Table of Contents
- Why To Invest in Debt Mutual Funds?
- Risks in Debt Mutual Funds
- Debt Mutual Fund Taxation
- Best Debt Mutual Funds in India for Investments FY 25 - 26
- Top 5 Liquid Mutual Funds
- Top 5 Ultra Short Term Bond Mutual Funds
- Top and Best Floating Rate Mutual Funds
- Top 5 Best Money Market Mutual Funds
- Top 5 Short Term Bond Mutual Funds
- Top 5 Medium to Long Term Bond Mutual Funds
- Top 5 Banking and PSU Debt Mutual Funds
- Top 5 Credit Risk Mutual Funds
- Top 5 Dynamic Bond Mutual Funds
- Top 5 Corporate Bond Mutual Funds
- Top 5 Gilt Mutual Funds
- How to Evaluate Best Debt Mutual Funds
- Things to consider as an investor
- How to Invest in Best Debt Funds Online?
- Conclusion
Top 5 Funds
Best Debt Mutual Funds 2025
Best debt funds vary according to the tenor of investment of the investor. Investors need to be clear on their time horizon of investment when selecting the best Debt fund for their investment and also factor in the interest rate scenario.
For investors with a very short holding period, say for a couple of days to a month, Liquid Funds and ultra-short term funds may be relevant. When the time horizon is one to two years then short-term funds may be the desired vehicle. For longer tenors, for more than 3 years, long-term debt funds are the most preferred instruments by investors, especially during falling interest rates. Above all, debt funds have proved to be less risky than equities when looking for short-term investments, however, the volatility of long-term income funds may match that of equities.
As debt funds invest in fixed income instruments like government securities, treasury bills, corporate Bonds, etc., they have the capacity of generating consistent and regular returns over time. However, there are many qualitative and quantitative factors that one needs understand before selecting the best debt funds to invest, viz - AUM, Average Maturity, Taxation, the credit quality of the portfolio, etc. Below we have listed the top 5 best debt funds to invest across the various categories of debt funds - Best Liquid Funds, best ultra short-term funds, best short-term funds, best long-term funds and best Gilt Funds to invest in 2025 - 2026.
Why To Invest in Debt Mutual Funds?
Debt funds are considered to be an ideal investment for generating regular income. For example, choosing dividend payout can be an option for regular income.
In debt funds, investors can withdraw required money from the investment at any point in time and can let the remaining money stay invested.
Since debt funds largely invest in government securities, corporate debt and other securities like treasury bills, etc., they are not affected by equity market volatility.
If an investor is planning to achieve short-term Financial goals or invest for short periods then debt funds can be a good option. Liquid funds, ultra short-term funds, and short-term income funds may be the desired options.
In debt funds, investors can generate fixed income every month by starting a Systematic Withdrawal Plan (SWP is a reverse of SIP / STP) to withdraw a fixed amount on a monthly basis. Also, you can change the amount of the SWP when required.
Risks in Debt Mutual Funds
While Investing in debt funds, investors should be cautious about two major risks associated with them- credit risk and interest risk.
Credit Risk
A 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. An AAA rating is considered to be the highest quality with little or negligible payment Default Risk.
Interest Risks
The interest rate risk refers to a change in the bond price due to the change in the prevailing interest rate. When the interest rate rise in the economy the bond prices fall down and vice versa. The higher the maturity of the funds’ portfolio, the more prone it is to the interest rate risk. So in a rising interest rate scenario, it is advisable to go for lower maturity debt funds. And the reverse in a falling interest rate scenario.
Debt Mutual Fund Taxation
Tax implication on debt funds is computed in the following manner-
a. Short Term Capital Gains
If the holding period of a debt investment is less than 36 months, then it is classified as a short-term investment and these are taxed as per individual's tax slab.
b. Long Term Capital Gains
If the holding period of debt investment is more than 36 months, then it is classified as a long-term investment and is taxed at 20% with an indexation benefit.
