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Top 4 Best Floating Rate Funds to Invest in 2020
Floating Rate Funds are a type of Debt fund that mainly invests in floating rate instruments. Here the interest paid changes in order with the changing interest rate scenario in the debt market. As per Security and Exchange Board of India (SBEI) norms, Floater Fund should invest a minimum of 65 percent of its total assets in the floating rate instrument. One of the biggest advantages of this fund is its lowest degree of sensitivity to changes in interest rates. So, let’s look at some of the best performing floater funds to invest in 2020.
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What are Floating Rate Funds?
The floating rate instrument is considered to be an attractive instrument for investors with a conservative portion. This fund invests a major portion of its corpus in floating rate instruments and rest in fixed income securities. These funds are least risky in terms of interest rate. Unlike other debt funds, floating rate funds do not react to the changing interest rates. When the Government of India issues bond in the market, they have a fixed coupon rate, whereas, floating rate securities have variable interest rates. These floating rate interest increases or decreases based on the reference rate. To benefit the most, one should invest in these funds when interest rates are expected to rise.
But, being a debt fund, the credit risk in the fund still remains. Credit risk arises when a company that has issued the debt instruments does not make regular payments. In such cases, it has a major impact on the fund, depending on how much portion the fund has in the portfolio. Hence, it is suggested to be in debt instruments with a rating higher credit rating.
There are two kinds of floating rate funds— short-term and long-term. The portfolio of short-term floating funds is normally skewed towards short-term maturities and the portfolio of the long-term plan is skewed towards longer-term maturities.
Best Floating Rate Funds 2020
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹253.152
↓ -0.05 ₹6,133 2.5 4.1 8.8 8 8.6 0% Nippon India Floating Rate Fund Growth ₹32.5898
↓ 0.00 ₹8,964 2.9 5.3 10 7.8 9 7.02% 2Y 3M 18D 2Y 10M 13D ICICI Prudential Floating Interest Fund Growth ₹304.441
↓ -0.02 ₹6,018 1.5 3.5 8.1 7.2 8.4 0% Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 May 20
The primary objective of the schemes is to generate regular income through investment in a portfolio comprising substantially of floating rate debt / money market instruments. The schemes may invest a portion of its net assets in fixed rate debt securities and money market instruments. Aditya Birla Sun Life Floating Rate Fund - Long Term is a Debt - Floating Rate fund was launched on 25 Mar 09. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Floating Rate Fund - Long Term Returns up to 1 year are on (Erstwhile Reliance Floating Rate Fund - Short Term Plan) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed rate Debt Securities (including fixed rate Securitized Debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns). Nippon India Floating Rate Fund is a Debt - Floating Rate fund was launched on 27 Aug 04. It is a fund with Moderately Low risk and has given a Below is the key information for Nippon India Floating Rate Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Savings Fund) The scheme aims to generate income consistent with the prudent risk from a portfolio comprising floating rate debt instruments, fixed rate debt instruments swapped for floating rate return, and also fixed rate instruments & money market instruments. ICICI Prudential Floating Interest Fund is a Debt - Floating Rate fund was launched on 18 Nov 05. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Floating Interest Fund Returns up to 1 year are on 1. Aditya Birla Sun Life Floating Rate Fund - Long Term
