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Top 4 Best Floating Rate Funds to Invest in 2020 - Fincash

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Top 4 Best Floating Rate Funds to Invest in 2020

Updated on May 28, 2020 , 3038 views

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

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2019 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹253.152
↓ -0.05
₹6,1332.54.18.888.60%
Nippon India Floating Rate Fund Growth ₹32.5898
↓ 0.00
₹8,9642.95.3107.897.02%2Y 3M 18D2Y 10M 13D
ICICI Prudential Floating Interest Fund Growth ₹304.441
↓ -0.02
₹6,0181.53.58.17.28.40%
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 May 20

1. Aditya Birla Sun Life Floating Rate Fund - Long Term

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 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% .

Below is the key information for Aditya Birla Sun Life Floating Rate Fund - Long Term

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.

DateValue
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

Aditya Birla Sun Life Floating Rate Fund - Long Term SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for Aditya Birla Sun Life Floating Rate Fund - Long Term

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20

DurationReturns
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
YearReturns
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
NameSinceTenure
Kaustubh Gupta15 Jul 118.72 Yr.

Data below for Aditya Birla Sun Life Floating Rate Fund - Long Term as on 30 Apr 20

Asset Allocation
Asset ClassValue
Cash19.79%
Debt80.21%
Debt Sector Allocation
SectorValue
Corporate51.56%
Government39.48%
Cash Equivalent8.44%
Securitized0.53%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.80% GOI Floating Rate Bonds 2020
Sovereign Bonds | -
9%₹556 Cr55,500,000
REC LIMITED
Debentures | -
4%₹275 Cr2,710
Axis Bank Limited
Certificate of Deposit | -
4%₹249 Cr25,000
Bajaj Finance Limited
Debentures | -
3%₹175 Cr1,750
GOVT STOCK
Sovereign Bonds | -
3%₹161 Cr15,000,000
↑ 15,000,000
National Highways Authority Of India
Debentures | -
2%₹153 Cr1,500
Cooperatieve Rabobank U.A
Certificate of Deposit | -
2%₹149 Cr15,000
Net Receivables / (Payables)
Net Current Assets | -
2%₹142 Cr
Larsen And Toubro Limited
Debentures | -
2%₹125 Cr1,250
↑ 1,250
8.26% UP SDL Spl 2022
Domestic Bonds | -
2%₹116 Cr11,000,000

2. Nippon India Floating Rate Fund

(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 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% .

Below is the key information for Nippon India Floating Rate Fund

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.

DateValue
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

Nippon India Floating Rate Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125
Invest Now

Returns for Nippon India Floating Rate Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20

DurationReturns
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
YearReturns
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
NameSinceTenure
Anju Chhajer1 Feb 200.24 Yr.
Kinjal Desai25 May 181.93 Yr.

Data below for Nippon India Floating Rate Fund as on 30 Apr 20

Asset Allocation
Asset ClassValue
Cash4.4%
Debt95.18%
Other0.42%
Debt Sector Allocation
SectorValue
Corporate53.13%
Government41.77%
Cash Equivalent2.77%
Securitized1.91%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
GOVT STOCK
Sovereign Bonds | -
9%₹833 Cr77,500,000
↑ 20,500,000
Housing Development Finance Corporation Limited
Debentures | -
5%₹493 Cr4,975
↑ 250
8.42% OD SDL 2023
Sovereign Bonds | -
4%₹399 Cr36,765,400
Power Finance Corporation Ltd.
Debentures | -
4%₹384 Cr3,850
LIC Housing Finance Limited
Debentures | -
4%₹372 Cr3,732
↓ -1,000
Reliance Industries Limited
Debentures | -
4%₹350 Cr3,500
↑ 3,500
Nabha Power Limited
Debentures | -
3%₹298 Cr3,000
↑ 3,000
8.21% HR SDL Spl 2023
Domestic Bonds | -
3%₹272 Cr25,500,000
Larsen And Toubro Limited
Debentures | -
3%₹251 Cr2,500
↑ 2,500
India Grid Trust
Unlisted bonds | -
3%₹250 Cr2,500

3. ICICI Prudential Floating Interest Fund

(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 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% .

Below is the key information for ICICI Prudential Floating Interest Fund

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.

DateValue
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

ICICI Prudential Floating Interest Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125
Invest Now

Returns for ICICI Prudential Floating Interest Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 29 May 20

DurationReturns
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
YearReturns
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
NameSinceTenure
Rahul Goswami27 Sep 127.51 Yr.
Nikhil Kabra3 Aug 163.66 Yr.

Data below for ICICI Prudential Floating Interest Fund as on 30 Apr 20

Asset Allocation
Asset ClassValue
Cash15.49%
Debt78.73%
Other5.78%
Debt Sector Allocation
SectorValue
Corporate69.29%
Cash Equivalent13.5%
Government10.82%
Securitized0.62%
Credit Quality
RatingValue
A3.44%
AA43.35%
AAA53.21%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Bahadur Chand Investments Private Limited
Debentures | -
6%₹369 Cr369
Net Current Assets
Receivables | -
6%₹348 Cr
EMBASSY OFFICE PARKS REIT
Debentures | -
5%₹317 Cr3,000
State Bank Of India
Debentures | -
4%₹258 Cr2,500
7.80% GOI Floating Rate Bonds 2020
Sovereign Bonds | -
4%₹256 Cr25,562,400
Vedanta Limited
Debentures | -
4%₹242 Cr2,500
United Spirits Limited
Debentures | -
3%₹178 Cr1,800
Reliance Industries Limited
Debentures | -
3%₹170 Cr1,700
7.59% Govt Stock 2026
Sovereign Bonds | -
3%₹162 Cr15,000,000
Geetanjali Trading And Investments Pvt Ltd
Debentures | -
3%₹160 Cr125

Advantages of Floating Rate Funds

Some of the benefits of Floating Rate Funds are:

  1. 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.
  2. 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.
  3. 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?

  1. Open Free Investment Account for Lifetime at Fincash.com.

  2. Complete your Registration and KYC Process

  3. Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

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Disclaimer:
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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