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6 Best Debt Mutual Funds for Lump sum Investments 2022
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 22 - 23
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 (%) 2021 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Regular Savings Fund Growth ₹25.6461
↑ 0.02 ₹8,014 10,000 1.5 1.9 4.4 7.4 6.2 8.08% 1Y 5M 19D 2Y 5M 5D HDFC Credit Risk Debt Fund Growth ₹19.6678
↑ 0.02 ₹8,700 5,000 1.6 1 3.1 7.4 7 8.07% 2Y 29D 2Y 8M 16D Nippon India Credit Risk Fund Growth ₹28.097
↑ 0.01 ₹1,030 500 1.4 1.1 3.5 3.2 13.5 7.95% 1Y 8M 5D 2Y 4D Aditya Birla Sun Life Credit Risk Fund Growth ₹16.8941
↑ 0.01 ₹1,225 1,000 4 4.2 6.4 6.4 6.4 7.76% 1Y 9M 7D 2Y 9M 4D Axis Credit Risk Fund Growth ₹17.4424
↑ 0.01 ₹666 5,000 1.4 1.3 3.3 6.3 6 7.72% 1Y 5M 26D 1Y 11M 19D SBI Credit Risk Fund Growth ₹36.7531
↑ 0.02 ₹2,952 5,000 1.5 1.6 3.5 6.3 5 7.57% 1Y 7M 13D 2Y 7M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Oct 22
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 HDFC Corporate Debt Opportunities Fund) To generate regular income and capital appreciation by investing predominantly in corporate debt. HDFC Credit Risk Debt Fund is a Debt - Credit Risk fund was launched on 25 Mar 14. It is a fund with Moderate risk and has given a Below is the key information for HDFC Credit Risk Debt 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 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 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 1. ICICI Prudential Regular Savings Fund
CAGR/Annualized return of 8.3% since its launch. Ranked 26 in Credit Risk category. Return for 2021 was 6.2% , 2020 was 9.8% and 2019 was 9.5% . ICICI Prudential Regular Savings Fund
Growth Launch Date 3 Dec 10 NAV (04 Oct 22) ₹25.6461 ↑ 0.02 (0.07 %) Net Assets (Cr) ₹8,014 on 31 Aug 22 Category Debt - Credit Risk AMC ICICI Prudential Asset Management Company Limited Rating ☆ Risk Moderate Expense Ratio 1.53 Sharpe Ratio 0.65 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 8.08% Effective Maturity 2 Years 5 Months 5 Days Modified Duration 1 Year 5 Months 19 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,506 30 Sep 19 ₹11,455 30 Sep 20 ₹12,586 30 Sep 21 ₹13,574 30 Sep 22 ₹14,179 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 22 Duration Returns 1 Month 0.1% 3 Month 1.5% 6 Month 1.9% 1 Year 4.4% 3 Year 7.4% 5 Year 7.2% 10 Year 15 Year Since launch 8.3% Historical performance (Yearly) on absolute basis
Year Returns 2021 6.2% 2020 9.8% 2019 9.5% 2018 6.6% 2017 6.8% 2016 9.5% 2015 9% 2014 11% 2013 7.5% 2012 9.4% Fund Manager information for ICICI Prudential Regular Savings Fund
Name Since Tenure Manish Banthia 7 Nov 16 5.82 Yr. Akhil Kakkar 3 Jun 17 5.25 Yr. Data below for ICICI Prudential Regular Savings Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 17.81% Equity 3.58% Debt 78.61% Debt Sector Allocation
Sector Value Corporate 71.27% Cash Equivalent 14.76% Government 10.07% Securitized 0.34% Credit Quality
Rating Value A 11.05% AA 65.52% AAA 22.87% B 0.56% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.54% Govt Stock 2032
Sovereign Bonds | -3% ₹253 Cr 26,523,750
↓ -30,000,000 Prestige Estates Projects Limited
Debentures | -3% ₹252 Cr 2,500 Nayara Energy Limited
Debentures | -3% ₹243 Cr 2,500 Aditya Birla Fashion And Retail Limited
Debentures | -3% ₹222 Cr 1,750 Embassy Office Parks Reit
-, Since 31 Jul 20 | -3% ₹207 Cr 5,712,698 National Bank For Agriculture And Rural Development
Debentures | -2% ₹198 Cr 2,000
↑ 2,000 Ongc Petro Additions Limited
