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Top 4 Best Floating Rate Funds to Invest in 2021
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 2021.
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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 2021
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹263.895
↓ -0.16 ₹9,684 0.1 2 6.8 7.8 8.6 4.71% 1Y 5M 16D 1Y 8M 1D Nippon India Floating Rate Fund Growth ₹34.3563
↓ -0.02 ₹16,057 -0.1 2.6 8.6 8.3 11.3 4.92% 1Y 9M 14D 2Y 6M 29D ICICI Prudential Floating Interest Fund Growth ₹324.642
↓ -0.01 ₹13,323 1.4 3.8 8.3 8 9.5 5.12% 8M 1D 3Y 25D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 23 Feb 21
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 8.5% since its launch. Ranked 14 in Floating Rate category. Return for 2020 was 8.6% , 2019 was 8.6% and 2018 was 7.5% . Aditya Birla Sun Life Floating Rate Fund - Long Term
Growth Launch Date 25 Mar 09 NAV (23 Feb 21) ₹263.895 ↓ -0.16 (-0.06 %) Net Assets (Cr) ₹9,684 on 31 Jan 21 Category Debt - Floating Rate AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.38 Sharpe Ratio 2.3 Information Ratio 1.74 Alpha Ratio 1.32 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 4.71% Effective Maturity 1 Year 8 Months 1 Day Modified Duration 1 Year 5 Months 16 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 16 ₹10,000 31 Jan 17 ₹11,008 31 Jan 18 ₹11,717 31 Jan 19 ₹12,631 31 Jan 20 ₹13,715 31 Jan 21 ₹14,773 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 23 Feb 21 Duration Returns 1 Month -0.2% 3 Month 0.1% 6 Month 2% 1 Year 6.8% 3 Year 7.8% 5 Year 8% 10 Year 15 Year Since launch 8.5% Historical performance (Yearly) on absolute basis
Year Returns 2020 8.6% 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% Fund Manager information for Aditya Birla Sun Life Floating Rate Fund - Long Term
Name Since Tenure Kaustubh Gupta 15 Jul 11 9.56 Yr. Pranay Sinha 6 Aug 20 0.49 Yr. Data below for Aditya Birla Sun Life Floating Rate Fund - Long Term as on 31 Jan 21
Asset Allocation
Asset Class Value Cash 13.05% Debt 86.95% Debt Sector Allocation
Sector Value Corporate 50.57% Government 39.4% Cash Equivalent 9.92% Securitized 0.11% Credit Quality
Rating Value AA 0.06% AAA 99.94% Top Securities Holdings / Portfolio
Name Holding Value Quantity Axis Bank Limited
Debentures | -5% ₹500 Cr 50,000 National Bank For Agriculture And Rural Development
Debentures | -4% ₹383 Cr 3,820
↑ 570 REC Limited
Debentures | -2% ₹201 Cr 1,980 Power Finance Corporation Limited
Debentures | -2% ₹197 Cr 1,950 National Bank For Agriculture and Rural Development
Debentures | -2% ₹196 Cr 1,900
↑ 1,000 National Bank For Agriculture and Rural Development
Debentures | -2% ₹187 Cr 1,800
↑ 1,050 Larsen and Toubro Limited
Debentures | -2% ₹183 Cr 1,750 Hindustan Petroleum Corporation Limited
Debentures | -2% ₹175 Cr 1,750 National Housing Bank
Debentures | -2% ₹159 Cr 1,500 9.39% Gujarat SDL 2023
Sovereign Bonds | -2% ₹151 Cr 13,500,000
↑ 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 2020 was 11.3% , 2019 was 9% and 2018 was 5.8% . Nippon India Floating Rate Fund
Growth Launch Date 27 Aug 04 NAV (23 Feb 21) ₹34.3563 ↓ -0.02 (-0.04 %) Net Assets (Cr) ₹16,057 on 31 Jan 21 Category Debt - Floating Rate AMC Nippon Life Asset Management Ltd. Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.3 Sharpe Ratio 2.42 Information Ratio -0.51 Alpha Ratio 0.16 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Months (0.5%),1 Months and above(NIL) Yield to Maturity 4.92% Effective Maturity 2 Years 6 Months 29 Days Modified Duration 1 Year 9 Months 14 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 16 ₹10,000 31 Jan 17 ₹10,947 31 Jan 18 ₹11,541 31 Jan 19 ₹12,264 31 Jan 20 ₹13,355 31 Jan 21 ₹14,723 Returns for Nippon India Floating Rate Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 23 Feb 21 Duration Returns 1 Month -0.3% 3 Month -0.1% 6 Month 2.6% 1 Year 8.6% 3 Year 8.3% 5 Year 7.9% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.3% 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% Fund Manager information for Nippon India Floating Rate Fund
