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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 (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Nippon India Credit Risk Fund Growth ₹31.4971
↑ 0.00 ₹1,031 500 1.9 3.8 7.8 8.5 7.9 9.02% 1Y 10M 2D 2Y 2M 16D HDFC Credit Risk Debt Fund Growth ₹21.7803
↓ -0.01 ₹8,191 5,000 1.7 3.8 7 6 6.6 8.62% 2Y 1M 10D 2Y 11M 26D SBI Credit Risk Fund Growth ₹41.2344
↑ 0.00 ₹2,557 5,000 1.8 3.6 6.9 6.3 8.3 8.49% 2Y 14D 2Y 8M 12D L&T Credit Risk Fund Growth ₹26.2308
↓ 0.00 ₹568 10,000 1.5 3.2 6.4 5.5 6.5 8.3% 1Y 10M 6D 2Y 8M 5D Kotak Low Duration Fund Growth ₹3,063.42
↑ 0.75 ₹8,242 5,000 1.9 3.5 6.9 5.2 6.7 8.09% 11M 8D 1Y 9M 4D Mahindra Low Duration Bachat Yojana Growth ₹1,500.44
↑ 0.26 ₹521 1,000 1.8 3.5 6.9 5 6.7 8.07% 10M 24D 1Y 4M 22D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Apr 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 (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 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 The primary objective of the Scheme is to generate income through investment
primarily in low duration debt & money market securities. However, there is no
assurance that the objective of the scheme will be realized Kotak Low Duration Fund is a Debt - Low Duration fund was launched on 6 Mar 08. It is a fund with Moderate risk and has given a Below is the key information for Kotak Low Duration Fund Returns up to 1 year are on (Erstwhile Mahindra ALP-Samay Bachat Yojana) The investment objective of the Scheme is to provide reasonable returns, commensurate with a low to moderate level of risk and high degree of liquidity, through a portfolio constituted of money market and debt instruments. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns. Mahindra Low Duration Bachat Yojana is a Debt - Low Duration fund was launched on 15 Feb 17. It is a fund with Moderately Low risk and has given a Below is the key information for Mahindra Low Duration Bachat Yojana 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 (16 Apr 24) ₹31.4971 ↑ 0.00 (0.00 %) Net Assets (Cr) ₹1,031 on 29 Feb 24 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.64 Sharpe Ratio 1.99 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 9.02% Effective Maturity 2 Years 2 Months 16 Days Modified Duration 1 Year 10 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹8,876 31 Mar 21 ₹9,556 31 Mar 22 ₹10,773 31 Mar 23 ₹11,282 31 Mar 24 ₹12,192 Returns for Nippon India Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.7% 3 Month 1.9% 6 Month 3.8% 1 Year 7.8% 3 Year 8.5% 5 Year 4.1% 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 5.86 Yr. Sushil Budhia 1 Feb 20 4.16 Yr. Data below for Nippon India Credit Risk Fund as on 29 Feb 24
Asset Allocation
Asset Class Value Cash 4.42% Debt 95.33% Other 0.25% Debt Sector Allocation
Sector Value Corporate 84.78% Government 10.55% Cash Equivalent 4.42% Credit Quality
Rating Value A 23.35% AA 47.98% AAA 28.67% Top Securities Holdings / Portfolio
Name Holding Value Quantity Summit Digitel Infrastructure Limited
Debentures | -6% ₹60 Cr 620 JSW Steel Limited
Debentures | -5% ₹55 Cr 550 7.1% Govt Stock 2029
Sovereign Bonds | -5% ₹50 Cr 5,000,000 7.06% Govt Stock 2028
Sovereign Bonds | -5% ₹50 Cr 5,000,000 Indinfravit Trust
Debentures | -5% ₹49 Cr 5,000 Godrej Properties Limited
Debentures | -4% ₹45 Cr 4,500 Greenlam Industries Limited
Debentures | -4% ₹44 Cr 450 Prestige Projects Private Limited 11.75%
Debentures | -4% ₹40 Cr 4,000
↑ 4,000 DLF Cyber City Developers Limited 8.4%
Debentures | -4% ₹40 Cr 4,000 Lodha Developers Private Limited
Debentures | -4% ₹38 Cr 378 2. HDFC Credit Risk Debt Fund
CAGR/Annualized
