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12 Best debt mutual funds to invest in 2022

best debt mutual funds

Looking for the best debt mutual funds to invest your money?

Today I am going to show you the 12 best debt mutual funds you can invest in 2022.

Investing in debt mutual funds is ideal for investors who are looking for a less risky investment than equity funds and are risk-averse.

What are debt mutual funds?

Debt mutual funds are funds that primarily invest in debt instruments, such as government securities, corporate bonds, money market funds, etc…

These funds are best for people who want to grow their money but don’t want to take so much risk.

The debt mutual funds are usually low-risk or medium-risk investments.

Debt funds are also best for the people who want diversification in their portfolios.

Suggested reading: Types of mutual funds in India (Choose the best for you)

Top 12 best debt mutual funds In India to invest in 2022

I have chosen the best debt mutual fund that has assets under management (AUM) above Rs 1000 crore.

Because the more assets under management, the more funds can lend money and can earn interest on it.

In contrast to equity, the less AUM, the more they can earn a return.

For example, if the AUM of equity debt mutual fund is Rs 10,000, they invest Rs 300 crore at a small company, and in a year the company doubles its return, and it will not affect the fund that much, because it’s just a small portion of a portfolio.

Also, I have considered other factors such as the rating from 3 different mutual fund rating company that is CRISIL, Value research, and Morningstar.

Moreover, risk matrix, past performance, quality of management, and a lot more.

After doing all the research I have come up with the 12 best debt mutual funds in India.

Here’s a list of the best debt mutual funds in India:

Best debt mutual funds Return since inception Expense ratio
SBI Magnum Gilt Fund 9.5% 0.46%
SBI Magnum Medium Duration Fund 9.3% 0.69%
Aditya Birla Sun Life Short Term Direct Fund Growth 8.9% 0.4%
Aditya Birla Sun Life Banking & PSU Debt Fund 8.8% 0.34%
Aditya Birla Sun Life Corporate Bond Fund Growth 8.4% 0.3%
ICICI Prudential Corporate Bond Fund Growth 8.3% 0.27%
Nippon India Short Term Fund Direct-Growth 8.3% 0.35%
ICICI Prudential Ultra Short-Term Fund 8.3% 0.39%
IDFC Banking & PSU Debt Fund 8% 0.31%
Nippon India Corporate Bond Fund Direct-Growth 8% 0.26%
Nippon India Banking & PSU Debt Fund Direct-Growth 7.9% 0.30%
Sundaram Corporate Bond Fund Growth 7.7% 0.28%

We’re going to look at each debt mutual fund one by one based on its duration.

3 Best debt mutual funds for short term

Short-term debt mutual fund invests in debt securities that have a maturity between 1 to 3 years.

These funds are ideal for people who want to save money for a short time and want to earn interest on it.

A short-term debt mutual fund is the best alternative to a bank saving account.

ICICI Prudential Ultra Short-Term fund

ICICI Prudential Ultra Short Term

source: Indmoney

The ultra-short-term fund invests in liquid and money market securities of 3 to 9 months maturity.

This fund is the best for keeping your money safe for 3 months to a year.

ICICI Prudential Ultra short-term fund was launched on 1 January 2013.

The fund has ₹13,266 worth of assets under management (AUM).

The net asset value (NAV) of a fund is ₹ 24 as of 20-05-2022.

Manish Banthia and Ritesh Lunawat manage the fund.

Value research and Morningstar both rating companies gave a fund 5-star rating.

The expense ratio of a fund is 0.39%.

Since its inception, the fund has given a CAGR of 8.3%.

Over the last 5,3 and 1 year, the fund has given annualized returns of 6.9%, 6.2%, and 4.1% which is more than its category average.

ICICI Prudential Ultra short-term fund’s top 5 holdings are in Reserve Bank of India, Bharti Airtel Ltd, Axis Bank Ltd, HDFC Bank Ltd, and Vedanta Ltd.

Aditya Birla Sun Life Short Term direct fund growth

Aditya Birla Sun Life Short Term

Aditya Birla sun life’s short-term fund was started on 1 January 2013.

The net asset value of a fund is ₹40.39 as of 20-05-2022.

Value research, Morning star, and CRISIL have given a rating of 5, 5, and 4 stars respectively.

The fund has a worth of ₹7,640 Crores assets under management (AUM) as of 20-05-2022.

The fund has an expense ratio of 0.4%.

Over the last 5, 3, and 1 year the fund has given a CAGR of 7.6%, 7.8%, and 3.9% which is more than its category average return.

And since its launch, the fund has given an annualized return of 8.9%.

Aditya Birla sun life’s short-term fund is managed by Mohit Sharma and Kaustubh Gupta.

The top 5 holdings of a company are State Bank of India, L&T Finance Ltd., DME Development Ltd., Karnataka State, and GOI.

Nippon India Short Term Fund direct growth

Nippon India Short Term Fund

The fund has assets under management worth ₹8,160 crores as of 20-5-2022.

