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4 Best Debt Mutual Funds For Long-Term, Rated By Crisil, Should You Invest In Debt Fund?

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Debt mutual funds are those funds that will invest in government corporate bonds/securities etc.

 

Long Duration debt mutual funds

Long Duration debt mutual funds

The Long Duration debt mutual funds will pick the bonds/debt with an average maturity period of is around/more than 7 years. These funds offer better security in terms of returns than the equity focussed mutual funds. However, debt mutual funds usually generate lesser upside than equity funds. On the other hand, the long-duration funds are a bit sensitive because the interest rates on the same can vary upon time. So, the returns range will change.

Investors who are interested to diversify their portfolios in various sectors to mitigate risk can check these kinds of funds. Investors, with a moderate risk appetite, generally choose the debt funds. People also compare the debt funds with bank or post office FDs, however, in the present situation the FDs are providing much lesser upside than the debt mutual funds both in the long-term and short-term.

Here are 4 long-term debt mutual funds that have been discussed, which are rated by research firm Crisil.

1. Tata Income Fund - D (G)
 

1. Tata Income Fund - D (G)

The Tata Income Fund - D (G) has been rated 2 star by reputed research agency Crisil. This fund's Fund Size is Rs. 54.08 crore. In the last 5 years, this fund has given 38.91% (absolute) return, in the last 3 years it has given 27.88% (absolute) return, in the last 2 years it has given 15.66% (absolute) return, and it has given 3.00% (absolute) return in the last 1 year. The expense ratio of this fund is 1.28%. In the last 5 years, this fund's SIP (absolute) return stood at 20.16%. The NAV, till January 3, stood at Rs. 71.98.

This fund invests 19.72% in government-backed bonds and 65.04% in NCD and Bonds.

2. IDFC Bond Fund - LTP - D (G)

2. IDFC Bond Fund - LTP - D (G)

The IDFC Bond Fund - LTP - D (G) has been rated 5 star by Crisil. This fund's fund size is Rs. 639.08 crore. In the last 5 years, this fund has given 41.75% (absolute) return, in the last 3 years it has given 27.79% (absolute) return, in the last 2 years it has given 14.10% (absolute) return, and it has given 1.87% (absolute) return in the last 1 year. The expense ratio of this fund is 1.32%. In the last 5 years, this fund's SIP (absolute) return stood at 20.55%. The NAV, till January 3, stood at Rs. 58.29.

This fund invests 30.82% in government-backed bonds.

3. Nippon India Income Fund - Direct Plan - Growth

3. Nippon India Income Fund - Direct Plan - Growth

The Nippon India Income Fund - Direct Plan-Growth has been rated 3 star by Crisil. This fund's fund size is Rs. 266.02 crore. In the last 5 years, this fund has given 40.24% (absolute) return, in the last 3 years it has given 28.49% (absolute) return, in the last 2 years it has given 13.75% (absolute) return, and it has given 2.36% (absolute) return in the last 1 year. The expense ratio of this fund is 0.58%. In the last 5 years, this fund's SIP (absolute) return stood at 20.84%. The NAV, till January 3, stood at Rs. 78.09.

This fund invests 69.56% in government-backed bonds and 9.36% in NCD and Bonds.

4. Canara Robeco Income Fund - Direct Plan-Growth Plan

4. Canara Robeco Income Fund - Direct Plan-Growth Plan

The Canara Robeco Income Fund - Direct Plan-Growth Plan has been rated with 3 star by Crisil. This fund's fund size is Rs. 145.97 crore. In the last 5 years, this fund has given 40.28% (absolute) return, in the last 3 years it has given 28.13% (absolute) return, in the last 2 years it has given 14.43% (absolute) return, and it has given 3.06% (absolute) return in the last 1 year. The expense ratio of this fund is 0.76%. In the last 5 years, this fund's SIP (absolute) return stood at 20.43%. The NAV, till January 3, stood at Rs. 49.93.

This fund invests 58.58% in government-backed bonds and 21.68% in NCD and Bonds.

Performance comparison

Performance comparison

In terms of Crisil rating, the IDFC Bond Fund - LTP - D (G) has been given the top rating. The IDFC Bond Fund - LTP (G) fund has the highest fund size among the 4 above-mentioned funds. So, if you are having a less risk appetite, then you can check the funds having higher fund size, as it will secure better liquidity. On the other hand, a lower expense ratio can increase your yield. However, if you are considering the long-term funds, then you can check the portfolio of the Canara Robeco Income Fund - Direct Plan-Growth Plan, as it has given the highest absolute returns in the last 5 years. On the other hand, the Nippon India Income Fund - Direct Plan-Growth has given the highest SIP return in the last 5 years, among these funds.

However, the major reason behind investing in a debt fund is getting a better assurance from the investment with higher interest rates than FDs or other similar investment tools. Hence, before investing in a debt fund, you must be assured about your risk appetite and financial goals. Additionally, the debt mutual funds will offer you better tax efficiency as you will have to pay the taxes only when you will redeem your money.

(Also read: What Is Debt Mutual Fund, And How To Select? Should You Invest In 2022?)

Disclaimer

Disclaimer

Investing in debt funds poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the research firm are not liable for any losses caused as a result of decisions based on the article.

Read more about: debt fund mutual fund sip profit fd
Story first published: Tuesday, January 4, 2022, 13:45 [IST]
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