANCE PRIVATE LIMITED
Debentures | -6% ₹100 Cr 1,000 Indostar Capital Finance Limited
Debentures | -6% ₹97 Cr 100 Essar Oil Limited
Debentures | -6% ₹96 Cr 95 Yes Bank Limited
Debentures | -4% ₹71 Cr 950 AMBA River Coke Limited
Debentures | -4% ₹70 Cr 701 Edelweiss Retail Finance Limited
Debentures | -4% ₹69 Cr 750,000 Idea Cellular Limited
Debentures | -4% ₹64 Cr 950 ZEE Learn Limited
Debentures | -4% ₹62 Cr 600 2. Nippon India Credit Risk Fund
CAGR/Annualized return of 6.7% 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 (28 Jan 20) ₹25.7825 ↑ 0.01 (0.03 %) Net Assets (Cr) ₹5,283 on 31 Dec 19 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.82 Sharpe Ratio -0.39 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 13.75% Effective Maturity 2 Years 6 Months 22 Days Modified Duration 1 Year 6 Months 7 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,878 31 Dec 16 ₹11,967 31 Dec 17 ₹12,808 31 Dec 18 ₹13,585 31 Dec 19 ₹13,848 Returns for Nippon India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 20 Duration Returns 1 Month 0.3% 3 Month 0.4% 6 Month 1.7% 1 Year 1.4% 3 Year 4.7% 5 Year 6.6% 10 Year 15 Year Since launch 6.7% Historical performance (Yearly) on absolute basis
Year Returns 2018 1.9% 2017 6.1% 2016 7% 2015 10% 2014 8.8% 2013 11% 2012 8% 2011 9.6% 2010 8.4% 2009 4.7% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Prashant Pimple 9 Oct 09 10.23 Yr. Kinjal Desai 25 May 18 1.6 Yr. Data below for Nippon India Credit Risk Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 10% Debt 90% Other 0% Debt Sector Allocation
Sector Value Corporate 94.39% Cash Equivalent 5.61% Credit Quality
Rating Value A 36.39% AA 22.12% AAA 0.01% BBB 26.35% Below B 1.02% Top Securities Holdings / Portfolio
Name Holding Value Quantity RMZ Buildcon Private Limited
Debentures | -13% ₹702 Cr 10,100 Yes Bank Limited
Debentures | -9% ₹480 Cr 6,500 MARIPOSA AGRI VENTURES AND HOSPITALITIES PRIVATE LIMITED
Debentures | -6% ₹350 Cr 3,000 Vineha Enterprises Private Limited
Debentures | -5% ₹281 Cr 22,500 Renew Wind Energy (Rajasthan One) Private Limited
Debentures | -5% ₹275 Cr 3,060 Indiabulls Housing Finance Limited
Debentures | -4% ₹235 Cr 2,960 Sugee Builders Private Limited
Debentures | -4% ₹230 Cr 201 Aqua Space Developers Pvt. Ltd.
Debentures | -4% ₹215 Cr 2,150 Piramal Enterprises Limited
Debentures | -4% ₹206 Cr 2,096 INDIAN RECEIVABLE TRUST 19 FEB - 2019
Unlisted bonds | -3% ₹183 Cr 2,112 3. Franklin India Credit Risk Fund
CAGR/Annualized return of 8.3% since its launch. Ranked 16 in Credit Risk category. Return for 2019 was 4% , 2018 was 8.4% and 2017 was 8.3% . Franklin India Credit Risk Fund
Growth Launch Date 30 Nov 11 NAV (28 Jan 20) ₹19.1685 ↑ 0.03 (0.15 %) Net Assets (Cr) ₹5,899 on 31 Dec 19 Category Debt - Credit Risk AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 1.75 Sharpe Ratio 0.27 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-12 Months (3%),12-24 Months (2%),24-36 Months (1%),36 Months and above(NIL) Yield to Maturity 12.64% Effective Maturity 2 Years 9 Months 7 Days Modified Duration 1 Year 11 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,929 31 Dec 16 ₹11,881 31 Dec 17 ₹12,864 31 Dec 18 ₹13,951 31 Dec 19 ₹14,507 Returns for Franklin India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 20 Duration Returns 1 Month -3.8% 3 Month -3.4% 6 Month -2.7% 1 Year -0.8% 3 Year 5.1% 5 Year 6.6% 10 Year 15 Year Since launch 8.3% Historical performance (Yearly) on absolute basis
Year Returns 2018 4% 2017 8.4% 2016 8.3% 2015 8.7% 2014 9.3% 2013 11.9% 2012 8.6% 2011 11% 2010 2009 Fund Manager information for Franklin India Credit Risk Fund
Name Since Tenure Santosh Kamath 15 Apr 14 5.63 Yr. Kunal Agrawal 25 Oct 18 1.1 Yr. Data below for Franklin India Credit Risk Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 0.97% Debt 96.99% Other 2.04% Debt Sector Allocation
Sector Value Corporate 96.76% Cash Equivalent 0.52% Government 0.18% Credit Quality
Rating Value A 37.98% AA 43.59% AAA 6.97% BB 1.62% BBB 6.51% Below B 1.29% Top Securities Holdings / Portfolio
Name Holding Value Quantity SHRIRAM TRANSPORT FINANCE COMPANY LIMITED
Debentures | -6% ₹365 Cr 3,930 ADANI RAIL INFRA PRIVATE LIMITED
Debentures | -6% ₹348 Cr 300 Idea Cellular Limited
Debentures | -4% ₹256 Cr 3,370 Rishanth Wholesale Trading Private Ltd.
