Debt Mutual Funds, are schemes which aim to provide stable growth to investors by investing in the fixed income securities such as bonds, debentures, FDs, RDs, and other such instruments. These schemes have been a safe haven for investors who want to invest in the mutual fund market, but can’t take too much risk with their investments. Now, just like the equity asset class, the debt space too have different categories following different investment objectives and styles. So, if you are a low risk investor, who want to invest in the debt space, below are the top debt funds to make an investment in the year 2019.
Franklin India Short Term Income Plan (G)
Franklin Templeton Mutual Fund is providing some of the premium debt funds and one among them is the short term income plan. Being a short duration fund, it follows the objective of providing stable returns to investors by investing in instruments with a maturity of less than 3 years, and keeping the average maturity of the overall portfolio between 4 months to 12 months. The scheme follows a diversified investment style and prefers instruments having low credit quality and medium interest rate sensitivity. As of now, it has 45.04% of the total investments in A & below instruments, 41.87% is in AA rated instruments, 9.79% is in AAA rated instruments, 2.25% is in cash equivalents, and the rest is in A1+ rated instruments. This scheme is a great choice for investors who wants to enjoy low risk returns, along with high liquidity.
SBI Magnum Medium Duration Fund (G)
This medium duration debt fund from SBI MF has maintained a good track record and in the past 1, 3, and 5 years has provided annualized returns of 8.98%, 8.95%, and 9.29%, respectively. The scheme aims to provide a stable growth to investors by investing in debt instruments in such way that the Macaulay duration of the overall portfolio is between 3 to 4 years. This debt scheme follows a focused investment approach and has investments in 41 stocks. It prefers instruments with medium credit quality and high interest rate sensitivity. Currently, the scheme has 37.63% investments in AAA rated instruments, 22.63% is in AA rated instruments, 17.55% is in A & below rated instruments, 8.93% is in cash equivalents, 7.57% is in SOV, and 5.69% is in A1+ rated instruments. A great scheme for investors who want a stable growth in medium term.
Franklin India Ultra Short Bond Fund (G)
Ultra short duration funds have been one of the most popular categories of the debt funds and the credit goes to the optimal growth and high level of liquidity provided by these schemes. Franklin India Ultra Short Term Fund has been consistently holding the number one position in the category by growth of around 9% to the investors. As of now this ultra short duration debt mutual fund is following a diversified approach of investing and has investments in 149 instruments. Bonds, debentures, and commercial papers are most preferred instruments. To provide investors with risk adjusted growth the scheme prefers instruments with medium credit quality and low interest rate sensitivity. The scheme has no lock-in or exit load, so you can redeem your investments whenever you want.
Kotak Corporate Bond Fund (G)
Kotak Mutual Fund has made quite a name in the equity as well as debt mutual fund space by providing the best schemes. The corporate bond fund of Kotak is one among them and has helped a lot of low risk investors in achieving their goals. As the name suggests, this scheme invest in the bonds and debentures of corporate companies. The debt mutual fund scheme prefers quality over quantity and as of now has investments in just 47 securities. In the portfolio, AAA (77.89%) rated instruments holds the highest investments, and the rest is distributed among A1+ (13.59%), cash equivalents (4.34%), and AA (4.18%) rated instruments. Over the years, this scheme has provided returns of more than 8%, and looking at the current investment strategies, same can be expected in the future as well.
Axis Banking & PSU Debt Fund (G)
A banking & PSU debt fund which follows the objective of providing stable returns to investors by investing predominantly in the instruments provided by banks, public sector units, and public financial institutions. This scheme too has provided investors with an exceptional growth, especially in the last 1 year, when it has provided returns of 10.32% (as on May 31, 2019). As for the investment strategies, this scheme is currently following a diversified style of stock picking with current investments in 80 securities. Bonds and debentures are given major preference, and to provide stable growth to investors that maximum investment is in AAA (90.88%) rated instruments.
These are the top 5 best debt funds which you can opt for a stable and optimal growth. From the list, you can select one or more schemes depending on your requirements and investment style. Just make sure that whichever scheme you choose, you give it some time to show performance.
Tata Mutual Fund has been among the top AMCs of India and has contributed some of the best schemes to the MF industry. This article will provide you details on the best funds of Tata MF.