New Debt Mutual Fund Classification by SEBI

  • Akshatha Sajumon
  • 12 Jan
  • 23 minutes

What are debt funds?

Debt funds are one of the broad categories of mutual funds as per SEBI recategorization. These funds invest predominantly in debt and debt-related instruments like treasury bills, government bonds or securities, debentures, corporate bonds, commercial papers, etc. Debt funds have relatively lower risk as compared to equity funds and the returns generated from these funds are more or less stable or less volatile in comparison to equity funds. 

Who are the target investors for debt funds?

Debt funds are an excellent option to include in a portfolio as they can be used as a balancing factor along with the higher risk equity funds. These funds are an ideal option for investors with a low risk appetite and have relatively stable or regular returns expectations even if they are nominal in comparison to the returns generated by equity funds or equity-oriented hybrid funds.

The expense ratio of debt funds is lower than that of equity funds. This protects from the dilution of the returns generated from the debt funds.

How are debt funds taxed?

The taxation on debt funds like any other mutual funds is twofold namely the capital gains arising upon redemption of the units of the fund as well as the dividends received from the fund. The taxation of debt funds is tabled below. 

Type of capital gain/ DividendApplicable tax rate
Short term capital gains (period of holding less than 36 months)Slab rate of investor
Long term capital gains (period of holding 36 months and more) 20% (plus cess and surcharge)
Dividends Slab rate of investor

What is the new debt fund classification as per SEBI?

The new recategorization of debt funds has included 16 sub-categories under debt funds. The details of the applicable sub-categories under debt funds are mentioned below. 

Overnight funds

Overnight funds are a debt mutual fund that has the maturity or investment horizon of just one day. These funds are open-ended funds that invest in securities with limited maturity. These assets held in such funds are usually classified as cash and cash equivalents and have zero interest risk a swell as minimum credit risk. The expense ratio of these funds is also limited and usually under 1%. These funds are ideal for investors with an investment horizon for a day or a week. Their units are redeemed easily and the capital gains arising on them are taxed as per the taxation rules of debt mutual funds.  

The top overnight funds and their details are mentioned below.

  1. SBI Overnight Fund Direct plan Growth

This fund was launched in 2013 by SBI Mutual Funds. The details of the fund are mentioned hereunder.

ParticularsDetails
Fund managerMr. R. Arun
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.10%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.58%3.09%4.29%4.98%6.41%
  1. HDFC Overnight Direct Plan Growth option

This is a direct plan of HDFC Overnight Fund and was launched in the year 2013. The details of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Anil Bamboli
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.10%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.58%3.09%4.26%4.97%6.12%
  1. UTI Overnight Fund Growth Direct

This fund is available in the direct option as well as the regular plan. The details of the direct plan of this fund are mentioned below.

ParticularsDetails
Fund managerMr. Amandeep Singh Chopra
Launch date14th January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.06%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.58%3.11%4.32%4.91%6.43%

Liquid funds

Liquid funds are one of the sub-categories of debt funds. These funds are open-ended schemes without any lock-in period and a maturity period of 91 days. These funds invest mainly in commercial papers, government securities, treasury bills, etc. that have a maximum maturity of 91 days. The returns of these funds are higher than the interest offered by traditional investment options like a bank savings account. The average returns on such investment options are approximately around 3.5% per annum however, liquid funds provide an average return between 7% to 9% per annum. The risk of these funds is also lower as compared to equity funds or debt funds with a longer duration.

The top liquid funds and their details are mentioned below.

  1. ICICI Prudential Liquid Fund Direct plan Growth

This is a liquid fund with a maturity of up to three months and is available in a direct plan and growth plan. The details of the direct plan of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Rahul Goswami
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.20%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.67%3.28%5.09%5.84%7.08%
  1. Aditya Birla Sun Life Liquid Direct Plan Growth

This is a direct plan of the liquid fund with a maturity of up to three months. The fund was launched in 2013 details of the direct plan of the fund are mentioned below. 

ParticularsDetails
Fund managerMs. Sunaina Cunha
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.21%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.68%3.29%5.14%5.89%7.14%
  1. HDFC Liquid Fund Direct Plan Growth Option

This is a liquid fund launched in the year 2013 by HDFC Mutual Fund. The details of the direct plan of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Anupam Joshi
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.20%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.66%3.22%5.00%5.75%7.03%

Ultra short term funds

Ultra short term funds are the debt funds that have a maturity between 3 months to 6 months. The returns on such funds are higher than the overnight funds or liquid funds on account of longer maturity but the risk is the corresponding risk is also higher. These funds are taxed similar to debt funds and the applicable capital gains will depend on the period of holding. Some of the top funds in this category and their details are mentioned below. 

