3 Debt Funds That Have Given Up to 13% Returns In 1-Year

The last 1-year returns from the equity markets has been dismal, while interest rates have also collapsed. Investors have got very little returns from almost all asset classes, except gold. However, there are some debt funds/bond funds that have done very well and have generated good returns in the last 1-year. Here are 3 such debt funds:

1. What are debt funds/bond funds?

Debt funds or bond funds or are medium to long duration funds, which invest primarily in debt and bonds which have maturity over a longer period of say 5 to 7 years' time. Their duration helps them earn better returns, though we must emphasize that capital is never guaranteed or secure. Here are a few bond funds or debt that have generated excellent returns in the last 1-year.

SBI Magnum Income Fund

SBI Magnum Income Fund is a mutual fund debt scheme that has generated a superlative return of 13.60 per cent in the last 1-year. Value Research has accorded the fund a 5-star rating.

The fund was launched way back in 1998 and is amongst the oldest debt funds in the country. The current net asset value of the fund is around the Rs 53 mark.

The portfolio of the fund is extremely strong with almost 35 per cent parked in government of India securities. These type of bond funds, which have heavy investment in good quality paper are relatively better off, than funds that invest in securities where interest rates are higher, but, are not safe.

 

2. Nippon India Income Fund

This is another debt fund that has generated good returns over the last 1 year and also a period of 3 to 5 years. The Fund has generated a returns of 12 per cent over 1 year, 8.01 per cent over three years and 9.09 per cent over a 5-year period.

Almost 52 per cent of the funds are invested in government of India securities. Apart from this it also holds debentures in REC and Power Finance, which again are government owned entities.

The portfolio is thus relatively secure. One can invest through the SIP route, where the monthly investment can be as low as Rs 100. Good for generating returns over the more longer term.

 

3. ICICI Prudential Bond Fund

This fund has given investors a return of 12.80 per cent in the last 1-year. The returns over a longer term time frame of 3-years has been 8 per cent. The fund was launched in Aug 2008. One can invest in this bond fund by way of SIP, with a minimum investment of Rs 1,000 each year. The portfolio of ICICI Prudential Bond Fund is relatively secure with holdings in many government owned institutions like debentures of HUDCO, NCDs of National Highway Authority etc. It also has some holdings in SBI NCDs.

About the author:

Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.