| Capital Gains | Investment Holding Gains | Taxation |
|---|---|---|
| Short Term Capital Gains | Less than 36 months | As per individual's tax slab |
| Long Term Capital Gains | More than 36 months | 20% with indexation benefits |
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Best Debt Mutual Funds in India for Investments FY 25 - 26
Top 5 Liquid Mutual Funds
Top Liquid funds with AUM/Net Assets > 10,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Liquid Fund Growth ₹2,817.62
↑ 0.55 ₹34,674 500 0.6 1.8 3.5 7.4 7.4 7.06% 1M 10D 1M 11D Invesco India Liquid Fund Growth ₹3,478.98
↑ 0.65 ₹14,858 5,000 0.6 1.7 3.5 7.4 7.4 7.07% 1M 21D 1M 21D ICICI Prudential Liquid Fund Growth ₹374.746
↑ 0.07 ₹56,002 500 0.6 1.7 3.5 7.3 7.4 7.08% 1M 6D 1M 9D Aditya Birla Sun Life Liquid Fund Growth ₹407.831
↑ 0.07 ₹47,855 5,000 0.6 1.7 3.5 7.3 7.3 7.17% 1M 13D 1M 17D Nippon India Liquid Fund Growth ₹6,177.56
↑ 1.15 ₹32,108 100 0.6 1.7 3.5 7.3 7.3 7.19% 1M 20D 1M 25D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Ultra Short Term Bond Mutual Funds
Top Ultra Short Bond funds with AUM/Net Assets > 1,000 Crore.
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹528.905
↑ 0.16 ₹15,890 1,000 1.9 3.8 7.8 6.6 7.9 7.61% 5M 8D 7M 17D UTI Ultra Short Term Fund Growth ₹4,102.29
↑ 0.92 ₹3,039 5,000 1.6 3.5 7.1 6.1 7.2 7.59% 4M 28D 5M 9D ICICI Prudential Ultra Short Term Fund Growth ₹26.7578
↑ 0.01 ₹13,935 5,000 1.7 3.5 7.4 6.3 7.5 7.6% 4M 28D 5M 16D Invesco India Ultra Short Term Fund Growth ₹2,606.35
↑ 0.45 ₹1,764 5,000 1.7 3.4 7.4 6.1 7.5 7.37% 5M 1D 5M 13D SBI Magnum Ultra Short Duration Fund Growth ₹5,774.73
↑ 1.28 ₹12,885 5,000 1.7 3.5 7.4 6.3 7.4 7.43% 5M 1D 10M 6D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top and Best Floating Rate Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Floating Rate Fund - Long Term Growth ₹334.886
↑ 0.12 ₹13,430 1,000 1.7 3.8 7.9 6.8 7.9 7.44% 1Y 2M 8D 2Y 3M 25D Nippon India Floating Rate Fund Growth ₹43.3249
↑ 0.02 ₹7,799 5,000 1.5 4 8.1 6.4 8.2 7.61% 2Y 9M 18D 3Y 8M 1D ICICI Prudential Floating Interest Fund Growth ₹408.904
↑ 0.04 ₹8,202 5,000 1.6 3.8 8.1 6.8 8 7.94% 1Y 1M 10D 5Y 7M 17D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Best Money Market Mutual Funds
Fund NAV Net Assets (Cr) Min Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹356.954
↑ 0.07 ₹24,928 1,000 1.8 3.7 7.7 6.7 7.8 7.37% 4M 10D 4M 10D UTI Money Market Fund Growth ₹2,973.65
↑ 0.65 ₹16,372 10,000 1.8 3.7 7.7 6.7 7.7 7.34% 4M 11D 4M 12D ICICI Prudential Money Market Fund Growth ₹365.969
↑ 0.08 ₹26,632 500 1.8 3.7 7.7 6.6 7.7 7.27% 3M 11D 3M 19D Kotak Money Market Scheme Growth ₹4,331.72
↑ 0.80 ₹29,774 5,000 1.7 3.6 7.6 6.7 7.7 7.34% 4M 10D 4M 13D L&T Money Market Fund Growth ₹25.4746
↑ 0.01 ₹2,654 10,000 1.7 3.6 7.4 6.2 7.5 7.31% 4M 6D 4M 15D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Short Term Bond Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹39.3202
↓ 0.00 ₹28 1.2 3.1 6.1 4.2 7.18% 1Y 7M 28D 1Y 11M 1D Nippon India Short Term Fund Growth ₹50.5887
↑ 0.01 ₹7,534 1.6 4 7.9 6.1 8 7.62% 2Y 10M 2D 3Y 7M 20D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹45.648
↑ 0.00 ₹8,804 1.5 3.9 7.8 6.4 7.9 7.64% 2Y 10M 6D 3Y 10M 2D ICICI Prudential Short Term Fund Growth ₹57.7033
↓ 0.00 ₹20,033 1.6 3.8 7.8 6.7 7.8 7.74% 2Y 3M 7D 3Y 11M 12D UTI Short Term Income Fund Growth ₹30.456
