Table of Contents
Debt Mutual Fund schemes in India have grown over the years. As a result, the best performing mutual debt funds in the Market keep on changing. There are various rating systems in place to judge a mutual fund scheme, namely CRISIL, Morning Star, ICRA. These systems evaluate a mutual fund in terms of returns, Standard Deviation, credit quality of securities, rate movement guidance by RBI, etc.
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Below are the top ranked funds from Debt
Categories primarily funds having AUM > 500 Crore & are in Ultra-short, Corporate bond, Credit Risk, Low Duration sub categories && Having maturity of less than 3 years and providing highest yields.
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2021 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Credit Risk Fund Growth ₹27.5958
↑ 0.01 ₹1,060 500 -0.6 0.7 10.1 2.8 13.5 8.08% 1Y 9M 29D 2Y 2M 5D ICICI Prudential Regular Savings Fund Growth ₹25.0873
↓ -0.04 ₹8,022 10,000 -0.1 1.2 4 7.5 6.2 7.99% 1Y 9M 7D 2Y 10M 2D HDFC Credit Risk Debt Fund Growth ₹19.2887
↑ 0.01 ₹8,640 5,000 -0.7 0.3 3.4 7.5 7 7.94% 2Y 1M 10D 2Y 8M 19D Axis Credit Risk Fund Growth ₹17.1383
↑ 0.01 ₹690 5,000 -0.2 0.8 3.5 6.4 6 7.73% 1Y 5M 12D 1Y 10M 20D Aditya Birla Sun Life Credit Risk Fund Growth ₹16.1994
↑ 0.01 ₹1,214 1,000 0.3 1.2 3.8 5.5 6.4 7.52% 1Y 7M 17D 2Y 6M 29D SBI Credit Risk Fund Growth ₹36.1133
↑ 0.02 ₹3,015 5,000 0 1.1 3.6 6.4 5 7.37% 1Y 9M 4D 2Y 8M 5D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Jun 22
(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 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 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 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 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. 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 (22 Jun 22) ₹27.5958 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹1,060 on 31 May 22 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.82 Sharpe Ratio 1.02 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 8.08% Effective Maturity 2 Years 2 Months 5 Days Modified Duration 1 Year 9 Months 29 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,533 31 May 19 ₹11,065 31 May 20 ₹9,893 31 May 21 ₹10,875 31 May 22 ₹12,021 Returns for Nippon India Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 22 Jun 22 Duration Returns 1 Month 0.2% 3 Month -0.6% 6 Month 0.7% 1 Year 10.1% 3 Year 2.8% 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 4.02 Yr. Sushil Budhia 1 Feb 20 2.33 Yr. Data below for Nippon India Credit Risk Fund as on 31 May 22
Asset Allocation
Asset Class Value Cash 13.73% Debt 86.27% Debt Sector Allocation
Sector Value Corporate 58.63% Government 23.43% Cash Equivalent 13.73% Securitized 4.22% Credit Quality
Rating Value A 21.98% AA 31.43% AAA 46.58% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.22% Govt Stock 2025
Sovereign Bonds | -6% ₹67 Cr 7,000,000 JSW Steel Limited
Debentures | -5% ₹56 Cr 550 8.2% Govt Stock 2025
Sovereign Bonds | -5% ₹52 Cr 5,000,000 Tata Realty And Infrastructure Limited
Debentures | -5% ₹49 Cr 500 Piramal Capital & Housing Finance Limited
Debentures | -5% ₹49 Cr 594,997 7.35% Govt Stock 2024
Sovereign Bonds | -4% ₹46 Cr 4,500,000 Greenlam Industries Limited
