What are the best debt funds in India?
Debt mutual funds are gaining popularity as retail investors realise the superior returns that debt mutual funds are generating over traditional investment options like fixed deposits, PPF, EPF, Post office savings etc. While debt mutual funds are relatively safer than equity mutual funds, investors should analyse their risk profile and investment objective before investing in the best debt funds.
Debt funds invest in government securities, corporate and government bonds, money market instruments, etc. Debt funds invest a minimum of 65% of its investible corpus in these debt or debt related instruments.
The rest of the allocation is done in other assets that helps investors to take maximum advantage from diversification. Debt funds offer a multitude of benefits like stable returns, regular income, fits for both short term and long term investment horizon, etc.
Here are the best debt funds in India for 2021
| Investment Period | Schemes | MF Rating | Strength | 1 Yr | 3 Yr | 5 Yr |
|---|---|---|---|---|---|---|
| Up to 90 days | Axis Liquid Fund - Regular Growth |  |
 |
4.31% | 6.14% | 6.55% |
| Icici Prudential Liquid Fund - Growth | |
|
4.31% | 6.10% | 6.52% | |
| 91 days to 6 months | Aditya Birla Sun Life Savings Fund - Growth | |
|
7.01% | 7.69% | 7.92% |
| Icici Prudential Ultra Short Term Fund - Growth | |
|
6.55% | 7.48% | 7.86% | |
| 6 months to 1 year | L&t Low Duration Fund - Growth | |
|
6.89% | 6.18% | 7.34% |
| Icici Prudential Ultra Short Term Fund - Growth | |
|
6.38% | 4.75% | 5.69% | |
| 1 year to 3 years | Hdfc Short Term Debt Fund - Regular Plan - Growth | |
|
10.38% | 9.14% | 8.67% |
| Icici Prudential Short Term Fund - Growth Option | |
|
10.53% | 8.60% | 8.61% | |
| 3 years & above | Idfc Government Securities Fund- Investment Plan-regular Plan-growth | |
|
13.75% | 11.26% | 10.22% |
| Sbi Corporate Bond Fund - Regular Plan Growth | |
|
10.32% | - | - |
* The above ranking is as on 23rd December 2020. To check the latest data and ranking of all mutual funds click here.
Note: Sbi Corporate Bond Fund - Regular Plan Growth is relatively new in the markets. Hence, not enough data is available to calculate its returns. Also, know the right time to invest in these right funds so that you avoid buying overvalued funds. For more details, visit RankMF.com
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The author is a Certified Financial Planner (CFP) with 5 years experience in Investment Advisory and Financial Planning. Her strength lies in simplifying complex financial concepts with real life stories and analogies. Her goal is to make common retail investors financially smart and independent., RankMF | Last Update 21 June 2021