CAGR/Annualized return of 8.7% since its launch. Ranked 14 in Floating Rate category. Return for 2019 was 8.6% , 2018 was 7.5% and 2017 was 6.9% . Aditya Birla Sun Life Floating Rate Fund - Long Term
Growth Launch Date 25 Mar 09 NAV (29 May 20) ₹253.152 ↓ -0.05 (-0.02 %) Net Assets (Cr) ₹6,133 on 30 Apr 20 Category Debt - Floating Rate AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.39 Sharpe Ratio 6.37 Information Ratio 1.12 Alpha Ratio 1.06 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,000 30 Apr 16 ₹10,901 30 Apr 17 ₹11,851 30 Apr 18 ₹12,641 30 Apr 19 ₹13,682 30 Apr 20 ₹14,790 Returns for Aditya Birla Sun Life Floating Rate Fund - Long Term
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20 Duration Returns 1 Month 1.6% 3 Month 2.5% 6 Month 4.1% 1 Year 8.8% 3 Year 8% 5 Year 8.3% 10 Year 15 Year Since launch 8.7% Historical performance (Yearly) on absolute basis
Year Returns 2019 8.6% 2018 7.5% 2017 6.9% 2016 9.5% 2015 8.9% 2014 9.6% 2013 9.6% 2012 10.1% 2011 9.4% 2010 6.5% Fund Manager information for Aditya Birla Sun Life Floating Rate Fund - Long Term
Name Since Tenure Kaustubh Gupta 15 Jul 11 8.72 Yr. Data below for Aditya Birla Sun Life Floating Rate Fund - Long Term as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 19.79% Debt 80.21% Debt Sector Allocation
Sector Value Corporate 51.56% Government 39.48% Cash Equivalent 8.44% Securitized 0.53% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.80% GOI Floating Rate Bonds 2020
Sovereign Bonds | -9% ₹556 Cr 55,500,000 REC LIMITED
Debentures | -4% ₹275 Cr 2,710 Axis Bank Limited
Certificate of Deposit | -4% ₹249 Cr 25,000 Bajaj Finance Limited
Debentures | -3% ₹175 Cr 1,750 GOVT STOCK
Sovereign Bonds | -3% ₹161 Cr 15,000,000
↑ 15,000,000 National Highways Authority Of India
Debentures | -2% ₹153 Cr 1,500 Cooperatieve Rabobank U.A
Certificate of Deposit | -2% ₹149 Cr 15,000 Net Receivables / (Payables)
Net Current Assets | -2% ₹142 Cr Larsen And Toubro Limited
Debentures | -2% ₹125 Cr 1,250
↑ 1,250 8.26% UP SDL Spl 2022
Domestic Bonds | -2% ₹116 Cr 11,000,000 2. Nippon India Floating Rate Fund
CAGR/Annualized return of 7.8% since its launch. Ranked 32 in Floating Rate category. Return for 2019 was 9% , 2018 was 5.8% and 2017 was 5.9% . Nippon India Floating Rate Fund
Growth Launch Date 27 Aug 04 NAV (29 May 20) ₹32.5898 ↓ 0.00 (-0.01 %) Net Assets (Cr) ₹8,964 on 30 Apr 20 Category Debt - Floating Rate AMC Nippon Life Asset Management Ltd. Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.6 Sharpe Ratio 5.4 Information Ratio -0.99 Alpha Ratio 0.94 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Months (0.5%),1 Months and above(NIL) Yield to Maturity 7.02% Effective Maturity 2 Years 10 Months 13 Days Modified Duration 2 Years 3 Months 18 Days Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,000 30 Apr 16 ₹10,818 30 Apr 17 ₹11,665 30 Apr 18 ₹12,311 30 Apr 19 ₹13,226 30 Apr 20 ₹14,427 Returns for Nippon India Floating Rate Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20 Duration Returns 1 Month 2% 3 Month 2.9% 6 Month 5.3% 1 Year 10% 3 Year 7.8% 5 Year 7.9% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2019 9% 2018 5.8% 2017 5.9% 2016 9% 2015 8.6% 2014 9.8% 2013 7.9% 2012 9.7% 2011 9.2% 2010 5.4% Fund Manager information for Nippon India Floating Rate Fund
Name Since Tenure Anju Chhajer 1 Feb 20 0.24 Yr. Kinjal Desai 25 May 18 1.93 Yr. Data below for Nippon India Floating Rate Fund as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 4.4% Debt 95.18% Other 0.42% Debt Sector Allocation
Sector Value Corporate 53.13% Government 41.77% Cash Equivalent 2.77% Securitized 1.91% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity GOVT STOCK
Sovereign Bonds | -9% ₹833 Cr 77,500,000
↑ 20,500,000 Housing Development Finance Corporation Limited
Debentures | -5% ₹493 Cr 4,975
↑ 250 8.42% OD SDL 2023
Sovereign Bonds | -4% ₹399 Cr 36,765,400 Power Finance Corporation Ltd.
