+91-22-4891390910 Corporate Bond Mutual Funds to Invest 2026 - 2027
In the last few years, corporate bond Mutual Funds have quietly become one of the most sensible choices for investors looking beyond fixed deposits but without taking equity-level risk.
As interest rates fluctuate and Volatility remains a constant in equity markets, corporate bond funds offer a middle ground — better return potential than FDs and relatively lower risk compared to equity-oriented funds.
Corporate bond mutual funds invest primarily in debt instruments issued by well-established companies. These companies raise money by issuing Bonds, and in return, they pay regular interest to investors.
Corporate bond mutual funds are often preferred by investors who want stable income, predictable returns, and controlled risk. Over a full market cycle, they have the potential to deliver returns higher than traditional fixed-income options like Bank FDs.
That said, higher returns usually come with higher credit risk — which is why fund quality and Portfolio composition matter more here than anywhere else.
What Are Corporate Bond Mutual Funds?
Corporate bond mutual funds invest at least 80% of their assets in high-rated corporate debt instruments. These typically include bonds issued by:
- Large private sector companies
- Public Sector Undertakings (PSUs)
- Financial institutions and banks
Most corporate bond funds focus on AAA and AA+ rated papers, making them relatively safer within the debt mutual fund universe.
Types of Corporate Bond Funds
Broadly, corporate bond funds can be classified into two categories based on credit quality:
1. High-Rated Corporate Bond Funds
These funds invest predominantly in AAA-rated companies, PSUs, and banking institutions. Credit risk is low, but returns tend to be moderate and stable.
Best suited for:
- Conservative investors
- Retirees seeking regular income
- Investors transitioning from FDs
2. Moderate Credit Risk Corporate Bond Funds
These funds allocate a portion of their portfolio to AA or AA- rated companies. While returns may be slightly higher, credit risk is also elevated.
Best suited for:
- Investors with moderate risk appetite
- Those who understand credit cycles
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Who Should Invest in Corporate Bonds?
Corporate bond funds are suitable for investors who:
- Want higher fixed-income returns than FDs
- Prefer relatively low volatility
- Have an investment horizon of 2–4 years or more
- Want regular income with better tax efficiency than traditional instruments
While these funds aim to protect capital, no debt fund is entirely risk-free. Diversification across issuers and high credit quality remain key.
Key Features of Corporate Bond Funds
1. Bond Price
Bond prices fluctuate based on interest rate movements and credit perception. The same bond may trade at different prices depending on market conditions.
2. Par Value
Par Value represents the principal amount returned at maturity. In India, most corporate bonds have a par value of ₹1,000.
Fund Selection Methodology used to find 10 funds
Top Rated Corporate Bond Mutual Funds FY 26 - 27
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Franklin India Corporate Debt Fund Growth ₹103.483
↑ 0.02 ₹1,350 0.6 2.2 7.6 7.4 9.1 7.43% 2Y 11M 5D 6Y 4M 19D BNP Paribas Corporate Bond Fund Growth ₹28.4717
↑ 0.01 ₹358 0.5 1.8 6.1 7.5 8.3 7.08% 2Y 9M 4D 3Y 6M 18D ICICI Prudential Corporate Bond Fund Growth ₹30.9376