↑ 0.00 ₹2,640 1.4 3.8 7.7 6.2 7.9 7.53% 2Y 9M 11D 3Y 8M 5D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Sep 23
Top 5 Medium to Long Term Bond Mutual Funds
Top Medium to Long Term Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Income Fund Growth ₹67.8436
↓ -0.03 ₹1,863 1 3.6 7.9 6.2 8.1 7.58% 5Y 9M 25D 13Y 4D ICICI Prudential Bond Fund Growth ₹38.498
↓ -0.03 ₹3,084 1.4 4.1 8.4 6.7 8.6 7.24% 5Y 7Y 7M 17D Aditya Birla Sun Life Income Fund Growth ₹120.664
↓ -0.07 ₹2,189 0.9 3.6 8 5.9 8.4 7.24% 5Y 11M 26D 13Y 22D HDFC Income Fund Growth ₹55.8781
↓ -0.03 ₹861 1 3.7 8.6 5.5 9 7.12% 6Y 8M 15D 11Y 4M 26D Kotak Bond Fund Growth ₹73.8334
↓ -0.07 ₹2,034 0.9 3.4 8 5.7 8.2 7.1% 6Y 2M 26D 12Y 7M 20D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Banking and PSU Debt Mutual Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Banking and PSU Debt Fund Growth ₹22.0637
↑ 0.01 ₹5,881 1.4 3.7 7.7 6.1 7.9 7.38% 3Y 8M 5Y 2M 28D UTI Banking & PSU Debt Fund Growth ₹21.0337
↑ 0.01 ₹806 1.4 3.7 7.5 8.3 7.6 7.32% 2Y 3M 29D 2Y 9M 7D DSP BlackRock Banking and PSU Debt Fund Growth ₹23.1141
↑ 0.00 ₹3,076 1.1 3.8 8.4 6.2 8.6 7.25% 5Y 3M 29D 9Y 10M 17D Kotak Banking and PSU Debt fund Growth ₹62.7482
↑ 0.01 ₹5,679 1.5 3.9 7.9 6.2 8 7.39% 3Y 9M 11D 5Y 9M 25D ICICI Prudential Banking and PSU Debt Fund Growth ₹31.4372
↑ 0.00 ₹9,034 1.7 3.7 7.8 6.7 7.9 7.58% 2Y 9M 25D 4Y 5M 8D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Credit Risk Mutual Funds
Top Credit Risk funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Credit Risk Fund Growth ₹43.7692
↑ 0.02 ₹2,285 1.8 3.7 8 6.9 8.1 8.67% 2Y 3M 3Y 1M 24D HDFC Credit Risk Debt Fund Growth ₹23.1118
↑ 0.01 ₹7,404 1.5 4 7.9 6.2 8.2 8.44% 2Y 2M 16D 3Y 2M 2D L&T Credit Risk Fund Growth ₹27.6601
↑ 0.00 ₹582 1.4 3.5 7.1 5.7 7.2 8.08% 2Y 5M 19D 3Y 3M 18D Kotak Credit Risk Fund Growth ₹28.2059
↑ 0.01 ₹750 1.4 2.8 6.8 4.9 7.1 8.51% 2Y 4M 17D 3Y 22D Nippon India Credit Risk Fund Growth ₹33.4489
↑ 0.00 ₹995 1.8 4.1 8.2 6.8 8.3 8.93% 2Y 2M 1D 2Y 7M 13D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Dynamic Bond Mutual Funds
Top Dynamic Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity UTI Dynamic Bond Fund Growth ₹29.693
↓ -0.02 ₹555 0.9 3.7 8.1 8.4 8.6 7.17% 8Y 4M 13D 17Y 6M 25D SBI Dynamic Bond Fund Growth ₹34.2487
↓ -0.03 ₹3,322 0.4 3.2 8.2 6.6 8.6 7.15% 8Y 8M 16D 20Y 8M 1D IDFC Dynamic Bond Fund Growth ₹32.7753
↓ -0.07 ₹3,108 -0.3 2.4 8.8 5.7 10 7.12% 11Y 9M 25D 28Y 7M 2D Aditya Birla Sun Life Dynamic Bond Fund Growth ₹44.2941
↓ -0.01 ₹1,716 1 3.9 8.5 7.3 8.8 7.22% 8Y 2M 8D 15Y 14D HDFC Dynamic Debt Fund Growth ₹86.3154
↓ -0.06 ₹791 0.8 3.5 8.2 5.8 8.5 7.13% 7Y 7M 15D 15Y 10M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Corporate Bond Mutual Funds
Top Corporate Bond funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Corporate Bond Fund Growth ₹31.2276
↑ 0.01 ₹32,841 1.4 4.1 8.4 6.5 8.6 7.39% 3Y 10M 21D 6Y 17D Aditya Birla Sun Life Corporate Bond Fund Growth ₹108.32
↓ -0.02 ₹23,775 1.5 4.1 8.4 6.7 8.5 7.46% 3Y 10M 2D 5Y 7M 20D Nippon India Prime Debt Fund Growth ₹57.4126
↑ 0.01 ₹6,755 1.4 4.1 8.3 6.7 8.4 7.42% 3Y 10M 13D 5Y 1M 13D Kotak Corporate Bond Fund Standard Growth ₹3,615.29
↑ 0.21 ₹14,333 1.5 4 8.2 6.3 8.3 7.49% 3Y 3M 22D 5Y 29D ICICI Prudential Corporate Bond Fund Growth ₹28.6095
↓ 0.00 ₹29,074 1.6 3.8 7.9 6.9 8 7.61% 2Y 4M 24D 3Y 10M 17D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25