  1. IDFC Ultra Short Term Fund Direct Growth

This fund was launched in the year 2018. The details of the direct plan of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Harshal Joshi
Launch date18th January 2018
Minimum SIP investmentRs. 1,000
Expense ratio0.25%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.80%3.48%6.24%6.23%
  1. ICICI Prudential Ultra Short Term Fund Direct Plan Growth

This is a direct plan offered by ICICI Mutual Funds under the ultra short term funds. The details of this plan are mentioned below. 

ParticularsDetails
Fund managerMr. Manish Banthia
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.39%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.38%4.83%7.35%7.53%8.57%
  1. HDFC Ultra ST Fund Direct Growth

This fund was launched by HDFC Mutual Funds in the year 2018. The details of the direct plan of the fund are mentioned below.

ParticularsDetails
Fund managerMr. Anil Bamboli
Launch date25th January 2018
Minimum SIP investmentRs. 1,000
Expense ratio0.34%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.03%4.08%6.65%6.72%

Low duration funds

Low duration funds are funds that invest in securities with a maximum maturity of 6-12 months. The usual investments in this fund are Government securities and bonds, Money market securities, Securitized debts, Corporate bonds, REITs, Permitted derivatives, Other eligible mutual fund units. The returns of these funds are higher than the debt funds with shorter duration like liquid funds, ultra short term funds, etc. The risk on the other hand is higher than such funds on account of the longer maturity period. Some of the top funds in this category and their details are mentioned below. 

  1. IDFC Low Duration Fund Direct Plan Growth

This is an open ended scheme under the direct plan. The fund was launched in the year 2013 and the basic details of the fund are mentioned below.

ParticularsDetails
Fund managerMr. Anurag Mittal
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.30%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.03%3.97%6.91%6.96%7.97%
  1. Axis Treasury Advantage Fund Direct Plan Growth Option

This is a low duration direct plan from Axis Mutual Fund. The basic details of this plan are mentioned below.

ParticularsDetails
Fund managerMr. Devang Shah
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.31%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.26%4.45%7.39%7.32%8.14%
  1. SBI Magnum Low Duration Fund Direct Plan Growth

This fund invests in debt and money market instruments of duration up to 12 months. The details of this fund are mentioned below.

ParticularsDetails
Fund managerMr. Rajeev Radhakrishnan
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.40%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.15%4.11%7.03%6.98%7.82%

Money market funds

Money market mutual funds are short term debt funds that invest in Cash and cash equivalents or other securities that are liquid in nature like commercial paper, treasury bills, certificate of deposit,  etc. with a maximum maturity of up to 1 year. The risk of these funds is minimal and the returns potential is high as compared to other short term debt funds. The top funds in this category and their details are mentioned below. 

  1. ICICI Prudential Money Market Fund Retail Growth

This is an open ended fund from ICICI Mutual Funds. The fund was launched in 2013 and the basic details of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Rahul Goswami
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.21%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.98%3.86%6.42%6.68%7.55%
  1. Kotak Money Market Growth

This scheme was launched by Kotak Mahindra Mutual Funds in the year 2013 under money market funds. The details of the fund are mentioned hereunder

ParticularsDetails
Fund managerMr. Deepak Agrawal
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.26%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.93%3.83%6.25%6.55%7.50%
  1. SBI Short Term Debt Fund Plan Growth

This is a money market fund from SBI Mutual Funds launched on 2013. The basic details of the fund are mentioned hereunder.

ParticularsDetails
Fund managerMr. Rajeev Radhakrishnan
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.34%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.78%4.47%8.54%7.60%8.38%

Short duration funds

Short duration funds are debt mutual funds that invest in debt securities and money market securities with a maximum maturity of up to 3 years. The average return from these funds is in the range of 8 to 9% and is a good option as compared to traditional short term investment options like Bank FDs, recurring deposits, and savings accounts. These funds are ideal for investors aiming for fixed or stable returns at manageable risks. The top funds in this category are mentioned below.

  1. Kotak Bond Short Term Plan Growth

This is a regular short duration plan from Kotak Mahindra Mutual funds. The basic details of this plan are tabled below.  

ParticularsDetails
Fund managerMr. Deepak Agrawal
Launch date2nd January 2002
Minimum SIP investmentRs. 1,000
Expense ratio1.16%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.78%4.35%8.27%7.08%7.66%
  1. IDFC Bond Fund- Short Term Plan Direct Plan Growth

This is a direct plan from IDFC Mutual Funds. The basic details of ther fund are tabled below. 