Name Since Tenure Anju Chhajer 1 Feb 20 1 Yr. Data below for Nippon India Floating Rate Fund as on 31 Jan 21
Asset Allocation
Asset Class Value Cash 3.85% Debt 96.15% Debt Sector Allocation
Sector Value Government 54.64% Corporate 40.63% Cash Equivalent 3.54% Securitized 1.19% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2024
Sovereign Bonds | -13% ₹2,101 Cr 196,000,000
↑ 10,000,000 6.18% Govt Stock 2024
Sovereign Bonds | -11% ₹1,693 Cr 162,500,000 7.35% Govt Stock 2024
Sovereign Bonds | -6% ₹983 Cr 91,500,000 Housing Development Finance Corporation Limited
Debentures | -3% ₹516 Cr 4,975 National Bank For Agriculture and Rural Development
Debentures | -3% ₹406 Cr 3,800 Power Finance Corporation Limited
Debentures | -2% ₹400 Cr 3,850 LIC Housing Finance Limited
Debentures | -2% ₹390 Cr 3,732 Reliance Industries Limited
Debentures | -2% ₹363 Cr 3,500 Tata Capital Housing Finance Limited
Debentures | -2% ₹299 Cr 3,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹298 Cr 3,000
↑ 3,000 3. ICICI Prudential Floating Interest Fund
CAGR/Annualized return of 8% since its launch. Ranked 35 in Floating Rate category. Return for 2020 was 9.5% , 2019 was 8.4% and 2018 was 6.6% . ICICI Prudential Floating Interest Fund
Growth Launch Date 18 Nov 05 NAV (23 Feb 21) ₹324.642 ↓ -0.01 (0.00 %) Net Assets (Cr) ₹13,323 on 31 Jan 21 Category Debt - Floating Rate AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆ Risk Moderate Expense Ratio 1.31 Sharpe Ratio 2.22 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 5.12% Effective Maturity 3 Years 25 Days Modified Duration 8 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Jan 16 ₹10,000 31 Jan 17 ₹10,938 31 Jan 18 ₹11,611 31 Jan 19 ₹12,412 31 Jan 20 ₹13,463 31 Jan 21 ₹14,670 Returns for ICICI Prudential Floating Interest Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 23 Feb 21 Duration Returns 1 Month 0.2% 3 Month 1.4% 6 Month 3.8% 1 Year 8.3% 3 Year 8% 5 Year 7.9% 10 Year 15 Year Since launch 8% Historical performance (Yearly) on absolute basis
Year Returns 2020 9.5% 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% Fund Manager information for ICICI Prudential Floating Interest Fund
Name Since Tenure Rahul Goswami 27 Sep 12 8.35 Yr. Nikhil Kabra 3 Aug 16 4.5 Yr. Data below for ICICI Prudential Floating Interest Fund as on 31 Jan 21
Asset Allocation
Asset Class Value Cash 19.89% Debt 80.11% Debt Sector Allocation
Sector Value Corporate 41.86% Government 39.67% Cash Equivalent 18.21% Securitized 0.26% Credit Quality
Rating Value A 0.39% AA 26.07% AAA 73.54% Top Securities Holdings / Portfolio
Name Holding Value Quantity GOVT STOCK
Sovereign Bonds | -14% ₹1,915 Cr 189,133,800 GOI Floating Rate Bond 2024
Sovereign Bonds | -5% ₹653 Cr 66,000,000
↓ -4,000,000 5.09% Govt Stock 2022
Sovereign Bonds | -5% ₹633 Cr 62,500,000 7.94% Govt Stock 2021
Sovereign Bonds | -3% ₹429 Cr 42,300,000
↑ 17,300,000 Embassy Office Parks Reit
Debentures | -3% ₹360 Cr 3,000 8.79% Govt Stock 2021
Sovereign Bonds | -2% ₹311 Cr 30,000,000
↑ 30,000,000 Motherson Sumi Systems Limited
Debentures | -2% ₹304 Cr 3,000 State Bank of India
Debentures | -2% ₹268 Cr 2,500 Muthoot Finance Limited
Debentures | -2% ₹258 Cr 2,550,000 SRF Limited
Debentures | -2% ₹249 Cr 2,500
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.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
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