Top 5 Gilt Mutual Funds
Top (Erstwhile HDFC Medium Term Opportunities Fund) To generate regular income through investments in Debt/
Money Market Instruments and Government Securities with
maturities not exceeding 60 months. HDFC Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 29 Jun 10. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Corporate Bond Fund Returns up to 1 year are on (Erstwhile DHFL Pramerica Credit Opportunities Fund) The investment objective of the Scheme is to generate income and capital appreciation by investing predominantly in corporate debt. There can be no assurance that the investment objective of the Scheme will be realized. PGIM India Credit Risk Fund is a Debt - Credit Risk fund was launched on 29 Sep 14. It is a fund with Moderate risk and has given a Below is the key information for PGIM India Credit Risk Fund Returns up to 1 year are on (Erstwhile Aditya Birla Sun Life Short Term Fund) An Open-ended income scheme with the objective to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities. Aditya Birla Sun Life Corporate Bond Fund is a Debt - Corporate Bond fund was launched on 3 Mar 97. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Corporate Bond Fund Returns up to 1 year are on The investment objective of the scheme is to generate optimal returns with adequate liquidity through active management of the portfolio, by investing in debt and money market instruments. However, there can be no assurance that the investment objective of the scheme will be realized. UTI Dynamic Bond Fund is a Debt - Dynamic Bond fund was launched on 16 Jun 10. It is a fund with Moderate risk and has given a Below is the key information for UTI Dynamic Bond Fund Returns up to 1 year are on To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity. ICICI Prudential Long Term Plan is a Debt - Dynamic Bond fund was launched on 20 Jan 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Long Term Plan Returns up to 1 year are on GILT funds with AUM/Net Assets > 500 Crore.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity SBI Magnum Constant Maturity Fund Growth ₹60.8397
↓ -0.07 ₹1,934 1.3 4.2 8.9 6.3 9.1 6.93% 6Y 10M 2D 9Y 10M 6D Nippon India Gilt Securities Fund Growth ₹36.6668
↓ -0.04 ₹2,132 0.5 3.3 8.3 6 8.9 7.05% 9Y 5M 16D 21Y 4M 20D SBI Magnum Gilt Fund Growth ₹63.3957
↓ -0.09 ₹10,979 0.4 3.3 8.3 6.9 8.9 7.06% 10Y 2M 19D 25Y 7M 6D UTI Gilt Fund Growth ₹60.3056
↓ -0.09 ₹645 0.6 3.4 8.3 6.2 8.9 7.01% 10Y 1M 17D 23Y 1M 10D Aditya Birla Sun Life Government Securities Fund Growth ₹78.1625
↓ -0.14 ₹2,177 0.3 3.1 8.2 6 9.1 6.94% 8Y 5M 5D 17Y 9M 11D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 25 1. HDFC Corporate Bond Fund
CAGR/Annualized return of 8.1% since its launch. Ranked 2 in Corporate Bond category. Return for 2024 was 8.6% , 2023 was 7.2% and 2022 was 3.3% . HDFC Corporate Bond Fund