return of 8% since its launch. Ranked 9 in Credit Risk
category. Return for 2023 was 6.6% , 2022 was 3.7% and 2021 was 7% . HDFC Credit Risk Debt Fund
Growth Launch Date 25 Mar 14 NAV (16 Apr 24) ₹21.7803 ↓ -0.01 (-0.04 %) Net Assets (Cr) ₹8,191 on 29 Feb 24 Category Debt - Credit Risk AMC HDFC Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.53 Sharpe Ratio 0.6 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 8.62% Effective Maturity 2 Years 11 Months 26 Days Modified Duration 2 Years 1 Month 10 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹10,912 31 Mar 21 ₹11,936 31 Mar 22 ₹12,762 31 Mar 23 ₹13,279 31 Mar 24 ₹14,282 Returns for HDFC Credit Risk Debt Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.2% 3 Month 1.7% 6 Month 3.8% 1 Year 7% 3 Year 6% 5 Year 7.4% 10 Year 15 Year Since launch 8% Historical performance (Yearly) on absolute basis
Year Returns 2023 6.6% 2022 3.7% 2021 7% 2020 10.9% 2019 8.6% 2018 5.4% 2017 6.6% 2016 11% 2015 9% 2014 Fund Manager information for HDFC Credit Risk Debt Fund
Name Since Tenure Shobhit Mehrotra 25 Mar 14 10.03 Yr. Dhruv Muchhal 22 Jun 23 0.78 Yr. Data below for HDFC Credit Risk Debt Fund as on 29 Feb 24
Asset Allocation
Asset Class Value Cash 4.9% Equity 2.02% Debt 92.02% Other 0.26% Debt Sector Allocation
Sector Value Corporate 78.41% Government 11.48% Cash Equivalent 4.9% Securitized 2.92% Credit Quality
Rating Value A 3.13% AA 63.33% AAA 33.55% Top Securities Holdings / Portfolio
Name Holding Value Quantity Power Finance Corporation Limited
Debentures | -4% ₹295 Cr 2,790 Tata Projects Limited
Debentures | -3% ₹251 Cr 25,000 Ongc Petro Additions Limited
Debentures | -3% ₹246 Cr 24,500 Embassy Office Parks Reit
Unlisted bonds | -3% ₹239 Cr 6,058,223 The Tata Power Company Limited
Debentures | -3% ₹231 Cr 2,190 7.1% Govt Stock 2029
Sovereign Bonds | -3% ₹210 Cr 21,000,000 TATA Motors Limited
Debentures | -2% ₹201 Cr 2,000 Resco Global Wind Services Private Limited
Debentures | -2% ₹200 Cr 20,000 Ongc Petro Additions Limited
Debentures | -2% ₹200 Cr 20,000 TVS Credit Services Limited
Debentures | -2% ₹199 Cr 200 3. SBI Credit Risk Fund
CAGR/Annualized
return of 7.4% 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 (16 Apr 24) ₹41.2344 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹2,557 on 29 Feb 24 Category Debt - Credit Risk AMC SBI Funds Management Private Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.95 Sharpe Ratio 0.97 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 8.49% Effective Maturity 2 Years 8 Months 12 Days Modified Duration 2 Years 14 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹10,620 31 Mar 21 ₹11,474 31 Mar 22 ₹12,112 31 Mar 23 ₹12,679 31 Mar 24 ₹13,793 Returns for SBI Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.5% 3 Month 1.8% 6 Month 3.6% 1 Year 6.9% 3 Year 6.3% 5 Year 6.6% 10 Year 15 Year Since launch 7.4% 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 7.16 Yr. Pradeep Kesavan 1 Dec 23 0.33 Yr. Adesh Sharma 1 Dec 23 0.33 Yr. Data below for SBI Credit Risk Fund as on 29 Feb 24
Asset Allocation
Asset Class Value Cash 10.97% Equity 2.18% Debt 86.56% Other 0.29% Debt Sector Allocation
Sector Value Corporate 66.8% Government 19.76% Cash Equivalent 10.97% Credit Quality
Rating Value A 3.42% AA 64.88% AAA 31.7% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -7% ₹181 Cr 18,000,000
↓ -4,000,000 7.16% Govt Stock 2050
Sovereign Bonds | -5% ₹125 Cr 12,500,000
↑ 12,500,000 Aadhar Housing Finance Limited
Debentures | -5% ₹121 Cr 12,200 Nirma Limited
Debentures | -5% ₹115 Cr 11,500 Jindal Stainless Limited
Debentures | -3% ₹88 Cr 900 Avanse Financial Services Limited