ParticularsDetails
Fund managerMr. Suyash Chaudhary
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.29%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.59%4.42%8.79%7.71%8.47%

This is a direct plan under short term duration funds. The basic details of the fund are tabled below. 

ParticularsDetails
Fund managerMr. Devang Shah
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.30%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.85%5.12%9.08%8.05%8.76%

Medium duration funds

Medium duration funds belong to the debt mutual funds and have a maturity of 3 years to 4 years. These funds provide better returns in a falling interest rate scenario. The risk of these funds is higher than smaller duration debt funds but lower than equity funds or long duration debt funds. The returns provided under these funds make it an excellent candidate to meet mid term financial goals. The top funds under this category are mentioned below.

  1. Axis Strategic Bond Fund 

This fund is a open-ended direct plan under medium duration funds and was launched in the year 2013. The basic details of the plan are tabled below. 

ParticularsDetails
Fund managerMr. Devang Shah
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.39%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.84%7.32%8.93%8.19%9.20%
  1. HDFC Medium Term Debt Fund

This is a direct plan under medium duration fund offered by HDFC Mutual funds. The basic details of this fund are tabled below.

ParticularsDetails
Fund managerMr. Shobhit Mehrotra
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.59%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns4.00%7.44%9.51%8.08%8.84%
  1. Kotak Medium Term Direct Growth

This is a direct plan under the medium duration funds offered by Kotak Mahindra Mutual Funds. The basic details of the plan are mentioned below.

ParticularsDetails
Fund managerMr. Deepak Agrawal
Launch date25th January 2014
Minimum SIP investmentRs. 1,000
Expense ratio0.55%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns4.22%7.41%8.28%7.51%9.11%

Medium to long duration funds

Medium to long duration funds are open-ended debt funds that invest in debt and money market securities with the average maturity period ranging between 4 years to 7 years. The risk of these funds is quite higher in comparison to short term debt funds but lesser than equity funds. The returns on these funds complement the risk and are higher than most short duration funds. Some of the top funds in this category and their details are mentioned hereunder.

  1. Aditya Birla SL Income Fund

This fund is a direct plan of medium to long duration fund launched in the year 2013. The basic details of the plan are tabled below.

ParticularsDetails
Fund managerMr. Bhupesh Bameta
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.40%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.46%5.89%10.53%7.64%8.65%
  1. Kotak Bond Fund

This is a medium to long duration fund with a direct plan and a regular plan. The details of the direct plan of this fund are mentioned below. 

ParticularsDetails
Fund managerMr. Deepak Agrawal
Launch date2nd January 2002 
Minimum SIP investmentRs. 1,000
Expense ratio1.16%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.78%4.35%8.27%7.08%8.37%

Long duration funds

The long duration funds are a category of debt funds that invest in debt instruments that have a duration of 7 years or more. These funds are highly volatile to the interest rate fluctuations but the returns generated by these funds are quite higher than any other debt funds. The capital gains of these funds depend on the period of holding. Long duration funds are an excellent option for investment to meet mid term financial goals of investors. The top funds in this category and their details are mentioned below.

  1. ICICI Prudential Long Term Bond Fund Direct Plan Growth

This is a direct plan for long duration funds from the ICICI Prudential Mutual Funds. The details of this fund are tabled below.

ParticularsDetails
Fund managerMr. Anuj Tagra
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio1.40%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns1.22%1.73%10.02%7.80%8.90%
  1. Nippon India Nivesh Lakshya Fund Direct Plan-Growth option

This fund is now known as Nippon India Nivesh Lakshya Fund. It is a direct plan belonging to the long duration fund category. The details of the fund are mentioned below.

ParticularsDetails
Fund managerMr. Pranay Sinha
Launch date6th January 2018
Minimum SIP investmentRs. 1,000
Expense ratio0.25%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns0.59%2.96%12.08%10.91%

Dynamic funds

These are debt funds that invest in different types of debt securities that are of varying maturities. These funds have no fixed maturity. The fund manager selects the securities based on the interest rate fluctuations to take maximum advantage of the changing rate scenarios. The returns on these funds are higher than short term funds. The top funds in this category and their details are mentioned below.

  1. IDFC Dynamic Bond Fund Direct Plan Growth

This fund is a direct plan from IDFC Mutual funds under the dynamic bind category. The details of this fund are mentioned below.