Growth Launch Date 29 Jun 10 NAV (17 Jan 25) ₹31.2276 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹32,841 on 30 Nov 24 Category Debt - Corporate Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.59 Sharpe Ratio 2.56 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.39% Effective Maturity 6 Years 17 Days Modified Duration 3 Years 10 Months 21 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹11,181 31 Dec 21 ₹11,618 31 Dec 22 ₹11,997 31 Dec 23 ₹12,862 31 Dec 24 ₹13,962 Returns for HDFC Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 17 Jan 25 Duration Returns 1 Month 0.4% 3 Month 1.4% 6 Month 4.1% 1 Year 8.4% 3 Year 6.5% 5 Year 6.9% 10 Year 15 Year Since launch 8.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.6% 2022 7.2% 2021 3.3% 2020 3.9% 2019 11.8% 2018 10.3% 2017 6.5% 2016 6.5% 2015 10.6% 2014 8.6% Fund Manager information for HDFC Corporate Bond Fund
Name Since Tenure Anupam Joshi 27 Oct 15 9.19 Yr. Dhruv Muchhal 22 Jun 23 1.53 Yr. Data below for HDFC Corporate Bond Fund as on 30 Nov 24
Asset Allocation
Asset Class Value Cash 2.58% Debt 97.18% Other 0.23% Debt Sector Allocation
Sector Value Corporate 58.71% Government 38.47% Cash Equivalent 2.58% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.23% Govt Stock 2039
Sovereign Bonds | -10% ₹3,312 Cr 320,000,000
↓ -8,500,000 7.93% Govt Stock 2033
Sovereign Bonds | -4% ₹1,284 Cr 125,000,000 State Bank Of India
Debentures | -2% ₹804 Cr 800 7.53% Govt Stock 2034
Sovereign Bonds | -2% ₹780 Cr 77,500,000
↑ 2,500,000 Mangalore Refinery And Petrochemicals Limited
Debentures | -2% ₹559 Cr 5,670 Reliance Industries Limited
Debentures | -2% ₹527 Cr 5,000 HDFC Bank Limited
Debentures | -2% ₹511 Cr 50,000 Bajaj Housing Finance Limited
Debentures | -2% ₹504 Cr 50,000 6.79% Govt Stock 2034
Sovereign Bonds | -2% ₹502 Cr 50,000,000
↓ -7,500,000 Ncd Small Industries Development Bank Of India
Debentures | -2% ₹501 Cr 50,000
↑ 10,000 2. PGIM India Credit Risk Fund
CAGR/Annualized return of 6.3% since its launch. Ranked 2 in Credit Risk category. . PGIM India Credit Risk Fund
Growth Launch Date 29 Sep 14 NAV (21 Jan 22) ₹15.5876 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹39 on 31 Dec 21 Category Debt - Credit Risk AMC Pramerica Asset Managers Private Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.85 Sharpe Ratio 1.73 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 5.01% Effective Maturity 7 Months 2 Days Modified Duration 6 Months 14 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹9,782 31 Dec 21 ₹10,624 Returns for PGIM India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 17 Jan 25 Duration Returns 1 Month 0.3% 3 Month 0.6% 6 Month 4.4% 1 Year 8.4% 3 Year 3% 5 Year 4.2% 10 Year 15 Year Since launch 6.3% Historical performance (Yearly) on absolute basis
Year Returns 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Fund Manager information for PGIM India Credit Risk Fund
Name Since Tenure Data below for PGIM India Credit Risk Fund as on 31 Dec 21
Asset Allocation
Asset Class Value Debt Sector Allocation
Sector Value Credit Quality
Rating Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 3. Aditya Birla Sun Life Corporate Bond Fund
CAGR/Annualized return of 8.9% since its launch. Ranked 1 in Corporate Bond category. Return for 2024 was 8.5% , 2023 was 7.3% and 2022 was 4.1% . Aditya Birla Sun Life Corporate Bond Fund
