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Best Principal Debt Mutual Funds

Principal Asset Management Private Limited manages the investment for Principal Mutual Fund. Following disciplined risk management and focused fund management strategy supported by thorough economic and credit research, this organisation provides financial solutions for long-term, mid-term and short-term financial goals. As of 31st December 2019, this AMC manages funds at an average AUM of Rs.6601.5 crores.

This AMC currently offers 15+ mutual fund schemes distributed over equity, debt and hybrid fund categories. This includes the best Principal debt mutual funds.

A debt mutual fund is a mutual fund scheme that makes investments in fixed income instruments. These include money market instruments, corporate debt securities, government and corporate bonds, etc. Investments in such sectors substantially lower the risk factor for investors. A comparatively stable investment avenue for generating wealth, debt funds are also referred to as fixed income funds.

There are several options for investing in debt mutual funds, which include monthly income plans (MIPs), gilt fund, liquid funds, fixed maturity plans (FMPs), and short term plans (STPs). In addition to these, debt mutual funds also make investments in various long-term, mid-term and short-term bonds. 

A debt mutual fund is relatively less volatile and offers a low but steady income compared to an equity mutual fund. Low cost structure, reasonable safety, and relatively high liquidity are some other advantages that attract investors to this fund category.

The top Principal debt mutual funds may invest in fixed-income securities, considering the credit ratings of securities, but this usually depends on the scheme type. For instance, a credit risk fund typically invests in low-rated issuer bonds. Nevertheless, a high credit rating implies that an issuer is likely to pay interest timely and repay the principal at maturity.

Currently, there are around 4 debt fund schemes offered by Principal, which offer both regular earnings and capital gains. The sale of the best Principal debt mutual funds in 2021 generates capital gains that are applicable for taxation. The tax rate applied to these capital gains depends on the holding period.

Taxability

Long-term Capital Gains Tax: The capital gains generated from selling an investment of a debt fund after a holding period of 36 months are referred to as LTCG or long-term capital gains. These gains face taxation at the LTCG tax rate, which is currently 20% with indexation.

Short-term Capital Gains Tax: The capital gains generated from selling an investment of a debt fund at a holding period of fewer than 36 months are referred to as STCG or short-term capital gains. These gains face taxation at the STCG tax rate. For debt mutual funds, this taxation is based on the investor’s tax slab. For instance, if the taxpayer is eligible to service taxes at 20%, then the debt mutual fund gains would also attract the same rate of 20%.

TDS: Investors must note that there is no TDS applicable while selling or redeeming these units. While filing income tax returns, investors must pay taxes after showing the income. 

While this taxability section is highly vital for investors, there are some other parameters that they should take note of while making an investment in the best Principal debt mutual fund.

Factors to Consider Before Investing

Expense ratio: Debt fund managers and mutual fund houses charge a certain amount of fees from investors to manage their portfolios. This charged fee is referred to as the expense ratio. 

Experience of the fund manager: The competence of a fund manager in tackling debt schemes can play a vital role in determining whether a debt fund scheme would be profitable for an investor. Competent fund managers make accurate predictions regarding the market and take prompt actions for maximising gains and minimising losses.

Past performance of the fund: Though a fund’s past performance does not indicate probable future outcomes, it is a healthy practice to keep a check on it. This is because the past performance bears the potential of offering valuable insights regarding the market conditions. Knowing whether a market is following a bullish or bearish trend would help make an informed decision. 

Return: Investors must note that although debt mutual funds invest in fixed income securities, they do not guarantee returns. With a rise in the economy’s overall rate of interest, the NAV of these funds tends to decline. Hence, debt funds are ideal for a falling rate of interest regime.

Venturing into the investment domain might prove to be a daunting task for first-time investors. However, having elementary knowledge about debt mutual funds and referring to this article as a guide would help them choose a suitable fund among the best Principal debt mutual funds.

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Top 10 Principal Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Principal Emerging Bluechip FundEquityVery High45.9%4₹3,200
Principal Hybrid Equity FundHybridVery High32.1%3₹1,107
Principal Cash Management FundDebtLow to Moderate3.2%2₹185
Principal Tax Savings FundEquityVery High40.2%3₹610
Principal Multi Cap Growth FundEquityVery High52.0%3₹862
Principal Dividend Yield FundEquityVery High36.6%3₹236
Principal Focused Multicap FundEquityVery High42.6%4₹686
Principal Nifty 100 Equal Weight FundOtherVery High38.7%1₹18
Principal Global Opportunities FundOtherVery High34.0%1₹39
Principal Balanced Advantage FundHybridModerate13.7%3₹292
Principal Ultra Short Term FundDebtLow to Moderate3.5%3₹175
Principal Low Duration FundDebtLow to Moderate3.7%2₹62
Principal Equity Savings FundHybridHigh22.3%5₹118
Principal Retirement Savings FundSolution OrientedModerately High14.2%1₹3
Principal Arbitrage FundHybridLow3.0%1₹8
View All Top 10 Principal Mutual Funds

Let's have a closer look

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

Principal Emerging Bluechip Fund Direct Growth

Fund Performance: The Principal Emerging Bluechip Fund has given 22.82% annualized returns in the past three years and 19.55% in the last 5 years. The Principal Emerging Bluechip Fund belongs to the Equity category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Emerging Bluechip Fund via lump sum is ₹300 and via SIP is ₹100.

