Table of Contents
6 Best Debt Mutual Funds for Lump sum Investments 2025
Debt Mutual Fund schemes in India have grown over the years. As a result, the best performing mutual debt funds in the Market keep on changing. There are various rating systems in place to judge a mutual fund scheme, namely CRISIL, Morning Star, ICRA. These systems evaluate a mutual fund in terms of returns, Standard Deviation, credit quality of securities, rate movement guidance by RBI, etc.
Why To Invest Lump Sum in Debt Mutual Funds?
- Better return than prevailing Fixed Deposit (FD) & Recurring deposit (RD) rates across banks
- Returns are linked to debt markets
- Immediate (T+1) Redemption online
- Indexation (Debt Taxation benefits) benefits on returns over three years
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Best Lumpsum Debt Mutual Funds FY 25 - 26
Below are the top ranked funds from Debt Categories primarily funds having AUM > 500 Crore & are in Ultra-short, Corporate bond, Credit Risk, Low Duration sub categories && Having maturity of less than 3 years and providing highest yields.
Top 6 Lump sum Debt 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 Nippon India Credit Risk Fund Growth ₹33.4943
↑ 0.00 ₹981 500 1.8 4.1 8.3 6.7 8.3 8.93% 2Y 2M 1D 2Y 7M 13D ICICI Prudential Regular Savings Fund Growth ₹30.4711
↑ 0.02 ₹6,287 10,000 1.6 4 8.1 7 8.5 8.52% 1Y 10M 2D 2Y 4M 10D HDFC Low Duration Fund Growth ₹55.7373
↓ 0.00 ₹18,122 5,000 1.6 3.4 7.4 6.2 7.4 7.88% 10M 28D 1Y 11M 16D Aditya Birla Sun Life Savings Fund Growth ₹529.524
↑ 0.06 ₹16,349 1,000 1.8 3.8 7.8 6.6 7.9 7.81% 5M 23D 7M 20D SBI Magnum Low Duration Fund Growth ₹3,374.64
↑ 0.30 ₹11,632 5,000 1.6 3.4 7.2 6.1 7.3 7.75% 10M 28D 1Y 8M 19D Nippon India Ultra Short Duration Fund Growth ₹3,901.44
↑ 0.79 ₹7,695 100 1.7 3.4 7.2 6.2 7.2 7.72% 5M 7D 6M 9D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 25
(Erstwhile Reliance Regular Savings Fund - Debt Plan) The primary investment objective of this option is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. Nippon India Credit Risk Fund is a Debt - Credit Risk fund was launched on 8 Jun 05. It is a fund with Moderate risk and has given a Below is the key information for Nippon India Credit Risk Fund Returns up to 1 year are on The fund’s objective is to provide reasonable returns, by maintaining an optimum balance of safety, liquidity and yield, through investments in a basket of debt and money market instruments with a view to delivering consistent performance. However, there can be no assurance that the investment objective of the Scheme will be realized. ICICI Prudential Regular Savings Fund is a Debt - Credit Risk fund was launched on 3 Dec 10. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Regular Savings Fund Returns up to 1 year are on (Erstwhile HDFC Cash Management Fund - Treasury Advantage Plan) To generate regular income through investment in debt securities and money market instruments. HDFC Low Duration Fund is a Debt - Low Duration fund was launched on 18 Nov 99. It is a fund with Moderately Low risk and has given a Below is the key information for HDFC Low Duration Fund Returns up to 1 year are on The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on (Erstwhile SBI-Short Horizon Fund - Ultra Short Term) To provide investors with an opportunity to generate regular income with high degree of liquidity through investments in a portfolio comprising predominantly of money market instruments with maturity/residual maturity up to one year and debt instruments which are rated not below investment grade by a credit rating agency. SBI Magnum Low Duration Fund is a Debt - Low Duration fund was launched on 27 Jul 07. It is a fund with Moderately Low risk and has given a Below is the key information for SBI Magnum Low Duration Fund Returns up to 1 year are on (Erstwhile Reliance Liquid Fund - Cash Plan) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Nippon India Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 7 Dec 01. It is a fund with Low risk and has given a Below is the key information for Nippon India Ultra Short Duration Fund Returns up to 1 year are on 1. Nippon India Credit Risk Fund