Debentures | -4% ₹44 Cr 450 L&T Metro Rail (Hyderabad) Limited
Debentures | -4% ₹42 Cr 400 Grasim Industries Limited
Debentures | -3% ₹35 Cr 350 Nirma Limited
Debentures | -3% ₹35 Cr 350 2. 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 (22 Jun 22) ₹25.0873 ↓ -0.04 (-0.17 %) Net Assets (Cr) ₹8,022 on 31 May 22 Category Debt - Credit Risk AMC ICICI Prudential Asset Management Company Limited Rating ☆ Risk Moderate Expense Ratio 1.6 Sharpe Ratio 0.94 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 7.99% Effective Maturity 2 Years 10 Months 2 Days Modified Duration 1 Year 9 Months 7 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,606 31 May 19 ₹11,434 31 May 20 ₹12,447 31 May 21 ₹13,657 31 May 22 ₹14,298 Returns for ICICI Prudential Regular Savings Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 22 Jun 22 Duration Returns 1 Month 0% 3 Month -0.1% 6 Month 1.2% 1 Year 4% 3 Year 7.5% 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 5.57 Yr. Akhil Kakkar 3 Jun 17 5 Yr. Data below for ICICI Prudential Regular Savings Fund as on 31 May 22
Asset Allocation
Asset Class Value Cash 18.49% Equity 2.61% Debt 78.9% Debt Sector Allocation
Sector Value Corporate 71.13% Cash Equivalent 18.49% Government 7.45% Securitized 0.33% Credit Quality
Rating Value A 8.25% AA 71.65% AAA 19.19% BB 0.91% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.54% Govt Stock 2032
Sovereign Bonds | -7% ₹526 Cr 55,523,750
↑ 5,821,700 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% ₹218 Cr 1,750 Ongc Petro Additions Limited
Debentures | -2% ₹195 Cr 2,000 JM Financial Credit Solutions Limited
Debentures | -2% ₹174 Cr 1,750 The Great Eastern Shipping Company Limited
Debentures | -2% ₹173 Cr 1,743 Dlf Limited
Debentures | -2% ₹164 Cr 1,650 Torrent Power Limited
Debentures | -2% ₹150 Cr 1,500 Rbl Bank Limited
Debentures | -2% ₹150 Cr 1,500 3. HDFC Credit Risk Debt Fund
CAGR/Annualized
return of 8.3% 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 (22 Jun 22) ₹19.2887 ↑ 0.01 (0.07 %) Net Assets (Cr) ₹8,640 on 31 May 22 Category Debt - Credit Risk AMC HDFC Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.55 Sharpe Ratio 0.1 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 7.94% Effective Maturity 2 Years 8 Months 19 Days Modified Duration 2 Years 1 Month 10 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,435 31 May 19 ₹11,259 31 May 20 ₹12,050 31 May 21 ₹13,539 31 May 22 ₹14,054 Returns for HDFC Credit Risk Debt Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 22 Jun 22 Duration Returns 1 Month 0.2% 3 Month -0.7% 6 Month 0.3% 1 Year 3.4% 3 Year 7.5% 5 Year 6.9% 10 Year 15 Year Since launch 8.3% 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 8.19 Yr. Sankalp Baid 22 Jan 21 1.35 Yr. Data below for HDFC Credit Risk Debt Fund as on 31 May 22
Asset Allocation
Asset Class Value Cash 16.19% Equity 1.68% Debt 82.13% Debt Sector Allocation
Sector Value Corporate 69.38% Cash Equivalent 16.19% Government 12.74% Credit Quality
Rating Value A 3.15% AA 54.08% AAA 42.76% Top Securities Holdings / Portfolio
Name Holding Value Quantity Bharti Hexacom Limited
Debentures | -4% ₹354 Cr 3,600 Indinfravit Trust
Unlisted bonds | -4% ₹346 Cr 3,500 Pipeline Infrastructure Limited
Debentures | -4% ₹331 Cr 3,200 Power Finance Corporation Ltd.
