Debt funds in India principally invest in fixed-income securities. It includes corporate bonds, treasury bills, debentures, and commercial paper, among others.
Since the best debt mutual funds primarily deal with debt instruments that earn a fixed interest, they carry lower risks than equity funds. Before investing in schemes under this category, it’s imperative for individuals to be aware of their characteristics.
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| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
| Aditya Birla Sun Life Medium Term Fund | Debt | Moderately High | 21.9% | 5 | ₹1,652 |
| Baroda BNP Paribas Credit Risk Fund | Debt | Moderately High | 5.8% | 5 | ₹180 |
| UTI Bond Fund | Debt | Moderate | 12.3% | 5 | ₹286 |
| Bank of India Short Term Income Fund | Debt | Moderate | 11.7% | 5 | ₹72 |
| Sundaram Short Duration Fund | Debt | Low to Moderate | 4.9% | 5 | ₹200 |
| UTI Short-term Income Fund | Debt | Moderate | 5.1% | 5 | ₹2,270 |
| Sundaram Low Duration Fund | Debt | Low to Moderate | 5.7% | 5 | ₹433 |
| Aditya Birla Sun Life Dynamic Bond Retail Fund | Debt | Moderate | 7.7% | 5 | ₹1,795 |
| ICICI Prudential All Seasons Bond Fund | Debt | Moderate | 6.5% | 5 | ₹6,755 |
| UTI Treasury Advantage Fund | Debt | Low to Moderate | 5.3% | 5 | ₹2,566 |
| Nippon India Ultra Short Duration Fund | Debt | Moderate | 6.0% | 5 | ₹5,115 |
| Axis Corporate Debt Fund | Debt | Moderate | 5.0% | 5 | ₹3,783 |
| ICICI Prudential Gilt Fund | Debt | Low to Moderate | 6.3% | 5 | ₹2,693 |
| ICICI Prudential Corporate Bond Fund | Debt | Low to Moderate | 5.8% | 5 | ₹16,998 |
| Edelweiss Government Securities Fund | Debt | Moderate | 4.6% | 5 | ₹120 |
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The following are the characteristics of best debt mutual funds 2022 –
Types of debt funds: Debt funds are of 16 types, broadly classified into two categories – security-based and duration-based. Schemes like money market fund, gilt fund, dynamic bond fund, banking and PSU fund fall under the former category. Ultra-short-term funds, long-term funds, medium-duration funds, and overnight fund are examples of the latter type.
Asset allocation: Fixed-income funds invest a significant portion of the corpus in debt and money market instruments.
Risk-return ratio: The best debt mutual fund offers stable and moderate returns against negligible market risks. However, fixed-income funds involve credit risk and inflation risk.
Short-term capital gains tax: In case debt fund units are sold before 3 years from the date of purchase, proceeds are taxed as per the investors’ slab rate. Thus, it will be 31.20% (30% + 4% cess) for investors in the highest tax bracket.
Long-term capital gains tax: If units of a debt fund are redeemed after 3 years, 20% tax will be applicable on the gains along with indexation benefits. This benefit applies to each year an individual remains invested in a debt MF.
TDS: Not applicable.
The best debt mutual funds are immune to stock market volatility and provide higher capital appreciation compared to bank fixed deposits. Debt MFs may be suitable for those looking to capitalise on these elements for diversifying their portfolio.
To decide whether to invest in fixed income funds, investors can take into consideration certain factors, like investment goal, investment horizon, and risk tolerance.
Investors can reap the following benefits by investing in the best debt mutual funds:
Credit quality rating: The debt instruments are rated by credit rating agencies in India. Before investing in these funds, individuals can check the credit quality rating to get an idea of the risk level associated with a scheme.
Now let us jump and check about these top 15 mutual fund schemes.
