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Best LIC Debt Mutual Funds

LIC Mutual Fund was incorporated in 1989 to provide investment solutions to different segments of investors based on innovation and research. The fund house is an associate company of LIC of India, which owns 45% shares of the asset management company (AMC). Its subsidiary, LIC Housing Finance Limited, has a 39.3% stake in it while Union Bank and GIC Finance Limited holds 4% and 11% shares, respectively.  

For the quarter ending March 2021, the fund house has a QAAUM of around Rs.16594 crore. The AMC offers over 20 mutual fund schemes, including the best LIC debt mutual funds. 

Debt funds are mutual fund schemes that primarily invest in fixed-income securities. These financial instruments include government securities, corporate bonds, debentures, commercial paper, certificates of deposits, etc. That’s why they are also known as fixed-income funds. 

Debt funds are categorised into more than 10 types based on the maturity period or the kind of underlying securities. These include low duration funds, liquid funds, overnight funds, medium duration funds, short duration funds, long duration funds, credit risk funds, etc. 

Since the underlying assets of these schemes include debt and money market securities, the performance of the top LIC debt mutual funds is immune to market volatility. Hence, unlike equity funds, they are associated with significantly lower risk and are known to be suitable for investors seeking stable returns. Moreover, they also have the potential to generate higher returns than bank fixed deposits

However, one must note that they carry other risks such as credit risk, interest rate risk, inflation risk, etc. The returns on the best LIC debt mutual funds are taxed based on when an investor chooses to sell their units. 

Taxability

Short-term Capital Gains Tax: If investors redeem their units after holding them for a period of less than 3 years, returns earned by him/her are known as short-term capital gains. The realised gains are added to an individual’s taxable income for a financial year and taxed per the slab rate that is applicable. 

Long-term Capital Gains Tax: When investors earn returns by redeeming their units after 3 years from the date of purchase, proceeds are called long-term capital gains. A tax rate of 20% is applicable on such gains. Moreover, investors are eligible for indexation benefit.

Factors to Consider Before Investing

LIC Mutual fund offers different types of debt funds that invest in a wind range of debt and money market instruments. Investors must consider various aspects to figure out which is the best option for them. So, let’s find out what they are.  

Investment goal: The financial goals of all investors are not the same. While some might prioritize stable earnings, others might look for aggressive returns. In either case, the choice of scheme is different. Hence, it’s vital for investors to consider this aspect when shortlisting the best LIC debt mutual funds.

Risk appetite: Unlike bank fixed deposits, the returns in the case of debt funds are not certain. As noted above, these funds carry an interest rate, credit, and liquidity risks. Thus, investors may want to assess their risk profile before finding out which one is the best LIC debt mutual fund for them. 

Expense ratio: This is a charge AMCs, including LIC Mutual Fund, impose to cover the expenses of managing a scheme. It includes the fund manager’s salary, record-keeping fees, marketing expenses, and other operational costs. It is calculated as a percentage of the fund’s overall assets and exerts a direct impact on the returns generated. This fee varies across debt fund schemes. Hence, when selecting the best LIC debt mutual funds, it’s imperative for investors to compare their expense ratios.

Past performance of a fund: By looking at a scheme’s historical returns, one can understand how the fund has performed in the changing economic environment. A proven track record is not an indicator of a fund’s future performance. However, it is vital for investors to compare the past performance of the best LIC debt mutual funds in 2021 before deciding.  

Experience of the fund manager: The performance of a debt fund significantly depends on the efficiency of the fund manager as they take vital buy-and-sell decisions. Someone with a proven track record and vast experience can expertly fulfill the objective a scheme was set up to achieve. Hence, one must keep this thing in mind when investing in debt funds. 

Direct or regular plan: Direct plans are those schemes an AMC offers to investors directly. They do not involve brokers or distributors. However, to opt for regular plans, investors need to make transactions via intermediaries, which involves commission. This is why direct plans report higher NAVs than regular plans and also have a lower expense ratio. 

Investment mode: One can invest in the best LIC debt mutual funds by opting for any of the two available options – lump sum and Systematic Investment Plan. If investors choose the first route, they can allocate a predetermined amount to a scheme at fixed intervals, for example, monthly, quarterly, yearly, etc. Nevertheless, if investors choose the lump-sum mode, they can invest the entire amount in a mutual fund scheme at once. While the minimum amount for lump-sum investment is Rs. 1,000, one can start an SIP with Rs. 500 in most cases.