Growth Launch Date 3 Mar 97 NAV (17 Jan 25) ₹108.32 ↓ -0.02 (-0.02 %) Net Assets (Cr) ₹23,775 on 15 Dec 24 Category Debt - Corporate Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.5 Sharpe Ratio 2.29 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.46% Effective Maturity 5 Years 7 Months 20 Days Modified Duration 3 Years 10 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹11,189 31 Dec 21 ₹11,641 31 Dec 22 ₹12,116 31 Dec 23 ₹12,999 31 Dec 24 ₹14,109 Returns for Aditya Birla Sun Life Corporate Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 17 Jan 25 Duration Returns 1 Month 0.4% 3 Month 1.5% 6 Month 4.1% 1 Year 8.4% 3 Year 6.7% 5 Year 7.1% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.5% 2022 7.3% 2021 4.1% 2020 4% 2019 11.9% 2018 9.6% 2017 7% 2016 6.5% 2015 10.2% 2014 8.9% Fund Manager information for Aditya Birla Sun Life Corporate Bond Fund
Name Since Tenure Kaustubh Gupta 12 Apr 21 3.73 Yr. Data below for Aditya Birla Sun Life Corporate Bond Fund as on 15 Dec 24
Asset Allocation
Asset Class Value Cash 3.51% Debt 96.26% Other 0.23% Debt Sector Allocation
Sector Value Corporate 57.33% Government 38.42% Cash Equivalent 3.51% Securitized 0.51% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -11% ₹2,675 Cr 261,000,000 7.18% Govt Stock 2037
Sovereign Bonds | -6% ₹1,514 Cr 147,324,100
↑ 3,500,000 7.1% Govt Stock 2034
Sovereign Bonds | -5% ₹1,162 Cr 113,661,700
↑ 12,500,000 7.53% Govt Stock 2034
Sovereign Bonds | -3% ₹701 Cr 69,637,700 Small Industries Development Bank Of India
Debentures | -3% ₹695 Cr 69,550 Small Industries Development Bank Of India
Debentures | -3% ₹600 Cr 6,000 Bajaj Housing Finance Limited
Debentures | -2% ₹559 Cr 55,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹487 Cr 48,500 Bajaj Finance Limited
Debentures | -2% ₹454 Cr 45,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹399 Cr 4,000 4. UTI Dynamic Bond Fund
CAGR/Annualized return of 7.7% since its launch. Ranked 3 in Dynamic Bond category. Return for 2024 was 8.6% , 2023 was 6.2% and 2022 was 10.1% . UTI Dynamic Bond Fund
Growth Launch Date 16 Jun 10 NAV (17 Jan 25) ₹29.693 ↓ -0.02 (-0.05 %) Net Assets (Cr) ₹555 on 30 Nov 24 Category Debt - Dynamic Bond AMC UTI Asset Management Company Ltd Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.54 Sharpe Ratio 1.14 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.17% Effective Maturity 17 Years 6 Months 25 Days Modified Duration 8 Years 4 Months 13 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,586 31 Dec 21 ₹11,728 31 Dec 22 ₹12,909 31 Dec 23 ₹13,709 31 Dec 24 ₹14,889 Returns for UTI Dynamic Bond Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 17 Jan 25 Duration Returns 1 Month 0% 3 Month 0.9% 6 Month 3.7% 1 Year 8.1% 3 Year 8.4% 5 Year 8.7% 10 Year 15 Year Since launch 7.7% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.6% 2022 6.2% 2021 10.1% 2020 10.8% 2019 5.9% 2018 -3.9% 2017 5.2% 2016 4.2% 2015 14.9% 2014 6.9% Fund Manager information for UTI Dynamic Bond Fund
Name Since Tenure Sudhir Agarwal 1 Dec 21 3.09 Yr. Data below for UTI Dynamic Bond Fund as on 30 Nov 24
Asset Allocation
Asset Class Value Cash 12% Debt 87.75% Other 0.25% Debt Sector Allocation
Sector Value Government 65.93% Corporate 21.83% Cash Equivalent 12% Credit Quality
Rating Value AA 0.94% AAA 99.06% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.92% Govt Stock 2039
Sovereign Bonds | -22% ₹110 Cr 1,100,000,000 7.09% Govt Stock 2054
Sovereign Bonds | -20% ₹101 Cr 1,000,000,000 Small Industries Development Bank Of India
Debentures | -8% ₹40 Cr 4,000 National Bank For Agriculture And Rural Development
Debentures | -8% ₹40 Cr 4,000 Rec Limited
Debentures | -8% ₹40 Cr 4,000 7.23% Govt Stock 2039
Sovereign Bonds | -6% ₹31 Cr 300,000,000 Power Finance Corporation Ltd.