Debentures | -3% ₹297 Cr 2,790 Dlf Cyber City Developers Ltd
Debentures | -3% ₹266 Cr 2,750 Coastal Gujarat Power Limited
Debentures | -3% ₹220 Cr 2,030 Green Infra Wind Energy Limited
Debentures | -2% ₹210 Cr 2,350 TATA Motors Limited
Debentures | -2% ₹204 Cr 2,000 Hinduja Leyland Finance Limited
Debentures | -2% ₹196 Cr 2,000 TATA Motors Limited
Debentures | -2% ₹194 Cr 1,900 4. 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 (22 Jun 22) ₹17.1383 ↑ 0.01 (0.06 %) Net Assets (Cr) ₹690 on 31 May 22 Category Debt - Credit Risk AMC Axis Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.66 Sharpe Ratio -0.07 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 7.73% Effective Maturity 1 Year 10 Months 20 Days Modified Duration 1 Year 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,502 31 May 19 ₹11,321 31 May 20 ₹11,704 31 May 21 ₹12,737 31 May 22 ₹13,191 Returns for Axis Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 22 Jun 22 Duration Returns 1 Month 0.3% 3 Month -0.2% 6 Month 0.8% 1 Year 3.5% 3 Year 6.4% 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 7.88 Yr. Akhil Thakker 9 Nov 21 0.56 Yr. Data below for Axis Credit Risk Fund as on 31 May 22
Asset Allocation
Asset Class Value Cash 14.2% Debt 85.8% Debt Sector Allocation
Sector Value Corporate 71.27% Cash Equivalent 14.2% Government 12.49% Securitized 2.03% Credit Quality
Rating Value A 9.03% AA 58.31% AAA 32.66% Top Securities Holdings / Portfolio
Name Holding Value Quantity Telesonic Networks Limited
Debentures | -5% ₹35 Cr 350 Aditya Birla Fashion and Retail Limited
Debentures | -4% ₹31 Cr 250 Bahadur Chand Investments Private Limited
Debentures | -4% ₹30 Cr 300 Nirma Limited
Debentures | -4% ₹25 Cr 250 Flometallic India Private Limited
Debentures | -3% ₹24 Cr 250 5.74% Govt Stock 2026
Sovereign Bonds | -3% ₹24 Cr 2,500,000
↓ -500,000 Birla Corporation Limited
Debentures | -3% ₹23 Cr 230 Hinduja Leyland Finance Limited
Debentures | -3% ₹20 Cr 200 Sepset Constructions Limited
Debentures | -3% ₹20 Cr 210 Sundew Properties Limited
Debentures | -3% ₹19 Cr 200 5. Aditya Birla Sun Life Credit Risk Fund
CAGR/Annualized
return of 6.9% 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 (22 Jun 22) ₹16.1994 ↑ 0.01 (0.03 %) Net Assets (Cr) ₹1,214 on 15 Jun 22 Category Debt - Credit Risk AMC Birla Sun Life Asset Management Co Ltd Rating Risk Moderate Expense Ratio 1.81 Sharpe Ratio 0.26 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 7.52% Effective Maturity 2 Years 6 Months 29 Days Modified Duration 1 Year 7 Months 17 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,592 31 May 19 ₹11,237 31 May 20 ₹11,394 31 May 21 ₹12,742 31 May 22 ₹13,240 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 22 Jun 22 Duration Returns 1 Month 0.3% 3 Month 0.3% 6 Month 1.2% 1 Year 3.8% 3 Year 5.5% 5 Year 5.6% 10 Year 15 Year Since launch 6.9% 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 7.13 Yr. Mohit Sharma 6 Aug 20 1.82 Yr. Data below for Aditya Birla Sun Life Credit Risk Fund as on 15 Jun 22
Asset Allocation
Asset Class Value Cash 20.16% Equity 0.39% Debt 79.45% Debt Sector Allocation
Sector Value Corporate 72.07% Cash Equivalent 20.16% Government 7.39% Credit Quality
Rating Value A 6.88% AA 64.51% AAA 27.04% Below B 1.57% Top Securities Holdings / Portfolio
Name Holding Value Quantity Shriram City Union Finance Limited
Debentures | -8% ₹101 Cr 1,000 Indusind Bank Limited
Debentures | -5% ₹63 Cr 610 Bharti Hexacom Limited
Debentures | -3% ₹42 Cr 430 Tata Housing Development Company Limited
Debentures | -3% ₹42 Cr 350 Telesonic Networks Limited
Debentures | -3% ₹41 Cr 420 Steel Authority Of India Limited
Debentures | -3% ₹41 Cr 400 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 The Tata Power Company Limited
Debentures | -2% ₹30 Cr 300 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 (22 Jun 22) ₹36.1133 ↑ 0.02 (0.04 %) Net Assets (Cr) ₹3,015 on 15 Jun 22 Category Debt - Credit Risk AMC SBI Funds Management Private Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.55 Sharpe Ratio 0.09 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 7.37% Effective Maturity 2 Years 8 Months 5 Days Modified Duration 1 Year 9 Months 4 Days Growth of 10,000 investment over the years.