↑ 0.01 ₹31,713 0.4 2.1 6 7.4 8 7.26% 3Y 5M 1D 6Y Bandhan Corporate Bond Fund Growth ₹19.8892
↑ 0.00 ₹14,446 0.7 2.1 5.7 7 7.4 6.71% 1Y 6M 25D 2Y 3M 22D Kotak Corporate Bond Fund Standard Growth ₹3,898.75
↑ 0.72 ₹17,275 0.3 1.8 5.7 7.2 7.8 7.29% 2Y 11M 26D 4Y 1M 28D Nippon India Prime Debt Fund Growth ₹61.8842
↑ 0.01 ₹8,950 0.3 1.6 5.6 7.3 7.8 7.19% 2Y 9M 11D 3Y 5M 1D Sundaram Corporate Bond Fund Growth ₹41.3841
↑ 0.01 ₹625 0.2 1.5 5.3 6.8 7.5 7.15% 2Y 6M 7D 3Y 2M 19D Invesco India Corporate Bond Fund Growth ₹3,266.12
↑ 0.59 ₹6,099 0 1.3 5.1 6.9 7.6 7% 3Y 1M 10D 4Y 11D Aditya Birla Sun Life Corporate Bond Fund Growth ₹115.795
↑ 0.02 ₹27,913 -0.2 1.3 4.7 7.1 7.4 7.21% 4Y 6M 25D 7Y 4D HDFC Corporate Bond Fund Growth ₹33.3409
↑ 0.01 ₹33,200 -0.3 1.1 4.6 7 7.3 7.24% 4Y 4M 24D 7Y 6M Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Mar 26 Research Highlights & Commentary of 10 Funds showcased
Commentary Franklin India Corporate Debt Fund BNP Paribas Corporate Bond Fund ICICI Prudential Corporate Bond Fund Bandhan Corporate Bond Fund Kotak Corporate Bond Fund Standard Nippon India Prime Debt Fund Sundaram Corporate Bond Fund Invesco India Corporate Bond Fund Aditya Birla Sun Life Corporate Bond Fund HDFC Corporate Bond Fund Point 1 Bottom quartile AUM (₹1,350 Cr). Bottom quartile AUM (₹358 Cr). Top quartile AUM (₹31,713 Cr). Upper mid AUM (₹14,446 Cr). Upper mid AUM (₹17,275 Cr). Lower mid AUM (₹8,950 Cr). Bottom quartile AUM (₹625 Cr). Lower mid AUM (₹6,099 Cr). Upper mid AUM (₹27,913 Cr). Highest AUM (₹33,200 Cr). Point 2 Established history (28+ yrs). Established history (17+ yrs). Established history (16+ yrs). Established history (10+ yrs). Established history (18+ yrs). Established history (25+ yrs). Established history (21+ yrs). Established history (18+ yrs). Oldest track record among peers (29 yrs). Established history (15+ yrs). Point 3 Rating: 2★ (bottom quartile). Rating: 3★ (lower mid). Rating: 4★ (upper mid). Not Rated. Rating: 4★ (upper mid). Rating: 4★ (upper mid). Rating: 3★ (lower mid). Rating: 2★ (bottom quartile). Top rated. Rating: 5★ (top quartile). Point 4 Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Point 5 1Y return: 7.58% (top quartile). 1Y return: 6.11% (top quartile). 1Y return: 6.01% (upper mid). 1Y return: 5.74% (upper mid). 1Y return: 5.70% (upper mid). 1Y return: 5.55% (lower mid). 1Y return: 5.34% (lower mid). 1Y return: 5.06% (bottom quartile). 1Y return: 4.67% (bottom quartile). 1Y return: 4.63% (bottom quartile). Point 6 1M return: -0.23% (top quartile). 1M return: -0.29% (upper mid). 1M return: -0.36% (upper mid). 1M return: 0.07% (top quartile). 1M return: -0.41% (lower mid). 1M return: -0.45% (lower mid). 1M return: -0.38% (upper mid). 1M return: -0.65% (bottom quartile). 1M return: -0.84% (bottom quartile). 1M return: -0.86% (bottom quartile). Point 7 Sharpe: 1.35 (top quartile). Sharpe: 1.01 (upper mid). Sharpe: 1.26 (top quartile). Sharpe: 0.66 (lower mid). Sharpe: 0.87 (upper mid). Sharpe: 0.79 (upper mid). Sharpe: 0.71 (lower mid). Sharpe: 0.64 (bottom quartile). Sharpe: 0.51 (bottom quartile). Sharpe: 0.52 (bottom quartile). