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Corporate Bond Mutual Funds

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100 per day can get you 10 Lakh*
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*10 lakh projection assumes 100/day for 11 years at an assumed 15% p.a.; actual returns will vary with the market.

What are Corporate Bond Funds?

Corporate bond funds belong to the debt mutual fund category and invest a minimum of 80% of their amount/corpus in corporate bonds. These funds primarily focus on top-rated instruments rated AA+ and above, which offer exposure to established companies while targeting relatively stable yields. Additionally, these funds are open-ended and provide liquidity, allowing investors to invest or withdraw capital at their convenience.

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/Month
10010L
Years
1Y40Y
%
1%30%
% /Year
0%25%
Estimated Returns1.99 Cr

How do corporate bond funds work?

These funds operate in the share market just like any standard mutual fund.

  • Money Pooling: The fund manager pools money from the various investors and invests it according to the fund's strategy.
  • Selecting Bonds: To maximise total returns, fund managers conduct thorough research to choose corporate bonds that typically carry a rating of AA+ or higher.
  • Interest Income: Bond issuers pay regular interest (a percentage of face value), providing passive income.

Who should invest in Corporate Bond Funds?

Corporate bond funds are suitable for investors:

  • Seeking low credit and interest rate risk: Those with a lower risk tolerance who prefer to avoid stock market volatility may find corporate bond funds better aligned with their investment goals.
  • Who want to diversify their portfolio: Individuals looking to spread risk across their debt holdings can incorporate high-quality corporate bond funds to spread risk.

Before investing in any corporate bond fund, you should evaluate your risk tolerance and align the investment with your financial goals.

How to invest in a corporate bond fund via Paisabazaar?

You can use Paisabazaar to invest in a corporate bond fund. You just have to follow these steps: 

  • Step 1: Create an account or log in to the Paisabazaar app.
  • Step 2: On the dashboard, click on the ‘Mutual Fund’ option.
  • Step 3: Choose mutual funds of your choice.
  • Step 4: Select the mode of investment.
  • Step 5: Complete the KYC procedure to continue your investing journey.

Tax Implications on Corporate Bonds

The taxability of corporate bond mutual funds remains the same as debt funds.

Holding Period of Fund Long Term Capital Gains (LTCG)  Short Term Capital Gains (STCG)
If mutual fund units are bought before April 1, 2023 Hold for more than 24 months and your gains qualify as LTCG at a flat 12.5%.  Hold for 24 months or less and it's STCG at your slab rate.
If mutual fund units bought on or after 1 April 2023
  • All gains, regardless of the holding period, are treated as STCG and taxed at your income tax slab rate. 
  • There is no indexation and no long-term benefit.

 

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Disclaimer

  • Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund, or designing a portfolio that suits your needs.
  • Paisabazaar Marketing and Consulting Private Limited is an AMFI registered Mutual Fund Distributor - ARN-336712 | ARN Validity period: 08 Aug 2025 to 07 Aug 2028
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