Best Credit Risk Mutual Funds

Credit risk mutual funds, as the name suggests, invest in instruments that carry higher credit risks. SEBI defines these funds as debt schemes investing in below the highest-rated corporate bonds. This category of debt funds invests at least 65 percent of their portfolio in lower than AA-rated securities. The best credit risk mutual funds have the potential to deliver high returns.

The interest risk is comparatively lower in these mutual funds as they invest for shorter durations. They have the potential to generate 2-3% higher returns compared to the risk-free papers based on the historical returns. These funds generate returns by earning interest on the securities held. Since credit risk funds invest after careful consideration, they also stand a chance to earn capital gains if the security of the low-rated invested securities is upgraded.

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Top 10 Credit Risk Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Franklin India Credit Risk Fund DebtModerate8.1%5star6,785
Franklin India Credit Risk Fund DebtModerate8.1%5star6,785
ICICI Prudential Credit Risk FundDebtModerate9.6%5star10,918
ICICI Prudential Credit Risk FundDebtModerate9.6%5star10,918
ICICI Prudential Credit Risk FundDebtModerate9.6%5star10,918
ICICI Prudential Credit Risk FundDebtModerate9.6%5star10,918
ICICI Prudential Credit Risk FundDebtModerate9.6%5star10,918
Franklin India Credit Risk Fund DebtModerate7.4%5star6,785
Franklin India Credit Risk Fund DebtModerate7.4%5star6,785
ICICI Prudential Credit Risk FundDebtModerate8.8%5star10,918
ICICI Prudential Credit Risk FundDebtModerate8.8%5star10,918
ICICI Prudential Credit Risk FundDebtModerate8.8%5star10,918
ICICI Prudential Credit Risk FundDebtModerate8.8%5star10,918
ICICI Prudential Credit Risk FundDebtModerate8.8%5star10,918
Sundaram Short Term Credit Risk FundDebtModerately Low-4.8%5star183
View All Top 10 Credit Risk Mutual Funds

Features of Credit Risk Mutual Fund

These mutual funds enable investors to seek higher returns by taking comparatively higher risks. Some of the best credit risk funds provide an opportunity for investors to expose their capital to lower-rated securities which have the potential to be upgraded. These funds serve as a viable investment option for investors looking to invest in debt funds.

They usually invest after careful consideration, but there is always a possibility that any of the invested securities are downgraded. This could result in the fund being unable to exit due to lack of liquidity. The downgrades can also result in capital losses, thereby impacting the investors’ portfolio.

Taxability

Credit risk funds fall under the debt fund category and are taxed accordingly. For funds that are held for a period of less than 36 months, a short-term capital gain tax as per the individual tax bracket would be applicable. If the mutual funds are held for over 36 months, a long-term capital gain tax of 20 per cent with indexation benefits will be levied. The dividends are tax-free, but a dividend distribution tax of 28.84 per cent will be applicable.

Who Are These Funds Suited For?

These funds are ideal for investors capable of taking strategic calls, time the market, and have a more aggressive approach. However, even the best credit risk mutual funds in India are not suitable for small retail investors who have a conservative investment approach. On the other hand, savvy investors who seek to diversify their portfolio further and earn higher returns can invest in these funds.

These mutual funds are medium to long-term investment bets, and investors with a corresponding investment horizon should invest in them. However, even the best performing funds have a chnace of running into liquidity risks if it were downgraded. Hence as an investor, you must also consider the liquidity aspects before investing.

Major Advantages

Credit risk funds enable investors with higher risk appetite to earn higher returns by investing in low-rated securities. Best credit risk funds come with the potential to capital gains if & when their security is moved up. This opens up an additional avenue for earning for these funds in India along with the regular interest income that is made on the securities that are held.

These mutual funds enable investors to earn returns by investing for a medium to long-term investment horizon. It also ensures that savvy investors have the right fund to expose their capitals to high-risk instruments which is otherwise difficult. It is worth noting that these mutual funds are a risky bet and investors should be cautious before investing.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Franklin India Credit Risk Fund Direct Plan Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.49% annualized returns in the last 3 years. In the last 1 year, it gave 8.14% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.14% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹500. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM6,785Cr
1Y Returns8.1%

Franklin India Credit Risk Fund Direct Plan Dividend

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.49% annualized returns in the last 3 years. In the last 1 year, it gave 8.14% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.14% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹500. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM6,785Cr
1Y Returns8.1%

ICICI Prudential Credit Risk Fund Direct Plan Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.44% annualized returns in the last 3 years. In the last 1 year, it gave 9.62% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.62% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns9.6%

ICICI Prudential Credit Risk Fund Direct Plan Dividend Quarterly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.44% annualized returns in the last 3 years. In the last 1 year, it gave 9.62% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.62% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns9.6%

ICICI Prudential Credit Risk Fund Direct Plan Bonus

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.44% annualized returns in the last 3 years. In the last 1 year, it gave 9.62% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.62% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹1,000. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns9.6%

ICICI Prudential Credit Risk Fund Direct Plan Dividend Yearly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.44% annualized returns in the last 3 years. In the last 1 year, it gave 9.62% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.62% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns9.6%

ICICI Prudential Credit Risk Fund Direct Plan Dividend Half Yearly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.44% annualized returns in the last 3 years. In the last 1 year, it gave 9.62% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.62% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns9.6%

Franklin India Credit Risk Fund Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.67% annualized returns in the last 3 years. In the last 1 year, it gave 7.36% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.36% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹500. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM6,785Cr
1Y Returns7.4%

Franklin India Credit Risk Fund Dividend

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.67% annualized returns in the last 3 years. In the last 1 year, it gave 7.36% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.36% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹500. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM6,785Cr
1Y Returns7.4%

ICICI Prudential Credit Risk Fund Bonus

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.48% annualized returns in the last 3 years. In the last 1 year, it gave 8.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.79% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹1,000. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns8.8%

ICICI Prudential Credit Risk Fund Dividend Quarterly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.48% annualized returns in the last 3 years. In the last 1 year, it gave 8.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.79% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns8.8%

ICICI Prudential Credit Risk Fund Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.48% annualized returns in the last 3 years. In the last 1 year, it gave 8.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.79% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns8.8%

ICICI Prudential Credit Risk Fund Dividend Half Yearly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.48% annualized returns in the last 3 years. In the last 1 year, it gave 8.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.79% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns8.8%

ICICI Prudential Credit Risk Fund Dividend Yearly

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 7.48% annualized returns in the last 3 years. In the last 1 year, it gave 8.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.79% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹100. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM10,918Cr
1Y Returns8.8%

Sundaram Short Term Credit Risk Fund Direct Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 3.45% annualized returns in the last 3 years. In the last 1 year, it gave -4.85% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -4.85% returns in the last 1 year. Minimum lump sum investment amount for this scheme is ₹NaN. Minimum SIP investment amount for this scheme is ₹500. This is one of the best Debt mutual fund in India.

Launch Date
Min Investment Amt₹NaN
AUM183Cr
1Y Returns-4.8%

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