Debentures | -3% ₹80 Cr 8,000 Ongc Petro Additions Limited
Debentures | -3% ₹75 Cr 7,500 JSW Steel Limited
Debentures | -3% ₹75 Cr 750 Nuvoco Vistas Corporation Limited
Debentures | -3% ₹74 Cr 750 Godrej Industries Limited
Debentures | -3% ₹74 Cr 750 4. 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 (16 Apr 24) ₹26.2308 ↓ 0.00 (-0.01 %) Net Assets (Cr) ₹568 on 15 Mar 24 Category Debt - Credit Risk AMC L&T Investment Management Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 1.66 Sharpe Ratio -0.57 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 8.3% Effective Maturity 2 Years 8 Months 5 Days Modified Duration 1 Year 10 Months 6 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹10,262 31 Mar 21 ₹10,584 31 Mar 22 ₹11,195 31 Mar 23 ₹11,646 31 Mar 24 ₹12,428 Returns for L&T Credit Risk Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.4% 3 Month 1.5% 6 Month 3.2% 1 Year 6.4% 3 Year 5.5% 5 Year 4.5% 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 1.35 Yr. Shriram Ramanathan 24 Nov 12 11.36 Yr. Data below for L&T Credit Risk Fund as on 15 Mar 24
Asset Allocation
Asset Class Value Cash 2.35% Debt 97.39% Other 0.25% Debt Sector Allocation
Sector Value Corporate 73.1% Government 24.3% Cash Equivalent 2.35% Credit Quality
Rating Value AA 62.57% AAA 37.43% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -18% ₹101 Cr 10,000,000
↑ 4,500,000 Nuvoco Vistas Corporation Limited
Debentures | -5% ₹26 Cr 250 Dlf Cyber City Developers Ltd
Debentures | -4% ₹25 Cr 250 Small Industries Development Bank Of India
Debentures | -4% ₹25 Cr 2,500 Nirma Limited
Debentures | -4% ₹25 Cr 2,500 8.25% Govt Stock 2033
Sovereign Bonds | -4% ₹21 Cr 2,000,000 Tata Projects Limited
Debentures | -4% ₹21 Cr 2,000 Jm Financial Services Limited
Debentures | -4% ₹20 Cr 2,000 Hinduja Leyland Finance Limited
Debentures | -4% ₹20 Cr 180 Andhra Pradesh Expressway Limited
Debentures | -3% ₹17 Cr 56 5. Kotak Low Duration Fund
CAGR/Annualized
return of 7.2% since its launch. Ranked 10 in Low Duration
category. Return for 2023 was 6.7% , 2022 was 3.9% and 2021 was 3.5% . Kotak Low Duration Fund
Growth Launch Date 6 Mar 08 NAV (16 Apr 24) ₹3,063.42 ↑ 0.75 (0.02 %) Net Assets (Cr) ₹8,242 on 15 Mar 24 Category Debt - Low Duration AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderate Expense Ratio 0.88 Sharpe Ratio -0.49 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 8.09% Effective Maturity 1 Year 9 Months 4 Days Modified Duration 11 Months 8 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹10,783 31 Mar 21 ₹11,499 31 Mar 22 ₹11,938 31 Mar 23 ₹12,497 31 Mar 24 ₹13,356 Returns for Kotak Low Duration Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.8% 3 Month 1.9% 6 Month 3.5% 1 Year 6.9% 3 Year 5.2% 5 Year 6% 10 Year 15 Year Since launch 7.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 6.7% 2022 3.9% 2021 3.5% 2020 7.9% 2019 8.3% 2018 7.3% 2017 7.1% 2016 8.9% 2015 9.3% 2014 9.5% Fund Manager information for Kotak Low Duration Fund
Name Since Tenure Deepak Agrawal 31 Jan 15 9.17 Yr. Manu Sharma 1 Nov 22 1.42 Yr. Palha Khanna 3 Jul 23 0.75 Yr. Data below for Kotak Low Duration Fund as on 15 Mar 24
Asset Allocation
Asset Class Value Cash 6.11% Debt 93.61% Other 0.28% Debt Sector Allocation
Sector Value Corporate 69.83% Government 26.11% Cash Equivalent 3.23% Securitized 0.55% Credit Quality
Rating Value AA 15.99% AAA 84.01% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.25% Govt Stock 2033
Sovereign Bonds | -8% ₹680 Cr 66,871,138
↑ 23,500,000 7.69% Govt Stock 2028
Sovereign Bonds | -5% ₹399 Cr 40,000,000
↑ 40,000,000 National Bank For Agriculture And Rural Development
Debentures | -5% ₹374 Cr 37,500 HDFC Bank Ltd.
