+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 (%) 2025 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Franklin India Corporate Debt Fund Growth ₹107.05
↑ 0.00 ₹1,409 0.7 2.5 4.9 7.3 9.1 7.57% 1Y 4M 2D 2Y 8M 1D BNP Paribas Corporate Bond Fund Growth ₹29.607
↑ 0.01 ₹269 0.6 3.2 4.9 7.5 8.3 7.25% 1Y 7M 24D 2Y 1M 17D ICICI Prudential Corporate Bond Fund Growth ₹32.0465
↓ -0.01 ₹28,385 0.3 2.7 4.8 7 8 7.83% 3Y 4M 20D 5Y 11M 1D Bandhan Corporate Bond Fund Growth ₹20.5904
↓ 0.00 ₹13,512 0.4 2.8 4.8 6.8 7.4 7.29% 1Y 6M 1Y 9M 7D Kotak Corporate Bond Fund Standard Growth ₹4,026.84
↓ -0.61 ₹14,791 0.4 2.6 4.1 7 7.8 7.77% 2Y 8M 8D 4Y 10M 17D Nippon India Prime Debt Fund Growth ₹63.969
↓ -0.01 ₹8,907 0.2 2.6 4 7 7.8 0.08% 2Y 4M 2D 2Y 9M 29D Sundaram Corporate Bond Fund Growth ₹42.7084
↓ 0.00 ₹619 0.4 2.5 3.8 6.7 7.5 7.4% 2Y 2Y 8M 12D Aditya Birla Sun Life Corporate Bond Fund Growth ₹119.663
↓ -0.01 ₹22,722 0 2.3 3.7 6.8 7.4 7.82% 3Y 14D 4Y 1M 2D Invesco India Corporate Bond Fund Growth ₹3,369.36
↓ -0.72 ₹3,478 -0.1 2.3 3.5 6.7 7.6 7.73% 3Y 25D 4Y 2M 26D Canara Robeco Corporate Bond Fund Growth ₹22.9145
↑ 0.00 ₹104 0.2 2.2 3.5 6 6.1 0.07% 2Y 3M 8D 2Y 10M 26D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 6 Nov 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 Aditya Birla Sun Life Corporate Bond Fund Invesco India Corporate Bond Fund Canara Robeco Corporate Bond Fund Point 1 Lower mid AUM (₹1,409 Cr). Bottom quartile AUM (₹269 Cr). Highest AUM (₹28,385 Cr). Upper mid AUM (₹13,512 Cr). Upper mid AUM (₹14,791 Cr). Upper mid AUM (₹8,907 Cr). Bottom quartile AUM (₹619 Cr). Top quartile AUM (₹22,722 Cr). Lower mid AUM (₹3,478 Cr). Bottom quartile AUM (₹104 Cr). Point 2 Oldest track record among peers (29 yrs). Established history (18+ yrs). Established history (17+ yrs). Established history (10+ yrs). Established history (19+ yrs). Established history (26+ yrs). Established history (21+ yrs). Established history (29+ yrs). Established history (19+ yrs). Established history (12+ yrs). Point 3 Rating: 2★ (lower mid). Rating: 3★ (upper mid). Rating: 4★ (top quartile). Not Rated. Rating: 4★ (upper mid). Rating: 4★ (upper mid). Rating: 3★ (lower mid). Top rated. Rating: 2★ (bottom quartile). Rating: 2★ (bottom 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: Moderately Low. Risk profile: Moderate. Risk profile: Moderate. Point 5 1Y return: 4.92% (top quartile). 1Y return: 4.90% (top quartile). 1Y return: 4.77% (upper mid). 1Y return: 4.76% (upper mid). 1Y return: 4.12% (upper mid). 1Y return: 4.03% (lower mid). 1Y return: 3.84% (lower mid). 1Y return: 3.69% (bottom quartile). 1Y return: 3.53% (bottom quartile). 1Y return: 3.52% (bottom quartile). Point 6 1M return: 0.13% (bottom quartile). 1M return: 0.34% (upper mid). 1M return: 0.40% (top quartile). 1M return: 0.24% (bottom quartile). 1M return: 0.41% (top quartile). 1M return: 0.29% (lower mid). 1M return: 0.28% (bottom quartile). 1M return: 0.34% (upper mid). 1M return: 0.33% (upper mid). 1M return: 0.29% (lower mid). Point 7 Sharpe: -0.07 (top quartile). Sharpe: -0.05 (top quartile). Sharpe: -0.12 (upper mid). Sharpe: -0.11 (upper mid). Sharpe: -0.45 (lower mid). Sharpe: -0.38 (upper mid). Sharpe: -0.60 (bottom quartile). Sharpe: -0.45 (lower mid). Sharpe: -0.55 (bottom quartile). Sharpe: -0.90 (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): 7.57% (upper mid). Yield to maturity (debt): 7.25% (bottom quartile). Yield to maturity (debt): 7.83% (top quartile). Yield to maturity (debt): 7.29% (lower mid). Yield to maturity (debt): 7.77% (upper mid). Yield to maturity (debt): 0.08% (bottom quartile). Yield to maturity (debt): 7.40% (lower mid). Yield to maturity (debt): 7.82% (top quartile). Yield to maturity (debt): 7.73% (upper mid). Yield to maturity (debt): 0.07% (bottom quartile). Point 10 Modified duration: 1.34 yrs (top quartile). Modified duration: 1.65 yrs (upper mid). Modified duration: 3.39 yrs (bottom quartile). Modified duration: 1.50 yrs (top quartile). Modified duration: 2.69 yrs (lower mid). Modified duration: 2.34 yrs (lower mid). Modified duration: 2.00 yrs (upper mid). Modified duration: 3.04 yrs (bottom quartile). Modified duration: 3.07 yrs (bottom quartile). Modified duration: 2.27 yrs (upper mid). 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
Aditya Birla Sun Life Corporate Bond Fund
Invesco India Corporate Bond Fund
Canara Robeco 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 (06 Nov 26) ₹107.05 ↑ 0.00 (0.00 %) Net Assets (Cr) ₹1,409 on 30 Sep 26 Category Debt - Corporate Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆ Risk Moderate Expense Ratio 0.79 Sharpe Ratio -0.07 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 7.57% Effective Maturity 2 Years 8 Months 1 Day Modified Duration 1 Year 4 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Oct 21 ₹10,000 31 Oct 22 ₹10,259 31 Oct 23 ₹10,929 31 Oct 24 ₹11,769 31 Oct 25 ₹12,861 31 Oct 26 ₹13,472 Returns for Franklin India Corporate Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Nov 26 Duration Returns 1 Month 0.1% 3 Month 0.7% 6 Month 2.5% 1 Year 4.9% 3 Year 7.3% 5 Year 6.2% 10 Year 15 Year Since launch 8.4% Historical performance (Yearly) on absolute basis
Year Returns 2025 9.1% 2024 7.6% 2023 6.5% 2022 3.2% 2021 3.8% 2020 9% 2019 9.2% 2018 7.5% 2017 7.7% 2016 9% Fund Manager information for Franklin India Corporate Debt Fund
Name Since Tenure Rahul Goswami 6 Oct 23 2.99 Yr. Anuj Tagra 7 Mar 24 2.57 Yr. Chandni Gupta 7 Mar 24 2.57 Yr. Data below for Franklin India Corporate Debt Fund as on 30 Sep 26
Asset Allocation
Asset Class Value Cash 12.94% Debt 86.78% Other 0.27% Debt Sector Allocation
Sector Value Corporate 67.06% Government 19.73% Cash Equivalent 12.94% Credit Quality
Rating Value AA 7.3% AAA 92.7% Top Securities Holdings / Portfolio
Name Holding Value Quantity Small Industries Development Bank Of India
Debentures | -6% ₹81 Cr 7,500 National Bank For Agriculture And Rural Development
Debentures | -6% ₹78 Cr 7,500 Jamnagar Utilities & Power Private Limited
Debentures | -5% ₹76 Cr 7,500 Poonawalla Fincorp Limited
Debentures | -4% ₹62 Cr 5,950 RJ Corp Limited
Debentures | -4% ₹57 Cr 5,467 LIC Housing Finance Ltd
Debentures | -4% ₹56 Cr 5,500 Maharashtra SDL
Sovereign Bonds | -4% ₹53 Cr 5,500,000 Small Industries Development Bank Of India
Debentures | -4% ₹52 Cr 5,000 Mahindra And Mahindra Financial Services Limited
Debentures | -4% ₹51 Cr 5,000 Summit Digitel Infrastructure Limited
Debentures | -4% ₹50 Cr 5,000 2. BNP Paribas Corporate Bond Fund
BNP Paribas Corporate Bond Fund
Growth Launch Date 8 Nov 08 NAV (06 Nov 26) ₹29.607 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹269 on 30 Sep 26 Category Debt - Corporate Bond AMC BNP Paribas Asset Mgmt India Pvt. Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.58 Sharpe Ratio -0.05 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 7.25% Effective Maturity 2 Years 1 Month 17 Days Modified Duration 1 Year 7 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 Oct 21 ₹10,000 31 Oct 22 ₹10,102 31 Oct 23 ₹10,773 31 Oct 24 ₹11,714 31 Oct 25 ₹12,741 31 Oct 26 ₹13,308 Returns for BNP Paribas Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Nov 26 Duration Returns 1 Month 0.3% 3 Month 0.6% 6 Month 3.2% 1 Year 4.9% 3 Year 7.5% 5 Year 6% 10 Year 15 Year Since launch 6.2% Historical performance (Yearly) on absolute basis
