Here is a list of top 5 Debt Funds you can invest in 2020 to generate quality returns:
| Fund Name |
AUM (cr.) |
3 Year Returns |
Link |
| Nippon India Gilt Securities Fund |
₹ 1,250 |
9.69% |
Invest Now |
| SBI Magnum Medium Duration Fund |
₹ 3,192 |
9.13% |
Invest Now |
| Kotak Credit Risk Fund |
₹ 2,662 |
6.96% |
Invest Now |
| ICICI Prudential Ultra Short Term Fund |
₹ 5,426 |
7.98% |
Invest Now |
| Franklin India Liquid Fund |
₹ 3,582 |
6.99% |
Invest Now |
{Note: Funds have been ranked on the basis of 5 year returns}
{Data as on May 12, 2020; Source: Value Research}
1. Nippon India Gilt Securities Fund
The fund primarily invests in debt securities issued by the Central and State governments to generate optimal risk-free returns.
| Returns |
1 - Year Returns |
3 - Year Returns |
5 - Year Returns |
| Fund |
9.69% |
10.17% |
9.52% |
| Benchmark |
9.79% |
9.77% |
9.08% |
{Data as on May 12, 2020; Source: Value Research}
- This is one of the safest debt instruments in terms of credit risks, as it is highly unlikely for a government to default on the payment of interest and principal of issued bonds.
- Investors who wish to invest with the motive of long term wealth creation can consider investing in this fund.
2. SBI Magnum Medium Duration
It is a debt fund that predominantly invests in debt securities to generate decent returns in the medium term investment horizon, coupled with a moderate level of liquidity. The average maturity period of the fund is 3-4 years.
| Returns |
1 - Year Returns |
3 - Year Returns |
5 - Year Returns |
| Fund |
9.13% |
10.09% |
10.13% |
| Benchmark |
7.13% |
7.35% |
7.42% |
{Data as on May 12, 2020; Source: Value Research}
- The fund invests in short term debt securities to ensure regular accrual payment, and medium duration securities for substantial capital appreciation.
- Well-diversified credit risk and suitable exporate to medium term securities makes it one of the best medium duration debt funds to invest in 2020.
3. Kotak Credit Risk Fund
An open-ended debt scheme that majorly invests in debt and money market instruments to deliver significant returns by taking a little high credit risk.
| Returns |
1 - Year Returns |
3 - Year Returns |
5 - Year Returns |
| Fund |
6.96% |
8.61% |
8.77% |
| Benchmark |
4.22% |
4.44% |
4.75% |
{Data as on May 12, 2020; Source: Value Research}
- The fund follows an investment strategy that focuses on selling securities with low-yield, and buying securities with high-yield.
- This fund is apt for investors who have a moderate risk appetite as the underlying securities carry a little high credit risk.
4. ICICI Prudential Ultra Short Term Fund
It is an open-ended debt scheme that predominantly invests in instruments with the maturity period ranging from 3 months to 6 months. The scheme has limited, if not zero, allocation to government securities so as to reduce interest rate volatility which might affect the fund returns.
| Returns |
1 - Year Returns |
3 - Year Returns |
5 - Year Returns |
| Fund |
7.98% |
8.97% |
8.89% |
| Benchmark |
4.22% |
4.44% |
4.75% |
{Data as on May 12, 2020; Source: Value Research}
- The fund follows a meticulous selection procedure to pick securities that have a high credit rating, and has the ability to enhance yield and effectively mitigate associated risks. The objective is to deliver quality returns across all interest rate cycles.
- The investment strategy followed by the fund focuses on holding the underlying corporate bonds till its maturity and generates regular accrual income from the same.
5. Franklin India Liquid Fund
It is a debt fund that primarily invests in debt instruments with a maximum maturity of 90 days, with the objective of generating optimal returns coupled with high liquidity..
| Returns |
1 - Year Returns |
3 - Year Returns |
5 - Year Returns |
| Fund |
6.99% |
7.30% |
7.88% |
| Benchmark |
4.22% |
4.44% |
4.75% |
{Data as on May 12, 2020; Source: Value Research}
- This fund is suitable for investors who want to invest their emergency/surplus funds with the motive of earning better returns on them as compared to those provided by savings bank accounts.
- Since the fund invests in a mix of highly rated short term debt securities and money market instruments, the overall risk exposure of the portfolio is considerably low.
