In recent years, a new route to Investing directly in companies has opened up through Corporate Bonds. Corporate bond funds are essentially a certificate of debt issued by major companies. These are issued as a way of raising money for businesses. Corporate bond funds are a great option when it comes to good return and low-risk type investment. Investors can earn a regular income which is usually higher than that you would get as interest on your Fixed Deposits (FDs).
Companies that have a threat of going bust also usually offer higher interest rates. Investors who are keen to invest in corporate bond funds can consider the following schemes to invest in.
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Fund NAV Net Assets (Cr) Rating 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2018 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Exit Load Aditya Birla Sun Life Corporate Bond Fund Growth ₹71.3491
₹15,134 ☆☆☆☆☆ 2.4 5.3 7.8 8 7 8.45% 1Y 1M 17D 1Y 5M 8D NIL HDFC Corporate Bond Fund Growth ₹20.7243
₹11,793 ☆☆☆☆☆ 2.7 5.7 7.8 8.1 6.5 8.51% 2Y 4M 10D 3Y 2M 8D NIL ICICI Prudential Corporate Bond Fund Growth ₹19.0152
₹4,519 ☆☆☆☆ 2.5 4.8 7.2 7.6 6.4 8.4% 1Y 5M 12D 1Y 11M 8D NIL Kotak Corporate Bond Fund Standard Growth ₹2,461.66
₹1,139 ☆☆☆☆ 2.4 4.8 8.2 8 7.5 8.49% 10M 13D 11M 16D NIL Sundaram Corporate Bond Fund Growth ₹25.935
₹369 ☆☆☆ 3 6.5 7.1 7.5 4.8 8.42% 3Y 3M 14D 3Y 11M 12D NIL Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Mar 19
Fincash has employed the following parameters for shortlisting the top performing funds:
Past Returns: Return analysis of last 3 years.
Parameters & Weights: Information ratio with some modifications for our ratings and rankings.
Qualitative & Quantitative Analysis: Quantitative measures like Average Maturity, Credit Quality, Expense Ratio, Sharpe Ratio, Sortino Ratio, Alpa, including fund age and the size of the fund has been considered. Qualitative analysis like the reputation of the fund along with the fund manager is one of the important parameters that you would see in the listed funds.
Asset Size: The minimum AUM criteria for debt mutual fund are INR 100 Crores with some exceptions at times for new funds that are doing well in the market.
Performance with Respect to Benchmark: Peer average.
Some of the important tips to consider while investing in corporate bond funds are:
Investment Tenure: Investors planning to invest in corporate bond funds should stay invested for minimum three years.
Invest via a SIP: SIP or Systematic Investment plan is the most efficient way to invest in a Mutual Fund. They not only provide a systematic way of investing, but also ensures regular investment growth. You can invest in a SIP with an amount as low as INR 500.
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