Debentures | -5% ₹25 Cr 2,500 7.3% Govt Stock 2053
Sovereign Bonds | -4% ₹21 Cr 200,000,000 7.46% Govt Stock 2073
Sovereign Bonds | -3% ₹16 Cr 150,000,000 7.1% Govt Stock 2034
Sovereign Bonds | -3% ₹15 Cr 150,000,000 5. ICICI Prudential Long Term Plan
CAGR/Annualized return of 8.8% since its launch. Ranked 1 in Dynamic Bond category. Return for 2024 was 8.2% , 2023 was 7.6% and 2022 was 4.5% . ICICI Prudential Long Term Plan
Growth Launch Date 20 Jan 10 NAV (17 Jan 25) ₹35.4093 ↓ -0.01 (-0.03 %) Net Assets (Cr) ₹13,460 on 15 Dec 24 Category Debt - Dynamic Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆☆ Risk Moderate Expense Ratio 1.36 Sharpe Ratio 1.43 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Months (0.25%),1 Months and above(NIL) Yield to Maturity 7.64% Effective Maturity 5 Years 6 Months 14 Days Modified Duration 3 Years 6 Months 4 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹11,177 31 Dec 21 ₹11,657 31 Dec 22 ₹12,187 31 Dec 23 ₹13,111 31 Dec 24 ₹14,188 Returns for ICICI Prudential Long Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 17 Jan 25 Duration Returns 1 Month 0.4% 3 Month 1.5% 6 Month 4% 1 Year 8.1% 3 Year 7% 5 Year 7.2% 10 Year 15 Year Since launch 8.8% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.2% 2022 7.6% 2021 4.5% 2020 4.3% 2019 11.8% 2018 10.2% 2017 6.2% 2016 5.1% 2015 16.9% 2014 5.7% Fund Manager information for ICICI Prudential Long Term Plan
Name Since Tenure Manish Banthia 28 Sep 12 12.27 Yr. Nikhil Kabra 22 Jan 24 0.94 Yr. Data below for ICICI Prudential Long Term Plan as on 15 Dec 24
Asset Allocation
Asset Class Value Cash 15.89% Debt 83.87% Other 0.24% Debt Sector Allocation
Sector Value Government 50.69% Corporate 35.85% Cash Equivalent 13.22% Credit Quality
Rating Value AA 31.52% AAA 68.48% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2034
Sovereign Bonds | -38% ₹5,156 Cr 504,431,490 7.93% Govt Stock 2033
Sovereign Bonds | -5% ₹686 Cr 66,848,050 7.53% Govt Stock 2034
Sovereign Bonds | -3% ₹458 Cr 45,460,800 Nirma Limited
Debentures | -2% ₹202 Cr 20,000 Godrej Properties Limited
Debentures | -1% ₹202 Cr 20,000 Oberoi Realty Ltd.
Debentures | -1% ₹200 Cr 20,000 Bharti Telecom Limited
Debentures | -1% ₹161 Cr 16,000 National Bank For Agriculture And Rural Development
Debentures | -1% ₹150 Cr 1,500 SEIl Energy India Limited
Debentures | -1% ₹149 Cr 15,000 National Bank For Agriculture And Rural Development
Debentures | -1% ₹130 Cr 1,300
How to Evaluate Best Debt Mutual Funds
In order to select the best debt funds you wish to invest in, it is necessary to consider some of the important parameters such as average maturity, credit quality, AUM, expense ratio, tax implication., etc. Let's have an in-depth look-
1. Average Maturity/Duration
Average maturity is an essential parameter in debt funds that is sometimes overlooked by investors, who tend to invest for a long period without considering the risks involved. Investors need to decide their debt fund investment based on its maturity period, Matching the time period of investment with the maturity period of the debt fund is a good way to ensure you don't end up taking unnecessary risk. Thus, it is advisable to know the average maturity of a debt fund, before investing, in order to aim for optimum risk returns in debt funds. Looking at the average maturity (duration is a similar factor) is important, for example, a liquid fund may have an average maturity of a couple of days to maybe a month, this would mean it is a great option for an investor who is looking to invest money for a couple of days. Similarly, if you are looking at the time frame of one-year Investment plan then, a short-term debt fund can be ideal.