CAGR/Annualized return of 6.4% since its launch. Ranked 21 in Credit Risk category. Return for 2024 was 8.3% , 2023 was 7.9% and 2022 was 3.9% . Nippon India Credit Risk Fund
Growth Launch Date 8 Jun 05 NAV (24 Jan 25) ₹33.4943 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹981 on 31 Dec 24 Category Debt - Credit Risk AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Moderate Expense Ratio 1.63 Sharpe Ratio 3.46 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 100 Exit Load 0-12 Months (1%),12 Months and above(NIL) Yield to Maturity 8.93% Effective Maturity 2 Years 7 Months 13 Days Modified Duration 2 Years 2 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹9,411 31 Dec 21 ₹10,682 31 Dec 22 ₹11,095 31 Dec 23 ₹11,976 31 Dec 24 ₹12,966 Returns for Nippon India Credit Risk Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 4.1% 1 Year 8.3% 3 Year 6.7% 5 Year 5.4% 10 Year 15 Year Since launch 6.4% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.3% 2022 7.9% 2021 3.9% 2020 13.5% 2019 -5.9% 2018 1.9% 2017 6.1% 2016 7% 2015 10% 2014 8.8% Fund Manager information for Nippon India Credit Risk Fund
Name Since Tenure Kinjal Desai 25 May 18 6.61 Yr. Sushil Budhia 1 Feb 20 4.92 Yr. Data below for Nippon India Credit Risk Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 7.1% Debt 92.63% Other 0.27% Debt Sector Allocation
Sector Value Corporate 76.23% Government 16.39% Cash Equivalent 7.1% Credit Quality
Rating Value A 17.18% AA 53.57% AAA 29.25% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2030
Sovereign Bonds | -7% ₹72 Cr 7,000,000 Summit Digitel Infrastructure Limited
Debentures | -6% ₹61 Cr 620 7.1% Govt Stock 2029
Sovereign Bonds | -5% ₹51 Cr 5,000,000 Renew Solar Energy (Jharkhand Five) Private Limited
Debentures | -5% ₹49 Cr 5,000 Century Textiles And Industries Limited
Debentures | -5% ₹45 Cr 4,500 Shriram Housing Finance Limited 9.25%
Debentures | -4% ₹40 Cr 4,000 Prestige Projects Private Limited 11.75%
Debentures | -4% ₹40 Cr 4,000 Sandur Manganese And Iron Ores Limited (The) 11%
Debentures | -4% ₹40 Cr 4,000 Piramal Capital & Housing Finance Limited
Debentures | -4% ₹37 Cr 485,063 Delhi International Airport Limited
Debentures | -4% ₹35 Cr 3,500 2. ICICI Prudential Regular Savings Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 26 in Credit Risk category. Return for 2024 was 8.5% , 2023 was 7.2% and 2022 was 5.1% . ICICI Prudential Regular Savings Fund
Growth Launch Date 3 Dec 10 NAV (24 Jan 25) ₹30.4711 ↑ 0.02 (0.06 %) Net Assets (Cr) ₹6,287 on 31 Dec 24 Category Debt - Credit Risk AMC ICICI Prudential Asset Management Company Limited Rating ☆ Risk Moderate Expense Ratio 1.54 Sharpe Ratio 1.4 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 100 Exit Load 0-1 Years (1%),1 Years and above(NIL) Yield to Maturity 8.52% Effective Maturity 2 Years 4 Months 10 Days Modified Duration 1 Year 10 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,979 31 Dec 21 ₹11,663 31 Dec 22 ₹12,253 31 Dec 23 ₹13,139 31 Dec 24 ₹14,251 Returns for ICICI Prudential Regular Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.6% 6 Month 4% 1 Year 8.1% 3 Year 7% 5 Year 7.3% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 8.5% 2022 7.2% 2021 5.1% 2020 6.2% 2019 9.8% 2018 9.5% 2017 6.6% 2016 6.8% 2015 9.5% 2014 9% Fund Manager information for ICICI Prudential Regular Savings Fund
Name Since Tenure Manish Banthia 7 Nov 16 8.15 Yr. Akhil Kakkar 22 Jan 24 0.94 Yr. Data below for ICICI Prudential Regular Savings Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 16.09% Equity 1.43% Debt 82.15% Other 0.33% Debt Sector Allocation
Sector Value Corporate 71.13% Government 11.36% Cash Equivalent 9.7% Securitized 6.05% Credit Quality
Rating Value A 12.89% AA 56.66% AAA 30.45% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2034
Sovereign Bonds | -6% ₹370 Cr 36,170,730
↑ 2,500,000 Embassy Office Parks Reit
Unlisted bonds | -4% ₹260 Cr 6,954,163