Nippon India’s short-term fund was launched on 1 January 2013.

The current NAV (as of 20-5-2022) of a fund is ₹ 45.11.

Vivek Sharma and Sushil Budhia manage the fund.

Value research and the Morning star rating of a fund are 5 and 5 stars respectively.

Since the fund started, the fund has given an annualized return of 8.3%.

Over the last 5, 3, and 1year periods the fund has given a CAGR returns of 7.2%, 7.5%, and 3.4%.

The fund’s top 5 holdings are in GOI, Rural Electrification Corpn. Ltd., Embassy Office Parks REIT, India Infradebt Ltd., and India Grid Trust.

Nippon India’s short-term fund has an expense ratio of 0.35%.

4 Best debt mutual funds for the medium term

Here we include the best debt mutual funds for a medium period.

In this type of fund, the debt mutual fund company invests in debt instruments that have medium-term maturity that is 2 to 10 years.

You can invest in this type of mutual fund if you want to invest for the medium term and want a safer investment.

Nippon India Banking & PSU Debt Fund Direct growth

Nippon India Banking & PSU Debt Fund

Banking and PSU invest primarily in bonds issued by banks, public sector undertakings (PSUs), and public financial companies.

Nippon India banking and PSU debt funds were started on 05/05/2015.

Value research, Morningstar, and CRISIL have given a rating of 5,5, and 3 stars respectively.

The fund is managed by Vivek Sharma, Pranay Sinha, and Kinjal Desai.

The fund is currently managed worth ₹4,321 Crores assets.

The fund’s net asset value as of 20-5-22 is ₹ 17.09.

The fund’s top 5 holdings are in GOI, Oil & Natural Gas Corpn. Ltd., Bank of Baroda, Power Grid Corpn. Of India Ltd., National Housing Bank.

Over the last 5, 3, and 1 year the fund has given annualized returns of 7.5%, 7.6%, and 2.9%.

Since its inception, the fund delivered a 7.9% annualized return.

Nippon India banking and PSU debt fund have an expense ratio of 0.30%.

Aditya Birla Sun Life Banking & PSU Debt Fund

Aditya Birla Sun Life Banking & PSU Debt Fund

The fund was launched on 01/01/2013.

Aditya Birla Sun Life Banking & PSU Debt Fund has given an annualized return of 8.8% since inception.

Over the last year 5,3, and 1 year the fund’s CAGR return is 7.3%, 7.4%, and 3.2% respectively.

Morningstar and Value research rating for a fund is 5 and 4 stars.

Kaustubh Gupta and Harshil Suvarnkar, two manage the fund.

The fund has an expense ratio of 0.34%.

The fund has assets under management (AUM) worth ₹10,941 Crores as of 20-5-22.

Aditya Birla Sun life banking and PSU debt fund has a NAV of ₹302.6.

Its top 5 holding is in State Bank of India, National Bank for Agriculture & Rural Development, and Rural Electrification Corpn. Ltd., Housing & Urban Development Corpn. Ltd., HDFC Bank Ltd.

IDFC Banking & PSU Debt Fund

IDFC Banking & PSU Debt Fund

IDFC Banking & PSU Debt Fund was launched on 26/02/2013.

It’s been in existence for 9-year 2 months.

The fund has ₹17,076 worth of assets under management.

The NAV of a fund is ₹ 20.3 as of 20-05-2022.

It is managed by Gautam Kaul and Suyash Choudhary.

The expense ratio of a fund is 0.31%.

The fund has given an annualized return of 8% since its inception.

Over the last 5, 3, and 1 year the fund has delivered annualized returns of 7.6%, 7.6%, and 2.9%.

IDFC Banking & PSU Debt Fund’s top 5 holdings are Axis Bank Ltd., GOI, Bank of Baroda, and Hindustan Petroleum Corpn. Ltd., HDFC Bank Ltd.

CRISIL, Morningstar, and Value research have given a rating of 4, 5, and 5 stars.

SBI Magnum Medium duration fund

SBI Magnum Medium duration fund

The current NAV of an SBI Magnum Medium duration fund is ₹ 43.24 as of 20-5-22.

The fund was launched on 01/01/2013.

Value research, Morningstar, and CRISIL have a rating for a fund is 5, 5, and 4 stars respectively.

Dinesh Ahuja manages the fund.

The fund manages ₹ 9745 Cr assets.

It has an expense ratio of 0.69% which is the highest among all the best debt mutual funds I have included here.

The fund has given a CAGR return of 2.95%, 8.14%, and 7.94% over the last 1, 3, and 5year period.

And since its inception, the fund delivered a 9.28% annualized return.

Its top 5 holdings are GOI, State Bank of India, Mahindra Rural Housing Finance Ltd., Flometallic India Pvt. Ltd., and Indian Bank.

The fund carries low to moderate risk.

5 Best debt mutual funds for long term

Till now you looked at short-term and medium-term debt funds, now it’s time for the best debt mutual funds for the long term.