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 7.43% (top quartile). Yield to maturity (debt): 7.08% (bottom quartile). Yield to maturity (debt): 7.26% (upper mid). Yield to maturity (debt): 6.71% (bottom quartile). Yield to maturity (debt): 7.29% (top quartile). Yield to maturity (debt): 7.19% (lower mid). Yield to maturity (debt): 7.15% (lower mid). Yield to maturity (debt): 7.00% (bottom quartile). Yield to maturity (debt): 7.21% (upper mid). Yield to maturity (debt): 7.24% (upper mid). Point 10 Modified duration: 2.93 yrs (upper mid). Modified duration: 2.76 yrs (upper mid). Modified duration: 3.42 yrs (bottom quartile). Modified duration: 1.57 yrs (top quartile). Modified duration: 2.99 yrs (lower mid). Modified duration: 2.78 yrs (upper mid). Modified duration: 2.52 yrs (top quartile). Modified duration: 3.11 yrs (lower mid). Modified duration: 4.57 yrs (bottom quartile). Modified duration: 4.40 yrs (bottom quartile). Franklin India Corporate Debt Fund
BNP Paribas Corporate Bond Fund
ICICI Prudential Corporate Bond Fund
Bandhan Corporate Bond Fund
Kotak Corporate Bond Fund Standard
Nippon India Prime Debt Fund
Sundaram Corporate Bond Fund
Invesco India Corporate Bond Fund
Aditya Birla Sun Life Corporate Bond Fund
HDFC Corporate Bond Fund
All the funds mentioned above are ideal, we are giving you detailed analysis of 5 funds.
(Erstwhile Franklin India Income Builder Account - Plan A) The investment objective of the Scheme is primarily to provide investors Regular income under the Dividend Plan and Capital appreciation under the Growth Plan. Below is the key information for Franklin India Corporate Debt Fund Returns up to 1 year are on The investment objective of the Scheme is to generate income and capital gains through investments in a portfolio of debt and money market instruments. However, there can be no assurance that the investment objectives of the Scheme will be realized. The Scheme launched hereunder does not guarantee/indicate any returns. Research Highlights for BNP Paribas Corporate Bond Fund Below is the key information for BNP Paribas Corporate Bond Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Ultra Short Term Plan) ICICI Prudential Ultra Short Term Plan is an open-ended income fund that intends to generate regular income through investments in a basket of debt and money market instruments of very short maturities with a view to providing reasonable returns, while maintaining an optimum balance of safety, liquidity and yield. However, there can be no assurance that the investment objective of the scheme will be realized. Research Highlights for ICICI Prudential Corporate Bond Fund Below is the key information for ICICI Prudential Corporate Bond Fund Returns up to 1 year are on The Fund seeks to provide steady income and capital appreciation by investing primarily in corporate debt securities across maturities and ratings. There is no assurance or guarantee that the objectives of the scheme will be realised. Research Highlights for Bandhan Corporate Bond Fund Below is the key information for Bandhan Corporate Bond 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. Research Highlights for Kotak Corporate Bond Fund Standard Below is the key information for Kotak Corporate Bond Fund Standard Returns up to 1 year are on 1. Franklin India Corporate Debt Fund
Franklin India Corporate Debt Fund