Date Value 31 May 17 ₹10,000 31 May 18 ₹10,509 31 May 19 ₹11,258 31 May 20 ₹12,015 31 May 21 ₹13,095 31 May 22 ₹13,587 Returns for SBI Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 22 Jun 22 Duration Returns 1 Month 0.3% 3 Month 0% 6 Month 1.1% 1 Year 3.6% 3 Year 6.4% 5 Year 6.2% 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 5.33 Yr. Data below for SBI Credit Risk Fund as on 15 Jun 22
Asset Allocation
Asset Class Value Cash 23.5% Debt 76.5% Debt Sector Allocation
Sector Value Corporate 50.84% Government 25.67% Cash Equivalent 23.5% Credit Quality
Rating Value A 10.72% AA 43.7% AAA 45.58% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.84% Govt Stock 2022
Sovereign Bonds | -5% ₹151 Cr 15,000,000 TATA International Limited
Debentures | -5% ₹150 Cr 1,500 Indinfravit Trust
Debentures | -5% ₹148 Cr 1,500 Coastal Gujarat Power Limited
Debentures | -3% ₹102 Cr 1,000 Aadhar Housing Finance Limited
Debentures | -3% ₹101 Cr 1,000 182 Dtb 01092022
Sovereign Bonds | -3% ₹99 Cr 10,000,000 182 Dtb 29092022
Sovereign Bonds | -3% ₹98 Cr 10,000,000 Flometallic India Private Limited
Debentures | -3% ₹95 Cr 950 Avanse Financial Services Limited
Debentures | -3% ₹94 Cr 950 Nuvoco Vistas Corporation Limited
Debentures | -3% ₹91 Cr 900
The yield is a measure of the interest Income generated by the Bonds in the portfolio.
For instance, let's assume that a bond has a Face Value of INR 100 with an 8 percent coupon rate. This means that the investor will earn INR 8 p.a., on each bond that he invests in. As the bonds are traded in the open market, the price will fluctuate each Business Day. The interest rates rise and fall and demand for the bonds moves up and down. And this impacts the price of the bond. Let’s assume interest rates rise to 10 percent. Even then the investor will continue to earn INR 8. So to increase the yield to 10 percent, which is the current market rate of interest, the price of the bond will have to drop to INR 80.
In another instance, lets assume that the interest rates fall to 6 percent. Again, the investor will continue to earn INR 8. This time the price of the bond will have to go up to INR 133.
If we look at these assumptions, there are two aspects to it- the one is that the yield is not fixed, but fluctuates to changes in the interest rate. The second one is the price of the bond moves inversely to interest rates. It moves to maintain a level where it will attract buyers.
The yield to maturity(ytm) of a debt mutual fund indicates the running yield of the fund. When comparing debt funds on the Basis of YTM, one should also look at that fact that how is the extra yield being generated. Is this at the cost of as lower portfolio quality? Investing in not so good quality instruments has its own issues. You don't want to end up investing in a Debt fund which has such bonds or securities that may Default later on. So, always look at the portfolio yield and balance it off with the credit quality.
Modified duration provides a fair indication of a bond’s sensitivity to a change in interest rates. The higher the duration, the more volatility the bond exhibits with a change in interest rates
In order to invest in Best Debt Funds, checking the credit quality of the bonds and debt securities is an essential parameter. Bonds are assigned a credit rating by various agencies based on their ability to pay the money back. A bond with AAA
rating is considered to be the best credit rating and also implies a safe and secure investment. If one truly wants safety and considers this as the paramount parameter in selecting the best debt fund, then getting into a fund with very high-quality debt instruments (AAA or AA+)
may be the desired option.
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A: Debt fund managers have their techniques for evaluating each bond and assessing the debtor's chances of defaulting to pay the bond. Usually, the higher the credit rating lesser is the chance for the creditor defaulting.
A: Debt mutual funds deal with securities and bonds along other money market instruments. The chances of these instruments failing are usually less, and hence, your investment will remain secure, thereby making debt mutual funds low-risk investments.
A: Yes, sometimes fund managers do invest in low-quality securities if chances of good ROI exist. However, this will be a calculated risk taken by your fund manager and only if the portfolio of investment already has stable, high-quality securities.
A: Yes, if you opt for a Liquid Fund in which investments are made in money market instruments that have a maturity of 91 days, then you can realize your investment in a matter of three months. This is a short-term investment that you can undertake to get a better understanding of debt mutual funds.
A: Yes, you can invest long-term in debt mutual funds. For example, suppose you invest in the Nippon India Credit Risk Fund or the ICICI Prudential Regular Savings Fund. In that case, it is better that you hold your investment at least for one year, 5 months, and 19 days and 2 years, one month, and 2 days respectively, to get maximum ROI. But you can keep investing beyond that for 3 years.