Here I have included the best debt fund that can give you a moderate to high return and carries low to moderate risk.

These funds are ideal for investors who want to invest above 8+ years.

Nippon India Corporate Bond Fund direct growth

Nippon India Corporate Bond Fund

Nippon India Corporate Bond Fund was launched on 1/1/2013.

The fund has been given a rating of 5 stars from Value research and 4 stars from Morningstar.

The fund manages ₹ 2885.45 Cr assets.

Nippon India Corporate bond fund has an expense ratio of 0.26% which is the lowest among all the best debt mutual funds I have included here.

The fund NAV as of 20-5-22 is ₹ 49.2.

The funds return over the last 5, 3, and 1 year are 7%, 6.7%, and 3.8% respectively.

Since its inception, the fund has given an annualized return of 8%.

The fund’s top 5 holdings are in Hindustan Petroleum Corpn. Ltd., State bank of India, Maharashtra State, Haryana State, National Bank for Agriculture & Rural Development.

Vivek Sharma and Kinjal Desai manage Nippon India Corporate Bond Fund.

Sundaram Corporate Bond Fund growth

Sundaram Corporate Bond Fund

The fund was launched on 13 May 2013.

Dwijendra Srivastava and Sandeep Agarwal manage the Sundaram Corporate Bond Fund.

The fund has assets under management worth ₹1,121.

The NAV of a fund is ₹ 33.3 as of 20-05-2022.

The fund has delivered an annualized return of 2.8%, 7.6%, and 7.2% over the last 1, 3, and 5year periods.

Since its inception, the fund has given a 7.7 annualized return.

The fund has an expense ratio of 0.28%.

Value research, Morningstar, and CRISIL have a rating of 3, 5, and 5 stars.

The fund’s top 5 holdings are in Tamilnadu State, Housing Development Finance Corpn. Ltd., Power Grid Corp. Of India Ltd., Hindustan Petroleum Corpn. Ltd., HDFC Bank Ltd.

Aditya Birla Sun Life Corporate Bond Fund growth

Aditya Birla Sun Life Corporate Bond Fund

Aditya Birla sun life corporate bond fund is managed by Kaustubh Gupta.

The fund was launched on 1/1/2013.

The fund’s current NAV is ₹90.3 as of 20-05-2022.

The fund has ₹15,360 Crores worth of assets under management.

Morningstar and Value research both rating companies have given a 5-star rating to this fund.

Over the last 5,3,1 years, the fund has given an annual average return of 7.4%, 7.5%, and 2.9%.

Aditya Birla sun life corporate bond has given a CAGR return of 8.4% since its inception.

The expense ratio of a fund is 0.3%.

Its top 5 holdings are GOI, National Bank for Agriculture & Rural Development, Bajaj Housing Finance Ltd., Tamilnadu State, and Power Finance Corpn. Ltd., L&T Finance Ltd.

SBI Magnum Gilt fund

SBI Magnum Gilt fund

A gilt fund is a type of debt fund that primarily invests in government securities.

The fund was launched on 1 January 2013.

The current NAV of the SBI Magnum Gilt fund is ₹ 54.1 as of 20-05-2022.

The fund manages ₹3540 crores worth of assets under management.

Dinesh Ahuja manages this fund.

CRISIL, Morningstar, and Value research have given a rating of 4, 5, and 4stars rating.

Since the fund started the fund has given a 9.49% annual average return which is more than its category average.

And also its return since inception is the highest among all the best debt mutual funds included here.

Over the last 5, 3, and 1 year the fund has given annualized returns of 7.4%, 8.4%, and 2.4%.

SBI Magnum Gilt fund has an expense ratio of 0.46%.

The fund’s top holdings are in the Reserve Bank of India, GOI, Maharashtra State, Uttar Pradesh State, and Rajasthan State.

It is the safest investment to keep the money for the long term.

ICICI Prudential Corporate Bond Fund growth

ICICI Prudential Corporate Bond Fund was launched on 1 January 2013.

The fund is managed by Rahul Goswami, Anuj Tagra, and Chandni Gupta.

Morningstar and Value research have given a rating of 5 and 4 stars respectively.

The current NAV of a fund is ₹24.5 as of 20-05-2022.

The fund has assets under management worth ₹17580 Crore.

The fund has given an annualized return of 8.3% since its inception.

Over the last 5, 3, and 1 years the fund has delivered a CAGR return of 7.3%, 7.4%, and 3.5%.

The fund has an expense ratio of 0.27% which is the second-lowest among all other best debt mutual funds.

The fund’s top 5 holdings are GOI, Reliance Industries Ltd., HDB Financial Services Ltd., DME Development Ltd., and Rural Electrification Corpn., Ltd.

Conclusion

I hope the post showed you the best debt mutual funds in which you can invest money in 2022.

Now, it’s your turn:

Which of the 12 best debt mutual funds from this post you’re going to invest in?

Are you going to invest in short, medium, or long-term debt funds?

Let me know in the comment section.

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