Debentures | -4% ₹384 Cr 3,850 LIC Housing Finance Limited
Debentures | -4% ₹372 Cr 3,732
↓ -1,000 Reliance Industries Limited
Debentures | -4% ₹350 Cr 3,500
↑ 3,500 Nabha Power Limited
Debentures | -3% ₹298 Cr 3,000
↑ 3,000 8.21% HR SDL Spl 2023
Domestic Bonds | -3% ₹272 Cr 25,500,000 Larsen And Toubro Limited
Debentures | -3% ₹251 Cr 2,500
↑ 2,500 India Grid Trust
Unlisted bonds | -3% ₹250 Cr 2,500 3. ICICI Prudential Floating Interest Fund
CAGR/Annualized return of 8% since its launch. Ranked 35 in Floating Rate category. Return for 2019 was 8.4% , 2018 was 6.6% and 2017 was 6.8% . ICICI Prudential Floating Interest Fund
Growth Launch Date 18 Nov 05 NAV (29 May 20) ₹304.441 ↓ -0.02 (-0.01 %) Net Assets (Cr) ₹6,018 on 30 Apr 20 Category Debt - Floating Rate AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆ Risk Moderate Expense Ratio 1.31 Sharpe Ratio 3.18 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Apr 15 ₹10,000 30 Apr 16 ₹10,828 30 Apr 17 ₹11,764 30 Apr 18 ₹12,468 30 Apr 19 ₹13,369 30 Apr 20 ₹14,313 Returns for ICICI Prudential Floating Interest Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20 Duration Returns 1 Month 1.8% 3 Month 1.5% 6 Month 3.5% 1 Year 8.1% 3 Year 7.2% 5 Year 7.7% 10 Year 15 Year Since launch 8% Historical performance (Yearly) on absolute basis
Year Returns 2019 8.4% 2018 6.6% 2017 6.8% 2016 8.9% 2015 8.1% 2014 9.2% 2013 9.2% 2012 9.7% 2011 9.1% 2010 5.6% Fund Manager information for ICICI Prudential Floating Interest Fund
Name Since Tenure Rahul Goswami 27 Sep 12 7.51 Yr. Nikhil Kabra 3 Aug 16 3.66 Yr. Data below for ICICI Prudential Floating Interest Fund as on 30 Apr 20
Asset Allocation
Asset Class Value Cash 15.49% Debt 78.73% Other 5.78% Debt Sector Allocation
Sector Value Corporate 69.29% Cash Equivalent 13.5% Government 10.82% Securitized 0.62% Credit Quality
Rating Value A 3.44% AA 43.35% AAA 53.21% Top Securities Holdings / Portfolio
Name Holding Value Quantity Bahadur Chand Investments Private Limited
Debentures | -6% ₹369 Cr 369 Net Current Assets
Receivables | -6% ₹348 Cr EMBASSY OFFICE PARKS REIT
Debentures | -5% ₹317 Cr 3,000 State Bank Of India
Debentures | -4% ₹258 Cr 2,500 7.80% GOI Floating Rate Bonds 2020
Sovereign Bonds | -4% ₹256 Cr 25,562,400 Vedanta Limited
Debentures | -4% ₹242 Cr 2,500 United Spirits Limited
Debentures | -3% ₹178 Cr 1,800 Reliance Industries Limited
Debentures | -3% ₹170 Cr 1,700 7.59% Govt Stock 2026
Sovereign Bonds | -3% ₹162 Cr 15,000,000 Geetanjali Trading And Investments Pvt Ltd
Debentures | -3% ₹160 Cr 125
Advantages of Floating Rate Funds
Some of the benefits of Floating Rate Funds are:
- Price Stability- As floating rate funds are tied to current rates; the price of the underlying securities doesn’t fluctuate in response to changes in the interest rates.
- Better Yield- Floating funds tend to offer better yields than those of Certificate of Deposits (CDs). This can be a better idea for those who want to earn returns in a short duration.
- Moderate Risk- Debt funds are anytime less risky than Equity Funds. When it comes to floater funds these are less risky than other debt funds, as they don’t carry interest rate risk. However, diversification of the portfolio significantly reduces the risk of the portfolio.
How to Select Best Floating Rate Funds?
Some of the ideal ways to choose best floating rate funds are:
- Look at the past performances of the fund, typically of past 1-3 years. The fund with the most stable and consistent performance is the one to go with
- Ideally, one should go with the fund that has an Asset Under Management (AUM) > INR 100 Cr
- Invest in funds that invests in high credit-rating companies
How to Invest in Floating Rate Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
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Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
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