Debentures | -2% ₹197 Cr 2,000 182 DTB 16032023
Sovereign Bonds | -2% ₹194 Cr 20,000,000
↑ 20,000,000 JM Financial Credit Solutions Limited
Debentures | -2% ₹174 Cr 1,750 The Great Eastern Shipping Company Limited
Debentures | -2% ₹173 Cr 1,743 2. HDFC Credit Risk Debt Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 9 in Credit Risk category. Return for 2021 was 7% , 2020 was 10.9% and 2019 was 8.6% . HDFC Credit Risk Debt Fund
Growth Launch Date 25 Mar 14 NAV (04 Oct 22) ₹19.6678 ↑ 0.02 (0.10 %) Net Assets (Cr) ₹8,700 on 31 Aug 22 Category Debt - Credit Risk AMC HDFC Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.55 Sharpe Ratio -0.29 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load 0-12 Months (1%),12-18 Months (0.5%),18 Months and above(NIL) Yield to Maturity 8.07% Effective Maturity 2 Years 8 Months 16 Days Modified Duration 2 Years 29 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,341 30 Sep 19 ₹11,262 30 Sep 20 ₹12,296 30 Sep 21 ₹13,538 30 Sep 22 ₹13,951 Returns for HDFC Credit Risk Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 22 Duration Returns 1 Month 0% 3 Month 1.6% 6 Month 1% 1 Year 3.1% 3 Year 7.4% 5 Year 6.9% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2021 7% 2020 10.9% 2019 8.6% 2018 5.4% 2017 6.6% 2016 11% 2015 9% 2014 2013 2012 Fund Manager information for HDFC Credit Risk Debt Fund
Name Since Tenure Shobhit Mehrotra 25 Mar 14 8.44 Yr. Priya Ranjan 1 May 22 0.33 Yr. Data below for HDFC Credit Risk Debt Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 12.38% Equity 1.68% Debt 85.94% Debt Sector Allocation
Sector Value Corporate 74.44% Cash Equivalent 12.38% Government 11.5% Credit Quality
Rating Value A 4.53% AA 54.84% AAA 40.64% Top Securities Holdings / Portfolio
Name Holding Value Quantity Bharti Hexacom Limited
Debentures | -4% ₹354 Cr 3,600 Indinfravit TRust
Debentures | -4% ₹343 Cr 3,500 Pipeline Infrastructure Limited
Debentures | -4% ₹327 Cr 3,200 Power Finance Corporation Ltd.
Debentures | -3% ₹301 Cr 2,790 Dlf Cyber City Developers Ltd
Debentures | -3% ₹267 Cr 2,750 The Tata Power Company Limited
Debentures | -3% ₹222 Cr 2,030 Green Infra Wind Energy Limited
Debentures | -2% ₹206 Cr 2,350 TATA Motors Limited
Debentures | -2% ₹205 Cr 2,000 7.1% Govt Stock 2029
Sovereign Bonds | -2% ₹199 Cr 20,000,000 TVS Credit Services Limited
Debentures | -2% ₹198 Cr 200 3. Nippon India Credit Risk Fund
CAGR/Annualized return of 6.1% since its launch. Ranked 21 in Credit Risk category. Return for 2021 was 13.5% , 2020 was -5.9% and 2019 was 1.9% . Nippon India Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (04 Oct 22) ₹28.097 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹1,030 on 31 Aug 22 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.82 Sharpe Ratio -0.09 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 7.95% Effective Maturity 2 Years 4 Days Modified Duration 1 Year 8 Months 5 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,479 30 Sep 19 ₹10,871 30 Sep 20 ₹9,987 30 Sep 21 ₹11,524 30 Sep 22 ₹11,934 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 22 Duration Returns 1 Month 0.2% 3 Month 1.4% 6 Month 1.1% 1 Year 3.5% 3 Year 3.2% 5 Year 3.6% 10 Year 15 Year Since launch 6.1% Historical performance (Yearly) on absolute basis
Year Returns 2021 13.5% 2020 -5.9% 2019 1.9% 2018 6.1% 2017 7% 2016 10% 2015 8.8% 2014 11% 2013 8% 2012 9.6% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Kinjal Desai 25 May 18 4.27 Yr. Sushil Budhia 1 Feb 20 2.58 Yr. Data below for Nippon India Credit Risk Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 12.58% Debt 87.42% Debt Sector Allocation