↓ -527,009 Varroc Engineering Limited
Debentures | -4% ₹233 Cr 25,000 Millennia Realtors Private Limited
Debentures | -3% ₹210 Cr 2,100 Aadhar Housing Finance Ltd
Debentures | -3% ₹176 Cr 17,500 7.17% Govt Stock 2030
Sovereign Bonds | -2% ₹153 Cr 15,000,000 Nirma Limited
Debentures | -2% ₹152 Cr 15,000 Dlf Home Developers Limited
Debentures | -2% ₹150 Cr 15,000 Yes Bank Limited
Debentures | -2% ₹105 Cr 1,050 JM Financial Home Loans Limited
Debentures | -2% ₹101 Cr 10,000 3. HDFC Low Duration Fund
CAGR/Annualized return of 7.1% since its launch. Return for 2024 was 7.4% , 2023 was 7% and 2022 was 4.1% . HDFC Low Duration Fund
Growth Launch Date 18 Nov 99 NAV (24 Jan 25) ₹55.7373 ↓ 0.00 (0.00 %) Net Assets (Cr) ₹18,122 on 31 Dec 24 Category Debt - Low Duration AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 1.03 Sharpe Ratio 1.24 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.88% Effective Maturity 1 Year 11 Months 16 Days Modified Duration 10 Months 28 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,815 31 Dec 21 ₹11,213 31 Dec 22 ₹11,672 31 Dec 23 ₹12,493 31 Dec 24 ₹13,417 Returns for HDFC Low Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.6% 6 Month 3.4% 1 Year 7.4% 3 Year 6.2% 5 Year 6% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.4% 2022 7% 2021 4.1% 2020 3.7% 2019 8.1% 2018 8% 2017 6.5% 2016 6.4% 2015 8.6% 2014 7.7% Fund Manager information for HDFC Low Duration Fund
Name Since Tenure Anupam Joshi 27 Oct 15 9.19 Yr. Praveen Jain 6 Oct 22 2.24 Yr. Dhruv Muchhal 22 Jun 23 1.53 Yr. Data below for HDFC Low Duration Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 12.95% Debt 86.78% Other 0.27% Debt Sector Allocation
Sector Value Corporate 70.99% Government 23.09% Cash Equivalent 5.24% Credit Quality
Rating Value AA 9.12% AAA 90.88% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.93% Govt Stock 2033
Sovereign Bonds | -7% ₹1,284 Cr 125,000,000 7.98% Govt Stock 2031
Sovereign Bonds | -3% ₹506 Cr 50,000,000 7.3% Govt Stock 2028
Sovereign Bonds | -3% ₹502 Cr 50,000,000 Titan Company Limited
Debentures | -3% ₹500 Cr 50,000 Hdb Financial Services Limited
Debentures | -2% ₹450 Cr 45,000 Aditya Birla Renewables Limited
Debentures | -2% ₹402 Cr 40,000
↑ 2,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹374 Cr 3,750 Power Finance Corporation Ltd.
Debentures | -2% ₹324 Cr 32,500
↑ 2,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹299 Cr 3,000
↑ 750 INDIA UNIVERSAL TRUST AL2
Unlisted bonds | -2% ₹278 Cr 277
↑ 277 4. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2024 was 7.9% , 2023 was 7.2% and 2022 was 4.8% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (24 Jan 25) ₹529.524 ↑ 0.06 (0.01 %) Net Assets (Cr) ₹16,349 on 31 Dec 24 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.54 Sharpe Ratio 4.24 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.81% Effective Maturity 7 Months 20 Days Modified Duration 5 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,702 31 Dec 21 ₹11,119 31 Dec 22 ₹11,648 31 Dec 23 ₹12,483 31 Dec 24 ₹13,463 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.8% 1 Year 7.8% 3 Year 6.6% 5 Year 6.1% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.9% 2022 7.2% 2021 4.8% 2020 3.9% 2019 7% 2018 8.5% 2017 7.6% 2016 7.2% 2015 9.2% 2014 8.9% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 20 Jun 14 10.54 Yr. Kaustubh Gupta 15 Jul 11 13.48 Yr. Monika Gandhi 22 Mar 21 3.78 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 42.53% Debt 57.22% Other 0.25% Debt Sector Allocation
Sector Value Corporate 56.9% Cash Equivalent 37.01% Government 5.84% Credit Quality
Rating Value AA 31.99% AAA 68.01% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Housing Bank 7.83%
Debentures | -5% ₹820 Cr 82,000 Shriram Finance Company Limited
Debentures | -4% ₹603 Cr 60,000 Cd - Union Bank Of India - 02/04/25
Debentures | -3% ₹489 Cr 10,000 Nirma Limited
Debentures | -3% ₹487 Cr 48,500 National Housing Bank
Debentures | -3% ₹400 Cr 40,000 Tata Realty And Infrastructure Limited