Growth Launch Date 23 Jun 97 NAV (31 Mar 26) ₹103.483 ↑ 0.02 (0.02 %) Net Assets (Cr) ₹1,350 on 28 Feb 26 Category Debt - Corporate Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆ Risk Moderate Expense Ratio 0.79 Sharpe Ratio 1.35 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load 0-1 Years (0.5%),1 Years and above(NIL) Yield to Maturity 7.43% Effective Maturity 6 Years 4 Months 19 Days Modified Duration 2 Years 11 Months 5 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,408 31 Mar 23 ₹10,813 31 Mar 24 ₹11,544 31 Mar 25 ₹12,458 31 Mar 26 ₹13,403 Returns for Franklin India Corporate Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Mar 26 Duration Returns 1 Month -0.2% 3 Month 0.6% 6 Month 2.2% 1 Year 7.6% 3 Year 7.4% 5 Year 6% 10 Year 15 Year Since launch 8.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 9.1% 2023 7.6% 2022 6.5% 2021 3.2% 2020 3.8% 2019 9% 2018 9.2% 2017 7.5% 2016 7.7% 2015 9% Fund Manager information for Franklin India Corporate Debt Fund
Name Since Tenure Rahul Goswami 6 Oct 23 2.4 Yr. Anuj Tagra 7 Mar 24 1.98 Yr. Chandni Gupta 7 Mar 24 1.98 Yr. Data below for Franklin India Corporate Debt Fund as on 28 Feb 26
Asset Allocation
Asset Class Value Debt 114.14% Other 0.27% Debt Sector Allocation
Sector Value Corporate 70.01% Government 44.13% Credit Quality
Rating Value AA 6.7% AAA 93.3% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.90% Gs 2065
Sovereign Bonds | -9% ₹115 Cr 11,929,500 Poonawalla Fincorp Limited
Debentures | -6% ₹82 Cr 8,000 Power Finance Corp Ltd. 7.24%
Debentures | -6% ₹75 Cr 7,500
↑ 7,500 LIC Housing Finance Ltd
Debentures | -4% ₹58 Cr 5,500
↑ 3,000 RJ Corp Limited
Debentures | -4% ₹55 Cr 5,467 Sikka Ports & Terminals Limited
Debentures | -4% ₹53 Cr 500 Summit Digitel Infrastructure Limited
Debentures | -4% ₹51 Cr 5,000 Rec Limited
Debentures | -4% ₹51 Cr 9,000 Embassy Office Parks Reit
Debentures | -4% ₹51 Cr 5,000 Jubilant Beverages Limited
Debentures | -3% ₹46 Cr 4,269 2. BNP Paribas Corporate Bond Fund
BNP Paribas Corporate Bond Fund
Growth Launch Date 8 Nov 08 NAV (31 Mar 26) ₹28.4717 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹358 on 15 Mar 26 Category Debt - Corporate Bond AMC BNP Paribas Asset Mgmt India Pvt. Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.58 Sharpe Ratio 1.01 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load 0-12 Months (1%),12-24 Months (0.5%),24-36 Months (0.25%),36 Months and above(NIL) Yield to Maturity 7.08% Effective Maturity 3 Years 6 Months 18 Days Modified Duration 2 Years 9 Months 4 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,325 31 Mar 23 ₹10,593 31 Mar 24 ₹11,411 31 Mar 25 ₹12,390 31 Mar 26 ₹13,146 Returns for BNP Paribas Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Mar 26 Duration Returns 1 Month -0.3% 3 Month 0.5% 6 Month 1.8% 1 Year 6.1% 3 Year 7.5% 5 Year 5.6% 10 Year 15 Year Since launch 6.2% Historical performance (Yearly) on absolute basis
Year Returns 2024 8.3% 2023 8.3% 2022 7% 2021 1.6% 2020 2.2% 2019 9.9% 2018 0.9% 2017 5.2% 2016 6.7% 2015 10.8% Fund Manager information for BNP Paribas Corporate Bond Fund
Name Since Tenure Gurvinder Wasan 21 Oct 24 1.36 Yr. Vikram Pamnani 10 Jul 24 1.64 Yr. Data below for BNP Paribas Corporate Bond Fund as on 15 Mar 26
Asset Allocation
Asset Class Value Cash 3.51% Equity 3.19% Debt 92.95% Other 0.35% Debt Sector Allocation
Sector Value Corporate 69.38% Government 23.57% Cash Equivalent 3.51% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Gs 2033
Sovereign Bonds | -6% ₹23 Cr 2,200,000 National Bank For Agriculture And Rural Development
Debentures | -6% ₹20 Cr 2,000
↓ -1,000 Ntpc Limited
Debentures | -4% ₹15 Cr 150 Bajaj Housing Finance Limited
Debentures | -4% ₹15 Cr 1,500 Small Industries Development Bank Of India
Debentures | -3% ₹12 Cr 1,200 National Housing Bank
Debentures | -3% ₹11 Cr 1,100 Hindustan Petroleum Corporation Limited
Debentures | -3% ₹10 Cr 100 Hindustan Petroleum Corporation Limited