Sector Value Corporate 64.69% Government 18.74% Cash Equivalent 12.58% Securitized 3.99% Credit Quality
Rating Value A 19.82% AA 37.44% AAA 42.74% Top Securities Holdings / Portfolio
Name Holding Value Quantity JSW Steel Limited
Debentures | -5% ₹55 Cr 550 Tata Realty And Infrastructure Limited
Debentures | -5% ₹49 Cr 500 Piramal Capital & Housing Finance Limited
Debentures | -5% ₹48 Cr 594,997 5.22% Govt Stock 2025
Sovereign Bonds | -5% ₹48 Cr 5,000,000 7.35% Govt Stock 2024
Sovereign Bonds | -4% ₹45 Cr 4,500,000 Greenlam Industries Limited
Debentures | -4% ₹44 Cr 450 L&T Metro Rail (Hyderabad) Limited
Debentures | -4% ₹42 Cr 400 Nirma Limited
Debentures | -4% ₹40 Cr 400 Grasim Industries Limited
Debentures | -3% ₹35 Cr 350 Summit Digitel Infrastructure Limited
Debentures | -3% ₹34 Cr 350 4. Aditya Birla Sun Life Credit Risk Fund
CAGR/Annualized return of 7.3% since its launch. Return for 2021 was 6.4% , 2020 was 9.4% and 2019 was 2.1% . Aditya Birla Sun Life Credit Risk Fund
Growth Launch Date 17 Apr 15 NAV (04 Oct 22) ₹16.8941 ↑ 0.01 (0.06 %) Net Assets (Cr) ₹1,225 on 31 Aug 22 Category Debt - Credit Risk AMC Birla Sun Life Asset Management Co Ltd Rating Risk Moderate Expense Ratio 1.81 Sharpe Ratio 0.83 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 7.76% Effective Maturity 2 Years 9 Months 4 Days Modified Duration 1 Year 9 Months 7 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,476 30 Sep 19 ₹11,287 30 Sep 20 ₹11,646 30 Sep 21 ₹12,627 30 Sep 22 ₹13,431 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 4 Oct 22 Duration Returns 1 Month 0.2% 3 Month 4% 6 Month 4.2% 1 Year 6.4% 3 Year 6.4% 5 Year 6.1% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 2021 6.4% 2020 9.4% 2019 2.1% 2018 6.6% 2017 8.1% 2016 10.3% 2015 2014 2013 2012 Fund Manager information for Aditya Birla Sun Life Credit Risk Fund
Name Since Tenure Sunaina Cunha 17 Apr 15 7.38 Yr. Mohit Sharma 6 Aug 20 2.07 Yr. Data below for Aditya Birla Sun Life Credit Risk Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 3.73% Equity 0.46% Debt 95.82% Debt Sector Allocation
Sector Value Corporate 73.64% Government 22.17% Cash Equivalent 3.73% Credit Quality
Rating Value A 6.34% AA 62.96% AAA 30.7% Top Securities Holdings / Portfolio
Name Holding Value Quantity Shriram City Union Finance Limited
Debentures | -8% ₹102 Cr 1,000 The Tata Power Company Limited
Debentures | -6% ₹76 Cr 750 Indusind Bank Limited
Debentures | -5% ₹59 Cr 580 Tata Housing Development Company Limited
Debentures | -3% ₹43 Cr 350 Bharti Hexacom Limited
Debentures | -3% ₹42 Cr 430 Telesonic Networks Limited
Debentures | -3% ₹42 Cr 420 Tata Realty And Infrastructure Limited
Debentures | -3% ₹41 Cr 420 JM Financial Credit Solutions Limited
Debentures | -3% ₹37 Cr 370 Bharti Hexacom Limited
Debentures | -3% ₹34 Cr 350 Steel Authority Of India Limited
Debentures | -3% ₹31 Cr 300 5. Axis Credit Risk Fund
CAGR/Annualized return of 7% since its launch. Ranked 4 in Credit Risk category. Return for 2021 was 6% , 2020 was 8.2% and 2019 was 4.4% . Axis Credit Risk Fund
Growth Launch Date 15 Jul 14 NAV (04 Oct 22) ₹17.4424 ↑ 0.01 (0.08 %) Net Assets (Cr) ₹666 on 31 Aug 22 Category Debt - Credit Risk AMC Axis Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.66 Sharpe Ratio -0.34 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 7.72% Effective Maturity 1 Year 11 Months 19 Days Modified Duration 1 Year 5 Months 26 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,414 30 Sep 19 ₹10,880 30 Sep 20 ₹11,767 30 Sep 21 ₹12,648 30 Sep 22 ₹13,071 Returns for Axis Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 22 Duration Returns 1 Month 0.1% 3 Month 1.4% 6 Month 1.3% 1 Year 3.3% 3 Year 6.3% 5 Year 5.5% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2021 6% 2020 8.2% 2019 4.4% 2018 5.9% 2017 6.4% 2016 9.8% 2015 8.7% 2014 2013 2012 Fund Manager information for Axis Credit Risk Fund