Year Returns 2025 8.3% 2024 8.3% 2023 7% 2022 1.6% 2021 2.2% 2020 9.9% 2019 0.9% 2018 5.2% 2017 6.7% 2016 10.8% Fund Manager information for BNP Paribas Corporate Bond Fund
Name Since Tenure Prashant Pimple 16 Sep 26 0.04 Yr. Vikram Pamnani 11 Jul 24 2.22 Yr. Data below for BNP Paribas Corporate Bond Fund as on 30 Sep 26
Asset Allocation
Asset Class Value Cash 11.79% Equity 2.6% Debt 85.12% Other 0.49% Debt Sector Allocation
Sector Value Corporate 69.65% Government 15.47% Cash Equivalent 11.79% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.38% Gujarat Sdl 2029
Sovereign Bonds | -8% ₹20 Cr 2,000,000 Rec Limited
Debentures | -6% ₹16 Cr 1,600 Ntpc Limited
Debentures | -5% ₹15 Cr 150 Small Industries Development Bank Of India
Debentures | -4% ₹12 Cr 1,200 Hindustan Petroleum Corporation Limited
Debentures | -4% ₹10 Cr 1,000 GAil (India) Limited
Debentures | -4% ₹10 Cr 100 Ultratech Cement Limited
Debentures | -4% ₹10 Cr 1,000 LIC Housing Finance Ltd
Debentures | -4% ₹10 Cr 1,000 Tata Capital Housing Finance Limited
Debentures | -4% ₹10 Cr 1,000 Mindspace Business Parks Reit
Debentures | -4% ₹10 Cr 1,000 3. ICICI Prudential Corporate Bond Fund
ICICI Prudential Corporate Bond Fund
Growth Launch Date 11 Aug 09 NAV (06 Nov 26) ₹32.0465 ↓ -0.01 (-0.03 %) Net Assets (Cr) ₹28,385 on 30 Sep 26 Category Debt - Corporate Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.57 Sharpe Ratio -0.12 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.83% Effective Maturity 5 Years 11 Months 1 Day Modified Duration 3 Years 4 Months 20 Days Growth of 10,000 investment over the years.
Date Value 31 Oct 21 ₹10,000 31 Oct 22 ₹10,397 31 Oct 23 ₹11,163 31 Oct 24 ₹12,068 31 Oct 25 ₹13,069 31 Oct 26 ₹13,580 Returns for ICICI Prudential Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Nov 26 Duration Returns 1 Month 0.4% 3 Month 0.3% 6 Month 2.7% 1 Year 4.8% 3 Year 7% 5 Year 6.5% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2025 8% 2024 8% 2023 7.6% 2022 4.5% 2021 4.1% 2020 10.4% 2019 9.9% 2018 6.4% 2017 6.3% 2016 9.8% Fund Manager information for ICICI Prudential Corporate Bond Fund
Name Since Tenure Manish Banthia 22 Jan 24 2.69 Yr. Ritesh Lunawat 22 Jan 24 2.69 Yr. Data below for ICICI Prudential Corporate Bond Fund as on 30 Sep 26
Asset Allocation
Asset Class Value Cash 0.51% Debt 99.14% Other 0.35% Debt Sector Allocation
Sector Value Corporate 61.14% Government 38% Cash Equivalent 0.51% Credit Quality
Rating Value AA 0.6% AAA 99.4% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.94% Govt Stock 2036
Sovereign Bonds | -6% ₹1,564 Cr 158,966,930
↑ 90,368,000 LIC Housing Finance Ltd
Debentures | -5% ₹1,451 Cr 145,500 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹908 Cr 950
↓ -50 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹860 Cr 900 National Bank For Agriculture And Rural Development
Debentures | -3% ₹743 Cr 74,550 Small Industries Development Bank Of India
Debentures | -3% ₹731 Cr 74,433 National Bank For Agriculture And Rural Development
Debentures | -2% ₹682 Cr 68,500 6.9% Govt Stock 2065
Sovereign Bonds | -2% ₹681 Cr 75,938,000 7.34% Govt Stock 2064
Sovereign Bonds | -2% ₹490 Cr 51,474,000 7.57% Madhyapradesh Sgs 2045
Sovereign Bonds | -2% ₹473 Cr 49,151,900 4. Bandhan Corporate Bond Fund
Bandhan Corporate Bond Fund
Growth Launch Date 12 Jan 16 NAV (06 Nov 26) ₹20.5904 ↓ 0.00 (0.00 %) Net Assets (Cr) ₹13,512 on 30 Sep 26 Category Debt - Corporate Bond AMC IDFC Asset Management Company Limited Rating Risk Moderate Expense Ratio 0.65 Sharpe Ratio -0.11 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 1 Year 9 Months 7 Days Modified Duration 1 Year 6 Months Growth of 10,000 investment over the years.