ParticularsDetails
Fund managerMr. Suyash Chaudhary
Launch date1st January 2013 
Minimum SIP investmentRs. 1,000
Expense ratio0.72%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.26%3.93%10.67%8.37%9.31%
  1. Axis Dynamic Bond Fund Direct Plan Growth Option

This fund is a direct plan under the dynamic bond fund category. The basic details of the fund are tabled below.

ParticularsDetails
Fund managerMr. R. Sivakumar
Launch date1st January 2013 
Minimum SIP investmentRs. 1,000
Expense ratio0.25%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.68%5.07%10.52%8.38%9.41%

Corporate bond funds

These are debt funds that invest a minimum of 80% of their corpus in the top-rated corporate bonds. This is high risk high return investment option as compared to other debt funds. The taxation of these funds is based on the period of holding of the units of the fund and is an ideal addition to the portfolio to maximize the investor’s wealth as well as meet the medium to long term financial objectives. The top rated funds in this category and their details are mentioned below.

  1. ICICI Prudential Corporate Bond Fund Direct Plan Growth

The details of the direct plan under corporate bond fund category are mentioned below.

ParticularsDetails
Fund managerMr. Rahul Goswami
Launch date1st January 2013 
Minimum SIP investmentRs. 1,000
Expense ratio0.27%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.82%5.26%8.94%7.89%8.74%
  1. HDFC Corporate Bond Fund Direct Plan Growth Option

The details of the direct plan under the corporate bond fund category are mentioned below.

ParticularsDetails
Fund managerMr. Anupam Joshi
Launch date1st January 2013 
Minimum SIP investmentRs. 1,000
Expense ratio0.30%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.05%5.33%9.56%8.10%8.76%
  1. IDFC Corporate Bond Fund Direct Plan Growth

The details of the direct plan of this fund under the corporate bond fund category are mentioned below

ParticularsDetails
Fund managerMr. Anurag Mittal
Launch date12th January 2016 
Minimum SIP investmentRs. 1,000
Expense ratio0.27%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.03%5.22%8.85%7.72%8.25%

Credit risk funds

These are a category of debt funds that invest in low rated fixed income securities of the corporate sector. The credit risk in such securities is quite high and such risk is compensated by higher interest rates. The performance of the fund relies on the expertise of the fund manager and hence, they may not be a good option for risk averse investors. The top rated fund in this category and their details are mentioned below.

  1. HDFC Credit Risk Debt Fund Direct Plan Growth Option

This is a direct plan under credit risk fund category from HDFC mutual fund. The basic details of the plan are mentioned hereunder. 

ParticularsDetails
Fund managerMr. Shobhit Mehrotra
Launch date25th January 2014 
Minimum SIP investmentRs. 1,000
Expense ratio1.08%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns4.65%9.69%9.89%8.48%9.72%
  1. Kotak Credit Risk Fund Direct Growth

The details of this open ended direct plan under credit risk fund are mentioned below.

ParticularsDetails
Fund managerMr. Deepak Agrawal
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.74%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns4.23%7.06%8.53%7.87%9.06%
  1. IDFC Credit Risk Fund Direct Growth

The details of the direct plan of this fund under th4e credit risk fund category are mentioned below.

ParticularsDetails
Fund managerMr. Arvind Subramanian
Launch date3rd January 2017
Minimum SIP investmentRs. 1,000
Expense ratio0.66%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.26%6.17%8.37%7.66%

Banking and PSU Fund

These are debt funds where minimum 80% or more of the corpus of any mutual fund is invested in debentures, bonds, banking, and public sector undertakings (PSUs). These are ideal funds for investors with low risk appetite and a short term investment horizon of 1 year to 3 years. The top funds under this category and their details are mentioned below.

  1. IDFC Banking nd PSU Debt Fund Direct Growth

This fund is a direct plan with predominant investment in banks, PSUs and public financial institutions. The details of the fund are mentioned below.

ParticularsDetails
Fund managerMr. Anurag Mittal
Launch date7th January 2017
Minimum SIP investmentRs. 1,000
Expense ratio0.31%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.44%4.56%9.83%8.11%8.43%
  1. Axis Banking nd PSU Debt Fund Direct Plan Growth

This fund was launched in the year 2013 by Axis mutual funds. The basic details of the fund are mentioned below. 

ParticularsDetails
Fund managerMr. Aditya Pagaria
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.33%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.30%4.32%9.03%8.11%8.47%
  1. Aditya Birla Sun Life Banking nd PSU Debt Fund Direct Plan Growth

The basic details of the direct plan of this fund are mentioned below.