Name Since Tenure Devang Shah 15 Jul 14 8.14 Yr. Akhil Thakker 9 Nov 21 0.81 Yr. Data below for Axis Credit Risk Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 16.15% Debt 83.85% Debt Sector Allocation
Sector Value Corporate 64.73% Government 16.9% Cash Equivalent 16.15% Securitized 2.22% Credit Quality
Rating Value A 9.88% AA 49.3% AAA 40.82% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.15% Govt Stock 2025
Sovereign Bonds | -7% ₹47 Cr 5,000,000 Aditya Birla Fashion And Retail Limited
Debentures | -5% ₹32 Cr 250 7.38% Govt Stock 2027
Sovereign Bonds | -5% ₹30 Cr 3,000,000
↑ 2,000,000 Bahadur Chand Investments Private Limited
Debentures | -5% ₹30 Cr 300 Godrej Properties Limited
Debentures | -4% ₹25 Cr 250 Godrej Housing Finance Limited
Debentures | -4% ₹25 Cr 250
↑ 250 Flometallic India Private Limited
Debentures | -4% ₹25 Cr 250 Birla Corporation Limited
Debentures | -4% ₹23 Cr 230 Hinduja Leyland Finance Limited
Debentures | -3% ₹20 Cr 200 Sundew Properties Limited
Debentures | -3% ₹19 Cr 200 6. SBI Credit Risk Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 3 in Credit Risk category. Return for 2021 was 5% , 2020 was 9.8% and 2019 was 6.5% . SBI Credit Risk Fund
Growth Launch Date 19 Jul 04 NAV (04 Oct 22) ₹36.7531 ↑ 0.02 (0.04 %) Net Assets (Cr) ₹2,952 on 31 Aug 22 Category Debt - Credit Risk AMC SBI Funds Management Private Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.55 Sharpe Ratio -0.47 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 7.57% Effective Maturity 2 Years 7 Months 24 Days Modified Duration 1 Year 7 Months 13 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,440 30 Sep 19 ₹11,203 30 Sep 20 ₹12,144 30 Sep 21 ₹13,021 30 Sep 22 ₹13,467 Returns for SBI Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Oct 22 Duration Returns 1 Month 0.3% 3 Month 1.5% 6 Month 1.6% 1 Year 3.5% 3 Year 6.3% 5 Year 6.1% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2021 5% 2020 9.8% 2019 6.5% 2018 6.2% 2017 6.9% 2016 10.5% 2015 9.7% 2014 10.6% 2013 10.1% 2012 9.8% Fund Manager information for SBI Credit Risk Fund
Name Since Tenure Lokesh Mallya 1 Feb 17 5.58 Yr. Mohit Jain 30 Nov 17 4.75 Yr. Data below for SBI Credit Risk Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 23.19% Debt 76.81% Debt Sector Allocation
Sector Value Corporate 61.8% Cash Equivalent 19.57% Government 18.63% Credit Quality
Rating Value A 10.95% AA 50.13% AAA 38.92% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.84% Govt Stock 2022
Sovereign Bonds | -5% ₹150 Cr 15,000,000 TATA International Limited
Debentures | -5% ₹150 Cr 1,500 Indinfravit TRust
Debentures | -5% ₹147 Cr 1,500 The Tata Power Company Limited
Debentures | -3% ₹101 Cr 1,000 Aadhar Housing Finance Limited
Debentures | -3% ₹101 Cr 1,000 Flometallic India Private Limited
Debentures | -3% ₹95 Cr 950 Avanse Financial Services Limited
Debentures | -3% ₹93 Cr 950 Jindal Stainless Limited
Debentures | -3% ₹87 Cr 900 5.63% Govt Stock 2026
Sovereign Bonds | -3% ₹86 Cr 9,000,000 TVS Credit Services Limited
Debentures | -3% ₹80 Cr 800
↑ 800
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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