Min Investment Amt₹300
AUM₹3,200Cr
1Y Returns45.9%

Principal Hybrid Equity Fund Direct Growth

Fund Performance: The Principal Hybrid Equity Fund has given 15.54% annualized returns in the past three years and 15.7% in the last 5 years. The Principal Hybrid Equity Fund belongs to the Hybrid category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Hybrid Equity Fund via lump sum is ₹300 and via SIP is ₹100.

Min Investment Amt₹300
AUM₹1,107Cr
1Y Returns32.1%

Principal Cash Management Direct Growth

Fund Performance: The Principal Cash Management Fund has given 4.53% annualized returns in the past three years and 3.69% in the last 5 years. The Principal Cash Management Fund belongs to the Debt category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Cash Management Fund via lump sum is ₹5,000 and via SIP is ₹2,000.

Min Investment Amt₹5,000
AUM₹185Cr
1Y Returns3.2%

Principal Tax Savings Fund Direct

Fund Performance: The Principal Tax Savings Fund has given 17.68% annualized returns in the past three years and 16.96% in the last 5 years. The Principal Tax Savings Fund belongs to the Equity category of Principal Mutual Funds.

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

Min Investment Amt₹500
AUM₹610Cr
1Y Returns40.2%

Principal Multi Cap Growth Fund Direct Growth

Fund Performance: The Principal Multi Cap Growth Fund has given 20.66% annualized returns in the past three years and 19.03% in the last 5 years. The Principal Multi Cap Growth Fund belongs to the Equity category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Multi Cap Growth Fund via lump sum is ₹300 and via SIP is ₹100.

Min Investment Amt₹300
AUM₹862Cr
1Y Returns52.0%

Principal Dividend Yield Fund Direct Growth

Fund Performance: The Principal Dividend Yield Fund has given 18.22% annualized returns in the past three years and 17.8% in the last 5 years. The Principal Dividend Yield Fund belongs to the Equity category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹236Cr
1Y Returns36.6%

Principal Focused Multicap Fund Direct Growth

Fund Performance: The Principal Focused Multicap Fund has given 22.09% annualized returns in the past three years and 18.69% in the last 5 years. The Principal Focused Multicap Fund belongs to the Equity category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Focused Multicap Fund via lump sum is ₹300 and via SIP is ₹100.

Min Investment Amt₹300
AUM₹686Cr
1Y Returns42.6%

Principal Nifty 100 Equal Weight Fund Direct Growth

Fund Performance: The Principal Nifty 100 Equal Weight Fund has given 16.06% annualized returns in the past three years and 14.06% in the last 5 years. The Principal Nifty 100 Equal Weight Fund belongs to the Other category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Nifty 100 Equal Weight Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹18Cr
1Y Returns38.7%

Principal Global Opportunities Fund Direct Growth

Fund Performance: The Principal Global Opportunities Fund has given 20.63% annualized returns in the past three years and 16.33% in the last 5 years. The Principal Global Opportunities Fund belongs to the Other category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Global Opportunities Fund via lump sum is ₹10,000 and via SIP is ₹2,000.

Min Investment Amt₹10,000
AUM₹39Cr
1Y Returns34.0%

Principal Balanced Advantage Fund Direct Growth

Fund Performance: The Principal Balanced Advantage Fund has given 8.66% annualized returns in the past three years and 8.78% in the last 5 years. The Principal Balanced Advantage Fund belongs to the Hybrid category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Balanced Advantage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹292Cr
1Y Returns13.7%

Principal Ultra Short Term Fund Direct Growth

Fund Performance: The Principal Ultra Short Term Fund has given 5.42% annualized returns in the past three years and 5% in the last 5 years. The Principal Ultra Short Term Fund belongs to the Debt category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Ultra Short Term Fund via lump sum is ₹5,000 and via SIP is ₹2,000.

Min Investment Amt₹5,000
AUM₹175Cr
1Y Returns3.5%

Principal Low Duration Fund Direct Growth

Fund Performance: The Principal Low Duration Fund has given -0.59% annualized returns in the past three years and 2.39% in the last 5 years. The Principal Low Duration Fund belongs to the Debt category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹2,000.

Min Investment Amt₹5,000
AUM₹62Cr
1Y Returns3.7%

Principal Equity Savings Fund Direct Growth

Fund Performance: The Principal Equity Savings Fund has given 13.84% annualized returns in the past three years and 11.77% in the last 5 years. The Principal Equity Savings Fund belongs to the Hybrid category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Equity Savings Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹118Cr
1Y Returns22.3%

Principal Retirement Savings Fund Progressive Plan Direct Growth

Fund Performance: The Principal Retirement Savings Fund has given 4.77% annualized returns in the past three years and 9.65% in the last 5 years. The Principal Retirement Savings Fund belongs to the Solution Oriented category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Retirement Savings Fund via lump sum is ₹5,000 and via SIP is ₹2,000.

Min Investment Amt₹5,000
AUM₹3Cr
1Y Returns14.2%

Principal Arbitrage Fund Direct Growth

Fund Performance: The Principal Arbitrage Fund has given 3.28% annualized returns in the past three years and 3.07% in the last 5 years. The Principal Arbitrage Fund belongs to the Hybrid category of Principal Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Principal Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹8Cr
1Y Returns3.0%

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