Debentures | -3% ₹10 Cr 1,000 Indian Railway Finance Corporation Limited
Debentures | -3% ₹10 Cr 1,000 LIC Housing Finance Ltd
Debentures | -3% ₹10 Cr 1,000 3. ICICI Prudential Corporate Bond Fund
ICICI Prudential Corporate Bond Fund
Growth Launch Date 11 Aug 09 NAV (31 Mar 26) ₹30.9376 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹31,713 on 15 Mar 26 Category Debt - Corporate Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.57 Sharpe Ratio 1.26 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.26% Effective Maturity 6 Years Modified Duration 3 Years 5 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,427 31 Mar 23 ₹11,007 31 Mar 24 ₹11,877 31 Mar 25 ₹12,863 31 Mar 26 ₹13,636 Returns for ICICI Prudential Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Mar 26 Duration Returns 1 Month -0.4% 3 Month 0.4% 6 Month 2.1% 1 Year 6% 3 Year 7.4% 5 Year 6.4% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2024 8% 2023 8% 2022 7.6% 2021 4.5% 2020 4.1% 2019 10.4% 2018 9.9% 2017 6.4% 2016 6.3% 2015 9.8% Fund Manager information for ICICI Prudential Corporate Bond Fund
Name Since Tenure Manish Banthia 22 Jan 24 2.1 Yr. Ritesh Lunawat 22 Jan 24 2.1 Yr. Data below for ICICI Prudential Corporate Bond Fund as on 15 Mar 26
Asset Allocation
Asset Class Value Cash 17.25% Debt 82.46% Other 0.29% Debt Sector Allocation
Sector Value Corporate 54.44% Government 28.02% Cash Equivalent 17.25% Credit Quality
Rating Value AA 0.51% AAA 99.49% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.48% Gs 2035
Sovereign Bonds | -6% ₹1,874 Cr 189,893,400
↓ -12,500,000 LIC Housing Finance Ltd
Debentures | -4% ₹1,463 Cr 145,500 6.68% Gs 2040
Sovereign Bonds | -4% ₹1,199 Cr 124,006,250 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹1,014 Cr 1,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹912 Cr 900 Small Industries Dev Bank Of India
Debentures | -2% ₹792 Cr 79,433 Goi Floating Rate Bond 2033
Sovereign Bonds | -2% ₹734 Cr 70,736,820
↓ -13,867,850 National Bank For Agriculture And Rural Development
Debentures | -2% ₹702 Cr 69,550 6.90% Gs 2065
Sovereign Bonds | -2% ₹600 Cr 64,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹579 Cr 57,500 4. Bandhan Corporate Bond Fund
Bandhan Corporate Bond Fund
Growth Launch Date 12 Jan 16 NAV (31 Mar 26) ₹19.8892 ↑ 0.00 (0.02 %) Net Assets (Cr) ₹14,446 on 15 Mar 26 Category Debt - Corporate Bond AMC IDFC Asset Management Company Limited Rating Risk Moderate Expense Ratio 0.65 Sharpe Ratio 0.66 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.71% Effective Maturity 2 Years 3 Months 22 Days Modified Duration 1 Year 6 Months 25 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,474 31 Mar 23 ₹10,808 31 Mar 24 ₹11,566 31 Mar 25 ₹12,520 31 Mar 26 ₹13,239 Returns for Bandhan Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Mar 26 Duration Returns 1 Month 0.1% 3 Month 0.7% 6 Month 2.1% 1 Year 5.7% 3 Year 7% 5 Year 5.8% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.4% 2023 7.7% 2022 6.8% 2021 2.6% 2020 3.7% 2019 11.6% 2018 8.5% 2017 6.3% 2016 6.2% 2015 Fund Manager information for Bandhan Corporate Bond Fund
Name Since Tenure Suyash Choudhary 28 Jul 21 4.59 Yr. Gautam Kaul 1 Dec 21 4.25 Yr. Brijesh Shah 10 Jun 24 1.72 Yr. Data below for Bandhan Corporate Bond Fund as on 15 Mar 26
Asset Allocation
Asset Class Value Cash 18.07% Debt 81.62% Other 0.31% Debt Sector Allocation
Sector Value Corporate 60.66% Government 25.05% Cash Equivalent 13.98% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Larsen And Toubro Limited