Debentures | -5% ₹371 Cr 40,000
↑ 40,000 Bharti Telecom Limited
Debentures | -3% ₹251 Cr 25,000 Rural Electrification Corporation Limited
Debentures | -3% ₹209 Cr 2,100 Embassy Office Parks Reit
Debentures | -2% ₹204 Cr 20,500
↓ -7,000 Muthoot Finance Limited
Debentures | -2% ₹200 Cr 20,000 Rural Electrification Corporation Limited
Debentures | -2% ₹200 Cr 20,000 LIC Housing Finance Limited
Debentures | -2% ₹199 Cr 2,000 6. Mahindra Low Duration Bachat Yojana
CAGR/Annualized
return of 5.8% since its launch. Return for 2023 was 6.7% , 2022 was 3.7% and 2021 was 3.1% . Mahindra Low Duration Bachat Yojana
Growth Launch Date 15 Feb 17 NAV (16 Apr 24) ₹1,500.44 ↑ 0.26 (0.02 %) Net Assets (Cr) ₹521 on 29 Feb 24 Category Debt - Low Duration AMC Mahindra Asset Management Company Pvt. Ltd. Rating Risk Moderately Low Expense Ratio 1.16 Sharpe Ratio -0.59 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 8.07% Effective Maturity 1 Year 4 Months 22 Days Modified Duration 10 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 19 ₹10,000 31 Mar 20 ₹10,743 31 Mar 21 ₹11,306 31 Mar 22 ₹11,683 31 Mar 23 ₹12,209 31 Mar 24 ₹13,046 Returns for Mahindra Low Duration Bachat Yojana
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 16 Apr 24 Duration Returns 1 Month 0.7% 3 Month 1.8% 6 Month 3.5% 1 Year 6.9% 3 Year 5% 5 Year 5.5% 10 Year 15 Year Since launch 5.8% Historical performance (Yearly) on absolute basis
Year Returns 2023 6.7% 2022 3.7% 2021 3.1% 2020 6.3% 2019 7.9% 2018 6.5% 2017 2016 2015 2014 Fund Manager information for Mahindra Low Duration Bachat Yojana
Name Since Tenure Rahul Pal 15 Feb 17 7.13 Yr. Data below for Mahindra Low Duration Bachat Yojana as on 29 Feb 24
Asset Allocation
Asset Class Value Cash 33.86% Debt 65.89% Other 0.26% Debt Sector Allocation
Sector Value Corporate 63.6% Government 18.4% Cash Equivalent 17.74% Credit Quality
Rating Value AA 30.3% AAA 69.7% Top Securities Holdings / Portfolio
Name Holding Value Quantity Shriram Finance Limited
Debentures | -5% ₹25 Cr 2,500,000 Small Industries Development Bank Of India
Debentures | -5% ₹25 Cr 2,500,000 Export Import Bank Of India
Debentures | -5% ₹24 Cr 2,500,000 360 One Prime Limited
Debentures | -5% ₹24 Cr 2,400,000 8.25% Govt Stock 2033
Sovereign Bonds | -4% ₹20 Cr 2,000,000 Tata Realty And Infrastructure Limited
Debentures | -4% ₹20 Cr 2,000,000 Mindspace Business Parks Reit
Debentures | -3% ₹15 Cr 1,500,000 Bharti Telecom Limited
Debentures | -3% ₹15 Cr 1,500,000 National Housing Bank
Debentures | -3% ₹15 Cr 1,500,000 Embassy Office Parks Reit
Debentures | -3% ₹15 Cr 1,500,000
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.
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