Fund Performance: The Aditya Birla Sun Life Medium Term Fund has given 14.14% annualized returns in the past three years and 8.54% in the last 5 years. The Aditya Birla Sun Life Medium Term Fund belongs to the Debt category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Medium Term Fund via lump sum is ₹1,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹1,652Cr |
| 1Y Returns | 21.9% |
Fund Performance: The Baroda BNP Paribas Credit Risk Fund has given 10.26% annualized returns in the past three years and 7.5% in the last 5 years. The Baroda BNP Paribas Credit Risk Fund belongs to the Debt category of Baroda Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Baroda BNP Paribas Credit Risk Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹180Cr |
| 1Y Returns | 5.8% |
Fund Performance: The UTI Bond Fund has given 9.98% annualized returns in the past three years and 4.15% in the last 5 years. The UTI Bond Fund belongs to the Debt category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Bond Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹286Cr |
| 1Y Returns | 12.3% |
Fund Performance: The Bank of India Short Term Income Fund has given 8.45% annualized returns in the past three years and 4.01% in the last 5 years. The Bank of India Short Term Income Fund belongs to the Debt category of BOI AXA Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bank of India Short Term Income Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹72Cr |
| 1Y Returns | 11.7% |
Fund Performance: The Sundaram Short Duration Fund has given 8.18% annualized returns in the past three years and 5.75% in the last 5 years. The Sundaram Short Duration Fund belongs to the Debt category of Sundaram Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Sundaram Short Duration Fund via lump sum is ₹5,000 and via SIP is ₹250.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹200Cr |
| 1Y Returns | 4.9% |
Fund Performance: The UTI Short-term Income Fund has given 7.94% annualized returns in the past three years and 5.37% in the last 5 years. The UTI Short-term Income Fund belongs to the Debt category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Short-term Income Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹2,270Cr |
| 1Y Returns | 5.1% |
Fund Performance: The Sundaram Low Duration Fund has given 7.58% annualized returns in the past three years and 5.29% in the last 5 years. The Sundaram Low Duration Fund belongs to the Debt category of Sundaram Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Sundaram Low Duration Fund via lump sum is ₹1,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹433Cr |
| 1Y Returns | 5.7% |
Fund Performance: The Aditya Birla Sun Life Dynamic Bond Retail Fund has given 7.3% annualized returns in the past three years and 5.82% in the last 5 years. The Aditya Birla Sun Life Dynamic Bond Retail Fund belongs to the Debt category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Dynamic Bond Retail Fund via lump sum is ₹1,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹1,795Cr |
| 1Y Returns | 7.7% |
Fund Performance: The ICICI Prudential All Seasons Bond Fund has given 7.15% annualized returns in the past three years and 8.08% in the last 5 years. The ICICI Prudential All Seasons Bond Fund belongs to the Debt category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential All Seasons Bond Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹6,755Cr |
| 1Y Returns | 6.5% |
Fund Performance: The UTI Treasury Advantage Fund has given 7.03% annualized returns in the past three years and 4.75% in the last 5 years. The UTI Treasury Advantage Fund belongs to the Debt category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Treasury Advantage Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹2,566Cr |
| 1Y Returns | 5.3% |
Fund Performance: The Nippon India Ultra Short Duration Fund has given 6.79% annualized returns in the past three years and 5.91% in the last 5 years. The Nippon India Ultra Short Duration Fund belongs to the Debt category of Nippon India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Nippon India Ultra Short Duration Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹5,115Cr |
| 1Y Returns | 6.0% |
Fund Performance: The Axis Corporate Debt Fund has given 6.67% annualized returns in the past three years and 7.25% in the last 5 years. The Axis Corporate Debt Fund belongs to the Debt category of Axis Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Axis Corporate Debt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹3,783Cr |
| 1Y Returns | 5.0% |
Fund Performance: The ICICI Prudential Gilt Fund has given 6.63% annualized returns in the past three years and 7.98% in the last 5 years. The ICICI Prudential Gilt Fund belongs to the Debt category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,693Cr |
| 1Y Returns | 6.3% |
Fund Performance: The ICICI Prudential Corporate Bond Fund has given 6.54% annualized returns in the past three years and 7.29% in the last 5 years. The ICICI Prudential Corporate Bond Fund belongs to the Debt category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Corporate Bond Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹16,998Cr |
| 1Y Returns | 5.8% |
Fund Performance: The Edelweiss Government Securities Fund has given 6.44% annualized returns in the past three years and 8.22% in the last 5 years. The Edelweiss Government Securities Fund belongs to the Debt category of Edelweiss Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Edelweiss Government Securities Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹120Cr |
| 1Y Returns | 4.6% |
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