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Top 10 Lic Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
LIC MF Large & Mid Cap FundEquityVery High39.2%4₹1,500
LIC MF Index Sensex FundOtherVery High30.0%3₹44
LIC MF Banking & PSU Debt FundDebtLow to Moderate3.1%2₹1,909
LIC MF Liquid FundDebtLow to Moderate3.4%5₹6,602
LIC MF Tax FundEquityVery High33.9%3₹410
LIC MF Govt. Securities FundDebtLow to Moderate3.0%4₹72
LIC MF Banking & Financial Services FundEquityVery High18.5%1₹63
LIC MF Index Nifty FundOtherVery High31.1%2₹53
LIC MF Savings FundDebtLow to Moderate4.3%3₹1,757
LIC MF Large Cap FundEquityVery High33.0%3₹648
LIC MF Flexi Cap FundEquityVery High25.9%2₹428
LIC MF Equity Hybrid FundHybridVery High20.1%2₹471
LIC MF Bond FundDebtLow to Moderate2.0%2₹131
LIC MF Infrastructure FundEquityVery High53.7%3₹80
LIC MF Debt Hybrid FundHybridModerate9.5%3₹68
View All Top 10 Lic Mutual Funds

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

LIC MF Large & Mid Cap Fund Direct Growth

Fund Performance: The LIC MF Large & Mid Cap Fund has given 20.58% annualized returns in the past three years and 18.21% in the last 5 years. The LIC MF Large & Mid Cap Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Large & Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹1,500Cr
1Y Returns39.2%

LIC MF Index Sensex Fund Direct Growth

Fund Performance: The LIC MF Index Sensex Fund has given 17.19% annualized returns in the past three years and 17.19% in the last 5 years. The LIC MF Index Sensex Fund belongs to the Other category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Index Sensex Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹44Cr
1Y Returns30.0%

LIC MF Banking & PSU Debt Fund Direct Growth

Fund Performance: The LIC MF Banking & PSU Debt Fund has given 7.89% annualized returns in the past three years and 7.47% in the last 5 years. The LIC MF Banking & PSU Debt Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Banking & PSU Debt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹1,909Cr
1Y Returns3.1%

LIC MF Liquid Fund Direct Growth

Fund Performance: The LIC MF Liquid Fund has given 4.93% annualized returns in the past three years and 5.78% in the last 5 years. The LIC MF Liquid Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Liquid Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹6,602Cr
1Y Returns3.4%

LIC MF Tax Direct Plan Growth

Fund Performance: The LIC MF Tax Fund has given 16.81% annualized returns in the past three years and 16.5% in the last 5 years. The LIC MF Tax Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Tax Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹410Cr
1Y Returns33.9%

LIC MF Govt. Securities Fund Direct Growth

Fund Performance: The LIC MF Govt. Securities Fund has given 9.34% annualized returns in the past three years and 7.07% in the last 5 years. The LIC MF Govt. Securities Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Govt. Securities Fund via lump sum is ₹10,000 and via SIP is ₹1,000.

Min Investment Amt₹10,000
AUM₹72Cr
1Y Returns3.0%

LIC MF Banking & Financial Services Fund Direct Growth

Fund Performance: The LIC MF Banking & Financial Services Fund has given 11.39% annualized returns in the past three years and 7.8% in the last 5 years. The LIC MF Banking & Financial Services Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Banking & Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹63Cr
1Y Returns18.5%

LIC MF Index Nifty Fund Direct Growth

Fund Performance: The LIC MF Index Nifty Fund has given 16.62% annualized returns in the past three years and 16.06% in the last 5 years. The LIC MF Index Nifty Fund belongs to the Other category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Index Nifty Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹53Cr
1Y Returns31.1%

LIC MF Savings Fund Direct Growth

Fund Performance: The LIC MF Savings Fund has given 5.49% annualized returns in the past three years and 6.19% in the last 5 years. The LIC MF Savings Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Savings Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹1,757Cr
1Y Returns4.3%

LIC MF Large Cap Fund Direct Growth

Fund Performance: The LIC MF Large Cap Fund has given 18.73% annualized returns in the past three years and 16.58% in the last 5 years. The LIC MF Large Cap Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Large Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹648Cr
1Y Returns33.0%

LIC MF Flexi Cap Fund Direct Growth

Fund Performance: The LIC MF Flexi Cap Fund has given 14.85% annualized returns in the past three years and 11.68% in the last 5 years. The LIC MF Flexi Cap Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Flexi Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹428Cr
1Y Returns25.9%

LIC MF Equity Hybrid Fund Direct Growth

Fund Performance: The LIC MF Equity Hybrid Fund has given 13.56% annualized returns in the past three years and 11.12% in the last 5 years. The LIC MF Equity Hybrid Fund belongs to the Hybrid category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Equity Hybrid Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹471Cr
1Y Returns20.1%

LIC MF Bond Fund Direct Growth

Fund Performance: The LIC MF Bond Fund has given 7.64% annualized returns in the past three years and 5.68% in the last 5 years. The LIC MF Bond Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Bond Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹131Cr
1Y Returns2.0%

LIC MF Infrastructure Fund Direct Growth

Fund Performance: The LIC MF Infrastructure Fund has given 19.81% annualized returns in the past three years and 15.34% in the last 5 years. The LIC MF Infrastructure Fund belongs to the Equity category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Infrastructure Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹80Cr
1Y Returns53.7%

LIC MF Debt Hybrid Fund Direct Growth

Fund Performance: The LIC MF Debt Hybrid Fund has given 9.67% annualized returns in the past three years and 7.4% in the last 5 years. The LIC MF Debt Hybrid Fund belongs to the Hybrid category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Debt Hybrid Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹68Cr
1Y Returns9.5%

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