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4 Best High-Rated Debt Mutual Funds Better Than PPF

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When it comes to receiving strong capital gains and a steady stream of income, debt mutual funds are the best to bet. Debt mutual funds, which invest in fixed-income assets such as corporate and government bonds, corporate debt instruments, money market instruments and so on, might be suitable for risk-averse investors looking for a steady revenue stream. Debt funds are less risky than equity funds since they are less influenced by market behaviour. Debt Mutual Funds may be a better alternative if you've been investing in traditional debt instruments like the Public Provident Fund (PPF) and are seeking consistent returns with low risk-appetite. Let's take a closer look at the five best-performing debt mutual funds that outperform PPF.

 

HDFC Credit Risk Debt Fund Direct Growth

HDFC Credit Risk Debt Fund Direct Growth

HDFC Credit Risk Debt Fund Direct-Growth is a mutual fund scheme issued by HDFC Mutual Fund. The fund's expense ratio is 1.05 per cent, which is higher than the expense ratio charged by most other Credit Risk funds. The 1-year returns for HDFC Credit Risk Debt Fund Direct-Growth are 10.85 per cent. The fund presently has Rs 7,631 crore funds under management or asset under management (AUM) and a NAV of Rs 19.71 as of July 2, 2021. Tata Motors Ltd., Punjab National Bank, IndInfravit Trust, Bharti Hexacom Ltd., and Pipeline Infrastructure (India) Pvt. Ltd. are among the fund's top holdings. One can start SIP in this fund with a minimum amount of Rs 500. If you redeem units worth more than 15% of your contribution within 12 months, you'll be charged 1%, and if you redeem after 12 months but within 18 months, you'll be charged 0.50 per cent as an exit load.

ICICI Prudential Credit Risk Fund Direct Plan Growth
 

ICICI Prudential Credit Risk Fund Direct Plan Growth

The recent one-year growth returns for the ICICI Prudential Credit Risk Fund Direct Plan were 9.35 per cent. According to Value Research, it has provided an average yearly return of 9.48 per cent since its inception. The fund presently has Rs 7,443 crore as an asset under management (AUM) and a NAV of Rs 25.92 as of July 2, 2021. The fund's expense ratio is 0.89 per cent, which is identical to the expense ratio charged by other Credit Risk funds. GOI, Adarsh Advisory Services Pvt. Ltd., Prestige Estates Projects Ltd., Indusind Bank Ltd., and Aditya Birla Fashion and Retail Ltd. are among the fund's top holdings. Minimum SIP can be started with a minimum amount of Rs 500. If more than 10% of units are redeemed or transferred within one year, an exit load of 1% is levied.

SBI Magnum Medium Duration Fund Direct Growth

SBI Magnum Medium Duration Fund Direct Growth

This Medium Duration Fund is launched by SBI Mutual Fund. SBI Magnum Medium Duration Fund Direct has a one-year growth rate of 7.12%. According to Value Research, it has provided an average yearly return of 9.99 per cent since its debut. The fund has a 0.68 per cent cost ratio, which is quite higher than other Medium Duration funds in the category. Reserve Bank of India, State Bank of India, Mahindra Rural Housing Finance Ltd., Tata Realty and Infrastructure Ltd., and Indian Bank are among the fund's top holdings. The fund presently has Rs 9,122 crore as an asset under management (AUM) and a NAV of Rs 42.25 as of July 2, 2021. An exit load of 1.50 per cent will be imposed on units worth more than 8% of the investment if they are redeemed within 12 months. With a minimum investment of Rs 500, one can commence a monthly SIP.

ICICI Prudential All Seasons Bond Fund Direct Plan Growth

ICICI Prudential All Seasons Bond Fund Direct Plan Growth

ICICI Prudential All Seasons Bond Fund Direct Plan-Growth is a Dynamic Bond mutual fund scheme launched by ICICI Prudential Mutual Fund. ICICI Prudential All Seasons Bond Fund Direct Plan-Growth is a medium-sized bond fund with Rs 5,793 crores as assets under management (AUM) and the current NAV is Rs 29.77 as of July 2, 2021. The growth returns of the ICICI Prudential All Seasons Bond Fund Direct Plan during the last year have been 7.10 per cent. According to Value Research, it has generated an average yearly return of 10.72 per cent since its inception. Uttar Pradesh State, GOI, Embassy Office Parks REIT, National Bank For Agriculture & Rural Development, and Godrej Industries Ltd. are among the fund's top 5 holdings. If redeemed within one month of deposit, there is a 0.25 per cent exit load charged by the fund.

Best Debt Mutual Funds

Best Debt Mutual Funds

Here're the top-performing debt mutual funds rated 5 star by Value Research.

Debt Funds1 Year Returns3 Year Returns5 Year ReturnsRating by Value Research
HDFC Credit Risk Debt Fund Direct Growth 10.85% 9.60% 9.01% 5 star
ICICI Prudential Credit Risk Fund Direct Plan Growth 9.35% 9.51% 9.22% 5 star
SBI Magnum Medium Duration Fund Direct Growth 7.12% 10.17% 9.81% 5 star
ICICI Prudential All Seasons Bond Fund Direct Plan Growth 7.10% 10.10% 9.66% 5 star
Source: Value Research

Should you invest?

Should you invest?

If we look at the historical returns of debt mutual funds, they have given pretty decent returns and have outperformed not only PPF but also other debt instruments like tax-saving fixed deposits. Undoubtedly, debt mutual funds are preferred as the secure investment bet when compared to equity mutual funds. But the returns are market-linked and thus known as a volatile instrument that investors must need to consider. As a result, interest rate risk and credit risk is the key consideration when investing in top-performing debt mutual funds. Conservative investors who do not want to risk their investment by investing in equity funds can choose the debt mutual funds mentioned above as a substitute for PPF, only to gain higher returns. For risk-averse investors, both debt mutual funds and PPF are excellent.

PPF strives to provide secure returns, in the form of interest income and annually compounding of the principal amount, whilst debt mutual funds can optimise your investment returns amid the current low-interest-rate regime. Diversifying your portfolio with debt mutual funds may be a good option if you want to achieve better market-linked returns in a short period of time, whereas PPF can be a solid pick for a long-term investment objective.

Disclaimer

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in

Read more about: mutual funds ppf
Story first published: Saturday, July 3, 2021, 18:03 [IST]
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