2. Interest Rate Scenario
Understanding the market environment is very important in debt funds which are affected by interest rates and its fluctuations. When the interest rate rises in the economy, the bond price falls and vice-versa. Also, during the time when the interest rates rise, new bonds are issued in the market with a higher yield than the older bonds, making those older bonds of lower value. Therefore, investors are more attracted towards newer bonds in the market and also a re-pricing of older bonds takes place. In case a debt fund is having an exposure to such "older bonds" then when the interest rates rise, the NAV of the debt fund would be impacted negatively. Furthermore, as debt funds are exposed to interest rate fluctuations, it disturbs the prices of the underlying bonds in the fund portfolio. For instance, long-term debt funds are at a higher risk during times of rising interest rates. During this time making a short-term investment plan will lower your interest rate risks.
If one has good knowledge of interest rates and can monitor the same, one can even take advantage of this. In a falling interest rate market, long-term debt funds would be a good choice. However, during the times of rising interest rates then it would be wise to be in funds with shorter average maturities like short-term funds, Ultra Short Term fund or even liquid funds.
3. Current Yield or Portfolio Yield
The yield is a measure of the interest income generated by the bonds in the portfolio. Funds that invest in debt or bonds that have a higher coupon rate (or yield) would have a higher overall portfolio yield. The yield to maturity(ytm) of a debt mutual fund indicates the running yield of the fund. When comparing debt funds on the basis of YTM, one should also look at that fact that how is the extra yield being generated. Is this at the cost of as lower portfolio quality? Investing in not so good quality instruments has its own issues. You don't want to end up investing in a debt fund which has such bonds or securities that may Default later on. So, always look at the portfolio yield and balance it off with the credit quality.
4. Credit Quality of Portfolio
In order to invest in best debt funds, checking the credit quality of the bonds and debt securities is an essential parameter. Bonds are assigned a credit rating by various agencies based on their ability to pay the money back. A bond with AAA rating is considered to be the best credit rating and also implies a safe and secure investment. If one truly wants safety and considers this as the paramount parameter in selecting the best debt fund, then getting into a fund with very high-quality debt instruments (AAA or AA+) may be the desired option.
5. Assets Under Management (AUM)
This is the foremost parameter to consider while choosing the best debt funds. AUM is the total amount invested in a particular scheme by all investors. Since, most Mutual Funds’ total AUM is invested in debt funds, investors need to select scheme assets that have a considerable AUM. Being in a fund which has a large exposure to corporates may be risky, since their withdrawals may be large which may affect the overall fund performance.
6. Expense Ratio
An important factor to be considered in debt funds is its expense ratio. A higher expense ratio creates a larger impact on the funds’ performance. For example, liquid funds have the lowest expense ratios which are up to 50 bps (BPS is a unit to measure interest rates wherein one bps is equal to 1/100th of 1%) whereas, other debt funds could charge up to 150 bps. So to make a choice between one debt mutual fund, it is important to consider the management fee or the fund running expense.
7. Taxation Impacts
Debt funds offer the benefit of long-term capital gains (more than 3 years) with indexation benefits. And the short term capital gains (less than 3 years) is taxed at 30%.
Things to consider as an investor
1. Fund Objectives
Debt Fund aims to earn optimal returns by maintaining a diversified portfolio of various types of securities. You can expect them to perform in a predictable manner. It is because of this reason, that debt funds are popular among conservative investors.
2. Fund Types
Debt funds are further divided into various categories like liquid funds, Monthly Income Plan (MIP), fixed maturity plans (FMP), Dynamic Bond Funds, income funds, credit opportunities funds, GILT funds, short-term funds and ultra short-term funds.
3. Risks
Debt funds are basically exposed to interest rate risk, credit risk, and liquidity risk. The fund value may fluctuate due to the overall interest rate movements. There’s a risk of default in the payment of interest and principal by the issuer. Liquidity risk happens when the fund manager is unable to sell the underlying security due to lack of demand.
4. Cost
Debt funds charge an expense ratio to manage your money. Till now SEBI had mandated the upper limit of expense ratio to be 2.25% (Might change time to time with regulations.).
5. Investment Horizon
An investment of 3 months to 1 year would be ideal for liquid funds. If you have a longer horizon of say 2 to 3 years, you may go for short-term bond funds.
6. Financial Goals
Debt funds can be used to achieve a variety of goals like earning additional income or for purpose of liquidity.
How to Invest in Best Debt 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!
Conclusion
Debt funds are one of the best ways to invest your money and generate income on a regular basis by choosing the relevant product matching your risk profile. So, investors looking to generate steady income or take advantage of the debt markets, can consider the above best debt funds for 2025 - 2026 and start investing!_
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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The article is nice and informative but it could be in more simple words because lot of people have much less knowledge in such sector