Debentures | -2% ₹360 Cr 36,000 Rural Electrification Corporation Limited
Debentures | -2% ₹325 Cr 32,500 7.3% Govt Stock 2028
Sovereign Bonds | -2% ₹316 Cr 31,500,000 Bajaj Housing Finance Ltd. 8%
Debentures | -2% ₹301 Cr 30,000 Avanse Financial Services Ltd 9.40%
Debentures | -2% ₹299 Cr 30,000 5. SBI Magnum Low Duration Fund
CAGR/Annualized return of since its launch. Ranked 41 in Low Duration category. Return for 2024 was 7.3% , 2023 was 6.7% and 2022 was 4% . SBI Magnum Low Duration Fund
Growth Launch Date 27 Jul 07 NAV (24 Jan 25) ₹3,374.64 ↑ 0.30 (0.01 %) Net Assets (Cr) ₹11,632 on 31 Dec 24 Category Debt - Low Duration AMC SBI Funds Management Private Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.95 Sharpe Ratio 1.32 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.75% Effective Maturity 1 Year 8 Months 19 Days Modified Duration 10 Months 28 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,672 31 Dec 21 ₹11,013 31 Dec 22 ₹11,456 31 Dec 23 ₹12,229 31 Dec 24 ₹13,120 Returns for SBI Magnum Low Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.6% 6 Month 3.4% 1 Year 7.2% 3 Year 6.1% 5 Year 5.6% 10 Year 15 Year Since launch Historical performance (Yearly) on absolute basis
Year Returns 2023 7.3% 2022 6.7% 2021 4% 2020 3.2% 2019 6.7% 2018 8.3% 2017 7.5% 2016 6.6% 2015 8.3% 2014 8.6% Fund Manager information for SBI Magnum Low Duration Fund
Name Since Tenure Rajeev Radhakrishnan 9 Jun 08 16.57 Yr. Arun R. 1 Dec 23 1.09 Yr. Pradeep Kesavan 1 Dec 23 1.09 Yr. Data below for SBI Magnum Low Duration Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 16.93% Debt 82.86% Other 0.21% Debt Sector Allocation
Sector Value Corporate 64.47% Government 21.72% Cash Equivalent 13.2% Securitized 0.4% Credit Quality
Rating Value AA 11.59% AAA 88.41% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.3% Govt Stock 2028
Sovereign Bonds | -12% ₹1,506 Cr 150,000,000 TRent Limited
Debentures | -4% ₹486 Cr 5,000 Larsen & Toubro Ltd.
Debentures | -3% ₹350 Cr 35,000 INDIA UNIVERSAL TRUST AL2
Unlisted bonds | -3% ₹327 Cr 327
↑ 327 L&T Metro Rail (Hyderabad) Limited
Debentures | -3% ₹323 Cr 3,250 Power Finance Corporation Limited
Debentures | -3% ₹322 Cr 3,250 India Grid TRust
Debentures | -2% ₹300 Cr 3,000 06.32 KA Sdl 2028
Sovereign Bonds | -2% ₹285 Cr 28,994,800
↑ 28,994,800 Rural Electrification Corporation Limited
Debentures | -2% ₹275 Cr 27,500 7.93% Govt Stock 2033
Sovereign Bonds | -2% ₹257 Cr 25,000,000 6. Nippon India Ultra Short Duration Fund
CAGR/Annualized return of 6.1% since its launch. Ranked 62 in Ultrashort Bond category. Return for 2024 was 7.2% , 2023 was 6.7% and 2022 was 4.6% . Nippon India Ultra Short Duration Fund
Growth Launch Date 7 Dec 01 NAV (24 Jan 25) ₹3,901.44 ↑ 0.79 (0.02 %) Net Assets (Cr) ₹7,695 on 31 Dec 24 Category Debt - Ultrashort Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Low Expense Ratio 1.14 Sharpe Ratio 1.22 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.72% Effective Maturity 6 Months 9 Days Modified Duration 5 Months 7 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 19 ₹10,000 31 Dec 20 ₹10,487 31 Dec 21 ₹11,302 31 Dec 22 ₹11,821 31 Dec 23 ₹12,611 31 Dec 24 ₹13,524 Returns for Nippon India Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 25 Duration Returns 1 Month 0.6% 3 Month 1.7% 6 Month 3.4% 1 Year 7.2% 3 Year 6.2% 5 Year 6.2% 10 Year 15 Year Since launch 6.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.2% 2022 6.7% 2021 4.6% 2020 7.8% 2019 4.9% 2018 0.9% 2017 7.3% 2016 5.8% 2015 6.8% 2014 7.6% Fund Manager information for Nippon India Ultra Short Duration Fund
Name Since Tenure Vivek Sharma 1 Oct 13 11.26 Yr. Kinjal Desai 25 May 18 6.61 Yr. Akshay Sharma 1 Dec 22 2.09 Yr. Data below for Nippon India Ultra Short Duration Fund as on 31 Dec 24
Asset Allocation
Asset Class Value Cash 66.33% Debt 33.46% Other 0.21% Debt Sector Allocation
Sector Value Cash Equivalent 50.01% Corporate 42.96% Government 6.82% Credit Quality
Rating Value AA 11.85% AAA 88.15% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 D Tbill Mat - 14/02/2025