Debentures | -4% ₹231 Cr 230 Piramal Enterprises Limited
Debentures | -4% ₹230 Cr 2,300 Andhra Pradesh Capital Region Development Authority
Debentures | -3% ₹197 Cr 10,140 PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
Debentures | -3% ₹162 Cr 2,125 AADARSHINI REAL ESTATE DEVELOPERS PRIVATE LIMITED
Debentures | -3% ₹151 Cr 30 Call, Cash & Other Assets
Receivables | -3% ₹150 Cr Yes Bank Limited
Debentures | -2% ₹136 Cr 1,695 4. Franklin India Low Duration Fund
CAGR/Annualized return of 8.1% 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 (28 Jan 20) ₹20.9924 ↑ 0.02 (0.08 %) Net Assets (Cr) ₹4,627 on 31 Dec 19 Category Debt - Low Duration AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 0.78 Sharpe Ratio 0.79 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 12.34% Effective Maturity 1 Year 2 Months 26 Days Modified Duration 11 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,984 31 Dec 16 ₹12,045 31 Dec 17 ₹13,046 31 Dec 18 ₹14,148 31 Dec 19 ₹14,881 Returns for Franklin India Low Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 20 Duration Returns 1 Month -5.8% 3 Month -6.5% 6 Month -5.1% 1 Year -1.9% 3 Year 4.9% 5 Year 6.8% 10 Year 15 Year Since launch 8.1% Historical performance (Yearly) on absolute basis
Year Returns 2018 5.2% 2017 8.4% 2016 8.3% 2015 9.7% 2014 9.8% 2013 10.1% 2012 9.5% 2011 10.2% 2010 9.9% 2009 Fund Manager information for Franklin India Low Duration Fund
Name Since Tenure Santosh Kamath 15 Apr 14 5.72 Yr. Kunal Agrawal 15 Apr 14 5.72 Yr. Data below for Franklin India Low Duration Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 18.12% Debt 83.07% Debt Sector Allocation
Sector Value Corporate 97.44% Government 1.97% Cash Equivalent 0.49% Credit Quality
Rating Value A 37.1% AA 33.05% AAA 18.54% BB 4.9% BBB 5.52% Below B 0.89% Top Securities Holdings / Portfolio
Name Holding Value Quantity Greenko Clean Energy Projects Private Limited
Debentures | -6% ₹302 Cr 30,000 Small Business Fincredit India Private Limited
Debentures | -5% ₹247 Cr 2,500 Renew Power Ventures Private Limited
Debentures | -4% ₹217 Cr 2,170 PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
Debentures | -4% ₹200 Cr 2,500 Tata Realty And Infrastructure Limited
Commercial Paper | -4% ₹200 Cr 4,300
↑ 4,300 ESS KAY FINCORP LIMITED
Debentures | -4% ₹196 Cr 2,000 Tata Projects Limited
Commercial Paper | -4% ₹192 Cr 4,000 Vodafone Mobile Services Limited
Debentures | -3% ₹175 Cr 1,970 Essel Infraprojects Limited
Debentures | -3% ₹155 Cr 110 ReNew Solar Power Private Limited
Debentures | -3% ₹154 Cr 1,498
↑ 1,498 5. Aditya Birla Sun Life Credit Risk Fund
CAGR/Annualized return of 7.1% 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 (28 Jan 20) ₹13.8882 ↑ 0.00 (0.03 %) Net Assets (Cr) ₹5,362 on 31 Dec 19 Category Debt - Credit Risk AMC Birla Sun Life Asset Management Co Ltd Rating Risk Moderate Expense Ratio 1.72 Sharpe Ratio -0.35 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 11.2% Effective Maturity 1 Year 11 Months 26 Days Modified Duration 1 Year 6 Months 22 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,591 31 Dec 16 ₹11,681 31 Dec 17 ₹12,626 31 Dec 18 ₹13,460 31 Dec 19 ₹13,740 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 28 Jan 20 Duration Returns 1 Month 0.9% 3 Month -1.1% 6 Month -0.3% 1 Year 2.5% 3 Year 5.5% 5 Year 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2018 2.1% 2017 6.6% 2016 8.1% 2015 10.3% 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 4.54 Yr. Sunaina Cunha 1 Apr 17 2.58 Yr. Data below for Aditya Birla Sun Life Credit Risk Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 14.63% Equity 0.1% Debt 85.28% Debt Sector Allocation
Sector Value Corporate 60.06% Government 21.84% Cash Equivalent 14.26% Securitized 3.75% Credit Quality
Rating Value A 14.47% AA 28.01% AAA 53.85% BBB 1.84% Below B 1.84% Top Securities Holdings / Portfolio
Name Holding Value Quantity SP Imperial Star Private Limited
Unlisted bonds | -5% ₹254 Cr 185 Air India Assets Holding Limited
Debentures | -3% ₹176 Cr 1,750 L & T Vadodara Bharuch Tollway Limited
Debentures | -3% ₹170 Cr 170,850 Clearing Corporation Of India Limited
CBLO | -3% ₹166 Cr ONGC Petro Additions Limited
Debentures | -3% ₹150 Cr 150 Power Finance Corporation Ltd.