ParticularsDetails
Fund managerMr. Harshil Suvarnkar
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.34%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.88%4.97%9.14%7.83%9.25%

Gilt funds

Gilt funds are a type of debt mutual funds that invest in government securities of varying tenures ranging from 5 years to 30 years as well as with short term maturities. These are risk free investments that provide moderate returns making them an ideal addition to the portfolio of risk averse investors as wella s investors looking for stable and regular returns from government backed securities. The top rated funds in this category and their details are mentioned below.

  1. UTI Gilt Fund Direct Plan Growth

This fund invests in government securities of varying tenures. The basic details of the direct plan of this fund are mentioned below. 

ParticularsDetails
Fund managerMr. Amandeep Chopra
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.64%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.63%3.71%9.52%8.04%9.18%
  1. Kotak Gilt Investment Fund Regular Growth Direct

This is a direct plan under the Gilt funds category. The details of the fund are mentioned hereunder. 

ParticularsDetails
Fund managerMr. Abhishek Bisen
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.48%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns4.10%6.04%11.13%8.21%

Gilt fund with 10 yr constant duration

These funds like gilt funds invest government securities, however, the duration of such securities is consistent with the maturity of 10 years. These funds do not carry much credit risk and provide regular and stable returns. The capital gains tax on these funds is based on the period of holding of the units of the fund. The top rated funds in this category are mentioned below.

  1. ICICI Prudential Constant Maturity Gilt Direct Growth

This fund invests in government bonds with maturity of 10 years. The basic details of the fund are mentioned below.

ParticularsDetails
Fund managerMr. Rahul Goswami
Launch date12th January 2014
Minimum SIP investmentRs. 1,000
Expense ratio0.23%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns3.08%4.01%11.77%8.80%10.21%
  1. IDFC Government Securities Fund Constant Maturity Direct Growth

This is the direct open ended plan offered by IDFC Mutual funds. The basic details of this fund are tabled below.

ParticularsDetails
Fund managerMr. Harshal Joshi
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.49%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.45%3.26%12.02%9.79%10.18%

Floater fund

Floater funds are a type of debt mutual fund that invest majorly (minimum 65% of the fund) in securities that have a floating rate of interest along with fixed rate securities. The returns under these funds are potentially higher than the fixed interest funds and the risk of such funds is high too on account of being sensitive to interest rate fluctuations. The top rated funds in this category and their details are mentioned hereunder. 

  1. Nippon India Floating Rate Fund Direct Plan Growth Plan

This is a direct plan under the floater fund category offered by Nippon India Mutual Fund. The details of the fund are tabled below.

ParticularsDetails
Fund managerMs Anju Chhajer
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.24%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.91%5.35%9.02%7.76%8.49%
  1. Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth

This is a direct plan under the floater fund category offered by Aditya Birla Sun LifeMutual Fund. The details of the fund are tabled below.

ParticularsDetails
Fund managerMr. Kaustubh Gupta
Launch date1st January 2013
Minimum SIP investmentRs. 1,000
Expense ratio0.23%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.60%4.59%7.69%7.46%8.44%
  1. UTI Floater Direct Growth

This is a direct plan under the floater fund category offered by UTI Mutual Fund. The fund was launched in the year 2018 and the basic details of the fund are tabled below.

ParticularsDetails
Fund managerMr. Amandeep Singh Chopra
Launch date30th January 2018
Minimum SIP investmentRs. 1,000
Expense ratio0.45%
RiskLow

The returns provided by the fund as of 17th October 2021 are tabled below

Period6 months1 yr3 yrs5 yrsSince launch
Returns2.66%4.64%7.65%

Conclusion

The new debt mutual fund classification has helped investors in making informed investment decisions with respect to the type of debt fund they need to invest in based on their investment horizon and risk return parameters. The other factors that plan an important role in the decision-making process apart from the time frame are the expense ratio and the investment budget of the investor.

FAQ

Is the benefit of indexation available on short term capital gains on debt funds?

No. Indexation is available only on the long term capital gains on debt funds

What is the maturity of liquid funds?

The maturity period of the liquid fund is maximum up to 3 months

Are debt funds safe?

Debt funds are considered safer than equity funds or equity-oriented hybrid funds as they are not as volatile to the market fluctuations. However, they are not completely risk free and do carry interest rate risk, credit risk, liquidity risk, and reinvestment risk.

Who are the target investors for Gilt funds?

Gilt funds are usually considered to be a safer option for new investors or risk-averse investors as the risk of default and interest rate risk is minimal on account of investment in government-backed securities.

Is there any lock-in period in debt funds?

No. Debt funds are open-ended schemes without any lock-in period, unlike ELSS schemes

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Akshatha Sajumon