Debentures | -4% ₹635 Cr 62,500,000
↑ 2,500,000 Reliance Industries Limited
Debentures | -4% ₹540 Cr 51,500,000 Nuclear Power Corporation Of India Limited
Debentures | -4% ₹511 Cr 50,400,000 Reliance Industries Limited
Debentures | -3% ₹495 Cr 47,500,000 Bajaj Finance Limited
Debentures | -3% ₹405 Cr 40,500,000
↓ -500,000 Rec Limited
Debentures | -2% ₹346 Cr 35,000,000 Ultratech Cement Limited
Debentures | -2% ₹328 Cr 32,500,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹288 Cr 28,500,000
↑ 28,500,000 LIC Housing Finance Ltd
Debentures | -2% ₹278 Cr 27,500,000 6.01% Gs 2030
Sovereign Bonds | -2% ₹275 Cr 27,700,000 5. Kotak Corporate Bond Fund Standard
Kotak Corporate Bond Fund Standard
Growth Launch Date 21 Sep 07 NAV (31 Mar 26) ₹3,898.75 ↑ 0.72 (0.02 %) Net Assets (Cr) ₹17,275 on 28 Feb 26 Category Debt - Corporate Bond AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.67 Sharpe Ratio 0.87 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.29% Effective Maturity 4 Years 1 Month 28 Days Modified Duration 2 Years 11 Months 26 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,459 31 Mar 23 ₹10,899 31 Mar 24 ₹11,721 31 Mar 25 ₹12,716 31 Mar 26 ₹13,441 Returns for Kotak Corporate Bond Fund Standard
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Mar 26 Duration Returns 1 Month -0.4% 3 Month 0.3% 6 Month 1.8% 1 Year 5.7% 3 Year 7.2% 5 Year 6.1% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.8% 2023 8.3% 2022 6.9% 2021 3.7% 2020 3.8% 2019 9.7% 2018 9.6% 2017 7.5% 2016 6.9% 2015 9.4% Fund Manager information for Kotak Corporate Bond Fund Standard
Name Since Tenure Deepak Agrawal 1 Feb 15 11.08 Yr. Manu Sharma 1 Nov 22 3.33 Yr. Data below for Kotak Corporate Bond Fund Standard as on 28 Feb 26
Asset Allocation
Asset Class Value Cash 3.02% Debt 96.68% Other 0.31% Debt Sector Allocation
Sector Value Corporate 72.71% Government 23.97% Cash Equivalent 3.02% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -3% ₹589 Cr 58,500 National Bank For Agriculture And Rural Development
Debentures | -3% ₹530 Cr 52,500 Karnataka (Government of) 0.0756%
- | -3% ₹462 Cr 45,700,000
↑ 25,700,000 Bajaj Finance Limited
Debentures | -3% ₹440 Cr 43,500 7.49% Karnataka Sgs 2035
Sovereign Bonds | -2% ₹423 Cr 42,000,000 Power Finance Corporation Limited
Debentures | -2% ₹400 Cr 40,000 Punjab National Bank
Domestic Bonds | -2% ₹376 Cr 40,000 Small Industries Development Bank Of India
Debentures | -2% ₹353 Cr 35,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹328 Cr 32,500 Power Finance Corporation Limited
Debentures | -2% ₹327 Cr 32,500
Additional Features You Should Understand
Coupon Interest
Coupon interest is the regular interest paid by the bond issuer. It is calculated as a percentage of the par value and forms the steady income component of corporate bond funds.
Yield to Maturity (YTM)
YTM indicates the annualised return an investor can expect if the bond is held until maturity. While a higher YTM looks attractive, it may also signal higher credit or duration risk.
Current Yield
Current yield measures the annual interest income relative to the bond’s current market price. For example, a bond with a ₹1,000 par value and a 20% coupon rate pays ₹200 annually.
Taxation of Corporate Bond Mutual Funds (Updated & Important)
Taxation rules for debt mutual funds changed significantly from 1 April 2023, and these rules continue to apply in 2026–27 for corporate bond mutual funds.