Date Value 31 Oct 21 ₹10,000 31 Oct 22 ₹10,202 31 Oct 23 ₹10,905 31 Oct 24 ₹11,741 31 Oct 25 ₹12,661 31 Oct 26 ₹13,232 Returns for Bandhan Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Nov 26 Duration Returns 1 Month 0.2% 3 Month 0.4% 6 Month 2.8% 1 Year 4.8% 3 Year 6.8% 5 Year 5.8% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2025 7.4% 2024 7.7% 2023 6.8% 2022 2.6% 2021 3.7% 2020 11.6% 2019 8.5% 2018 6.3% 2017 6.2% 2016 Fund Manager information for Bandhan Corporate Bond Fund
Name Since Tenure Suyash Choudhary 28 Jul 21 5.18 Yr. Gautam Kaul 1 Dec 21 4.83 Yr. Brijesh Shah 10 Jun 24 2.31 Yr. Data below for Bandhan Corporate Bond Fund as on 30 Sep 26
Asset Allocation
Asset Class Value Cash 29.61% Debt 70.04% Other 0.35% Debt Sector Allocation
Sector Value Corporate 61.97% Government 20.07% Cash Equivalent 17.61% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Reliance Industries Limited
Debentures | -4% ₹533 Cr 52,500,000 Reliance Industries Limited
Debentures | -3% ₹464 Cr 45,500,000 Bajaj Housing Finance Limited
Debentures | -3% ₹342 Cr 35,000,000 Larsen And Toubro Limited
Debentures | -2% ₹319 Cr 32,000,000
↑ 1,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹297 Cr 30,000,000 Bajaj Finance Limited
Debentures | -2% ₹293 Cr 30,000,000 Grasim Industries Ltd
Debentures | -2% ₹287 Cr 30,000,000 HDFC Bank Limited
Debentures | -2% ₹282 Cr 28,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹268 Cr 27,500,000 Tata Capital Limited
Debentures | -2% ₹248 Cr 25,000,000 5. Kotak Corporate Bond Fund Standard
Kotak Corporate Bond Fund Standard
Growth Launch Date 21 Sep 07 NAV (06 Nov 26) ₹4,026.84 ↓ -0.61 (-0.02 %) Net Assets (Cr) ₹14,791 on 30 Sep 26 Category Debt - Corporate Bond AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.67 Sharpe Ratio -0.45 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.77% Effective Maturity 4 Years 10 Months 17 Days Modified Duration 2 Years 8 Months 8 Days Growth of 10,000 investment over the years.
Date Value 31 Oct 21 ₹10,000 31 Oct 22 ₹10,298 31 Oct 23 ₹10,979 31 Oct 24 ₹11,921 31 Oct 25 ₹12,905 31 Oct 26 ₹13,352 Returns for Kotak Corporate Bond Fund Standard
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Nov 26 Duration Returns 1 Month 0.4% 3 Month 0.4% 6 Month 2.6% 1 Year 4.1% 3 Year 7% 5 Year 6.1% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2025 7.8% 2024 8.3% 2023 6.9% 2022 3.7% 2021 3.8% 2020 9.7% 2019 9.6% 2018 7.5% 2017 6.9% 2016 9.4% Fund Manager information for Kotak Corporate Bond Fund Standard
Name Since Tenure Deepak Agrawal 7 Aug 26 0.15 Yr. Manu Sharma 7 Aug 26 0.15 Yr. Data below for Kotak Corporate Bond Fund Standard as on 30 Sep 26
Asset Allocation
Asset Class Value Cash 7.26% Debt 92.37% Other 0.37% Debt Sector Allocation
Sector Value Corporate 71.69% Government 20% Cash Equivalent 6.93% Securitized 1.01% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹520 Cr 52,500 National Bank For Agriculture And Rural Development
Debentures | -3% ₹496 Cr 50,000 Small Industries Development Bank Of India
Debentures | -3% ₹468 Cr 47,500 Bajaj Finance Limited
Debentures | -3% ₹434 Cr 43,500 Power Finance Corporation Limited
Debentures | -3% ₹386 Cr 40,000 Karnataka (Government of) 0.0756%
- | -2% ₹347 Cr 35,700,000 Mahindra And Mahindra Financial Services Limited
Debentures | -2% ₹298 Cr 30,000 Knowledge Realty TRust
Debentures | -2% ₹295 Cr 30,000 Larsen And Toubro Limited
Debentures | -2% ₹270 Cr 2,700 Power Finance Corporation Limited
Debentures | -2% ₹262 Cr 26,500
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