Sovereign Bonds | -4% ₹287 Cr 29,000,000 182 DTB 12062025
Sovereign Bonds | -3% ₹237 Cr 24,500,000
↑ 24,500,000 PNb Housing Finance Limited
Debentures | -3% ₹225 Cr 22,500 National Bank For Agriculture And Rural Development
Debentures | -3% ₹200 Cr 2,000 Small Industries Development Bank Of India
Debentures | -3% ₹199 Cr 2,000 HDFC Credila Financial Services Ltd
Debentures | -3% ₹196 Cr 19,500
↑ 9,500 Indinfravit Trust
Debentures | -2% ₹189 Cr 19,500 Rec Limited
Debentures | -2% ₹182 Cr 1,850 INDIA UNIVERSAL TRUST AL2
Unlisted bonds | -1% ₹100 Cr 100
↑ 100 Piramal Capital & Housing Finance Ltd
Debentures | -1% ₹100 Cr 10,000
Smart Tips to Look for in Debt Funds
1. Yield
The yield is a measure of the interest Income generated by the Bonds in the Portfolio.
For instance, let's assume that a bond has a Face Value of INR 100 with an 8 percent coupon rate. This means that the investor will earn INR 8 p.a., on each bond that he invests in. As the bonds are traded in the Open Market, the price will fluctuate each Business Day. The interest rates rise and fall and demand for the bonds moves up and down. And this impacts the price of the bond. Let’s assume interest rates rise to 10 percent. Even then the investor will continue to earn INR 8. So to increase the yield to 10 percent, which is the current market rate of interest, the price of the bond will have to drop to INR 80.
In another instance, lets assume that the interest rates fall to 6 percent. Again, the investor will continue to earn INR 8. This time the price of the bond will have to go up to INR 133.
If we look at these assumptions, there are two aspects to it- the one is that the yield is not fixed, but fluctuates to changes in the interest rate. The second one is the price of the bond moves inversely to interest rates. It moves to maintain a level where it will attract buyers.
2. Yield to Maturity
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.
3. Modified Duration
Modified duration provides a fair indication of a bond’s sensitivity to a change in interest rates. The higher the duration, the more Volatility the bond exhibits with a change in interest rates
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.
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FAQs
1. How do debt fund managers identify which is high-quality security?
A: Debt fund managers have their techniques for evaluating each bond and assessing the debtor's chances of defaulting to pay the bond. Usually, the higher the credit rating lesser is the chance for the creditor defaulting.
2. Why is debt mutual funds low-risk?
A: Debt mutual funds deal with securities and bonds along other money market instruments. The chances of these instruments failing are usually less, and hence, your investment will remain secure, thereby making debt mutual funds low-risk investments.
3. Do fund managers invest in low-quality securities?
A: Yes, sometimes fund managers do invest in low-quality securities if chances of good ROI exist. However, this will be a calculated risk taken by your fund manager and only if the portfolio of investment already has stable, high-quality securities.
4. Is there any short-term debt mutual fund?
A: Yes, if you opt for a Liquid Fund in which investments are made in money market instruments that have a maturity of 91 days, then you can realize your investment in a matter of three months. This is a short-term investment that you can undertake to get a better understanding of debt mutual funds.
5. Can I invest long-term in a debt mutual fund?
A: Yes, you can invest long-term in debt mutual funds. For example, suppose you invest in the Nippon India Credit Risk Fund or the ICICI Prudential Regular Savings Fund. In that case, it is better that you hold your investment at least for one year, 5 months, and 19 days and 2 years, one month, and 2 days respectively, to get maximum ROI. But you can keep investing beyond that for 3 years.
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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