How Corporate Bond Funds Are Taxed
All Capital Gains from corporate bond mutual funds are taxed as per your income tax slab, irrespective of the holding period.
The earlier benefit of 20% long-term capital gains tax with indexation (after 3 years) is no longer available for most debt mutual funds, including corporate bond funds.
Returns from these funds are treated like interest income and added to your total taxable income.
Has Union Budget 2026 Changed Anything?
Union Budget 2026 did not introduce any new tax changes specifically for corporate bond mutual funds. Taxation remains slab-based, providing clarity and stability for investors planning medium-term allocations.
What This Means for Investors
Despite slab-based taxation, corporate bond funds can still make sense for:
- Investors seeking better pre-tax returns than bank fixed deposits
- Those who value daily liquidity and flexibility over lock-in products
- Portfolio diversification within the debt allocation
However, investors in higher tax slabs should always evaluate post-tax returns and avoid treating corporate bond funds as FD replacements.
In summary, while tax efficiency has reduced compared to earlier years, corporate bond mutual funds remain relevant for disciplined investors with a 2–4 year investment horizon.
Risks to Be Aware Of
While corporate bond funds are considered relatively stable, investors should be mindful of the following risks:
- Credit risk: The issuer may default or face a downgrade
- Interest rate risk: Bond prices can fall when interest rates rise
- Liquidity risk: Certain bonds may become difficult to sell during stressed market conditions
Choosing funds with strong credit discipline, diversified portfolios, and experienced fund management helps reduce these risks.
A Real-World Example: Corporate Bond Fund vs Fixed Deposit
Consider an investor in the 30% tax bracket choosing between a corporate bond fund and a bank fixed deposit:
- Corporate bond fund return: 7.5% per annum
- Bank FD return: 6.5% per annum
Both are taxed at slab rates. Even after taxation, the corporate bond fund may still offer better flexibility, daily liquidity, and portfolio diversification compared to an FD — provided the investment is held for the intended medium-term horizon and not treated as short-term parking.
This is why corporate bond funds work best as planned allocations, not substitutes for savings accounts.
Common Mistakes Investors Make in Corporate Bond Funds
Despite being relatively stable, investors often make avoidable mistakes:
- Chasing the highest YTM without understanding the underlying credit risk
- Ignoring credit quality and issuer concentration in the portfolio
- Using corporate bond funds as short-term parking tools, which exposes them to interest rate volatility
Avoiding these mistakes goes a long way in achieving predictable outcomes from corporate bond investments.
Who Should Avoid Corporate Bond Mutual Funds?
Corporate bond mutual funds are not suitable for everyone. You should avoid or limit exposure if you:
- Need money in the short term (less than 12 months)
- Are uncomfortable with temporary NAV fluctuations
- Do not understand credit risk and interest rate risk
- Expect guaranteed or FD-like fixed returns
Investors looking for ultra-safe parking options may consider Liquid Funds or bank fixed deposits instead. Corporate bond funds work best when given time and chosen carefully.
How to Invest in Corporate Bond 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!
Frequently Asked Questions (FAQs)
1. Are corporate bond mutual funds safe?
A: Corporate bond mutual funds are relatively safer than Equity Funds as they invest in debt instruments. However, they are not risk-free and carry credit risk and interest rate risk depending on the quality and maturity of bonds held.
2. Are corporate bond funds better than fixed deposits?
A: Corporate bond funds do not offer guaranteed returns like fixed deposits. However, they provide higher return potential, better liquidity, and portfolio diversification. The choice depends on your risk tolerance and investment horizon.
3. How are corporate bond mutual funds taxed?
A: All gains from corporate bond mutual funds are taxed as per the investor’s income tax slab, regardless of how long the investment is held. There is no indexation benefit.
Final Thoughts
Corporate bond mutual funds work best when treated as medium-term allocation tools, not short-term parking instruments. When chosen carefully, they can bring stability, predictability, and better post-tax returns to your portfolio — especially in uncertain market environments.
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Research Highlights for Franklin India Corporate Debt Fund