Debentures | -3% ₹149 Cr 1,450 JM Financial Products Limited
Debentures | -3% ₹147 Cr 1,500 ASIRVAD MICRO FINANCE LIMITED
Debentures | -2% ₹134 Cr 2,500 State Bank Of India
Debentures | -2% ₹122 Cr 1,150 Power Finance Corporation Ltd.
Debentures | -2% ₹100 Cr 1,000 6. Franklin India Ultra Short Bond Fund - Super Institutional Plan
CAGR/Annualized return of 8.6% since its launch. Return for 2019 was 9.6% , 2018 was 8.7% and 2017 was 8.2% . Franklin India Ultra Short Bond Fund - Super Institutional Plan
Growth Launch Date 18 Dec 07 NAV (28 Jan 20) ₹27.0577 ↑ 0.01 (0.03 %) Net Assets (Cr) ₹16,894 on 31 Dec 19 Category Debt - Ultrashort Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 0.42 Sharpe Ratio 12.5 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 10.37% Effective Maturity 7 Months 2 Days Modified Duration 5 Months 19 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,974 31 Dec 16 ₹12,036 31 Dec 17 ₹13,025 31 Dec 18 ₹14,162 31 Dec 19 ₹15,515 Returns for Franklin India Ultra Short Bond Fund - Super Institutional Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 20 Duration Returns 1 Month -3.6% 3 Month -2.1% 6 Month 0% 1 Year 4.7% 3 Year 7.2% 5 Year 8.2% 10 Year 15 Year Since launch 8.6% Historical performance (Yearly) on absolute basis
Year Returns 2018 9.6% 2017 8.7% 2016 8.2% 2015 9.7% 2014 9.7% 2013 10% 2012 10% 2011 10.3% 2010 9.4% 2009 5.9% Fund Manager information for Franklin India Ultra Short Bond Fund - Super Institutional Plan
Name Since Tenure Santosh Kamath 25 Oct 18 1.18 Yr. Pallab Roy 1 Jun 08 11.59 Yr. Data below for Franklin India Ultra Short Bond Fund - Super Institutional Plan as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 6.25% Debt 81.43% Other 12.32% Debt Sector Allocation
Sector Value Corporate 82.3% Cash Equivalent 4.2% Government 1.18% Credit Quality
Rating Value A 27.93% AA 61.79% AAA 5.75% BBB 4.54% Top Securities Holdings / Portfolio
Name Holding Value Quantity Call, Cash & Other Assets
Receivables | -12% ₹2,081 Cr Vedanta Limited
Debentures | -5% ₹795 Cr 7,900 Vodafone Mobile Services Limited
Debentures | -4% ₹722 Cr 7,990 Renew Power Ventures Private Limited
Debentures | -4% ₹674 Cr 6,740 Bharti Airtel Limited
Debentures | -3% ₹545 Cr 5,500 JM FINANCIAL CREDIT SOLUTIONS LIMITED
Debentures | -3% ₹540 Cr 5,400 Indostar Capital Finance Limited
Debentures | -3% ₹440 Cr 4,400 Bharti Airtel Limited
Debentures | -2% ₹399 Cr 4,000 INDOSTAR CAPITAL FINANCE LIMITED
Debentures | -2% ₹390 Cr 3,900
↑ 3,900 NIRCHEM Cement Limited
Debentures | -2% ₹377 Cr 3,750
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?
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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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