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5 Top-Rated SBI Debt Mutual Fund Investments for Better Returns Than Bank FDs

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Debt and money market instruments are invested in by SBI Debt Funds. These funds provide investors with a steady stream of income as well as capital protection. These funds are best for conservative investors with a long-term investment horizon.

 

SBI Mutual Fund has some of India's best-performing debt funds. The best SBI schemes have been chosen based on their past performance, AUM, and other factors. Investors who want to invest can do so in these funds and benefit from the debt markets to create a stable income.

A debt mutual fund invests a large amount of your money in fixed-income securities such as government bonds, debentures, corporate bonds, and other money-market instruments. Debt mutual funds reduce the risk element for investors significantly by investing in such outlets. This is a relatively safe investment option that may help you build wealth.

SBI Magnum Medium Duration Fund Direct

SBI Magnum Medium Duration Fund Direct

SBI Magnum Medium Duration Fund Direct returns have been 6.67 percent during the last year. Since its debut, it has returned an average of 9.98 percent every year.

The fund has a 0.68 percent expense ratio, and you can start investing in it with a minimum of Rs 1000. The fund's top holdings are in Reserve Bank of India, State Bank of India, Mahindra Rural Housing Finance Ltd., Tata Realty and Infrastructure Ltd., Flometallic India Pvt. Ltd. The AUM of SBI Magnum Medium Duration Fund is Rs 9,412 Crs.

ValueResearch Online and Morningstar have given the fund a 5-star rating. The most significant benefit of investing in the SBI Magnum Medium Duration Fund is that you will have exposure to a portfolio that includes debt and money market securities. This fund is appropriate for investors with a three- to the four-year investment horizon. On the other hand, this cannot be compared to the returns of an equity fund during a market peak.

SBI Banking and PSU Fund
 

SBI Banking and PSU Fund

As of July 17, 2021, the fund had Rs 14,078 crore in assets under management (AUM) and a NAV of Rs 2,597.98. The fund has a 5 Star Rating from Morningstar. The 1-year returns on SBI Banking and PSU Fund Direct-Growth are 4.16 percent. It has returned an average of 8.77 percent per year since its inception. The fund's top holdings are in Oil & Natural Gas Corpn. Ltd., State Bank of India, National Housing Bank, Rural Electrification Corpn. Ltd., Axis Bank Ltd..

Banking and public sector undertakings (PSU) funds primarily invest in bonds issued by banks, PSUs, and public financial institutions. They are appropriate for a two- to three-year investment horizon, as well as a fixed-income proportion in a longer-term portfolio. You can expect larger returns than you would get from a bank fixed deposit. The fund's expense ratio is 0.34 percent, which is comparable to that of most other Banking and Public Sector Union funds.

SBI Magnum Income Fund

SBI Magnum Income Fund

Medium to long-term debt funds mostly invests in bonds as they attempt to earn higher returns than similar-term bank fixed deposits. These funds have a low chance of losing money throughout the specified time period, but they may suffer some volatility in response to interest rate changes. The last one-year growth returns on the SBI Magnum Income Direct Plan were 5.76 percent. It has had an average yearly return of 8.85% since its inception. The fund's top holdings are in Reserve Bank of India, Indian Bank, GOI, Embassy Office Parks REIT, Tata Realty and Infrastructure Ltd. SBI Magnum Income Fund's direct plan has an expense ratio of 0.8 percent. ValueResearch Online and Morningstar have given the fund a 5-star rating.

SBI Savings Fund

SBI Savings Fund

It has an AUM of Rs 22,380.83 crores, and the most recent NAV declared as of 17 July 2021 is 34.591 crores. The fund has received a 4-star rating from ValueResearch and a 5-star rating from Morningstar. . The fund charges a 0.75 percent cost ratio, which is more than most other Money Market funds. GOI, Reserve Bank of India, Axis Bank Ltd., National Bank For Agriculture & Rural Development, and RBL Bank Ltd. are among the fund's top holdings. It has had an average yearly return of 7.25 percent since its inception.

Money Market Debt Funds invest in short-term bonds with a one-year maturity. They are designed to earn somewhat higher returns than a bank account or a short-term fixed deposit. These funds have a minimal chance of losing money throughout the specified duration, but they do not guarantee returns or capital protection.

SBI Credit Risk Fund

SBI Credit Risk Fund

Credit risk funds primarily invest in bonds with credit ratings of AA or lower from credit rating agencies. The lower grade suggests that there is a greater chance that these bonds may fail to return investors' money. As a result, these funds are the riskiest of the debt fund categories. However, they make up for the increased risk with a bigger return potential, as these bonds pay higher interest rates than the highest-rated bonds. The fund has received a 4-star rating from ValueResearch and a 5-star rating from Morningstar.

SBI Credit Risk Fund-Growth is a medium-sized fund in its category, with assets under management (AUM) of 3,473 crores. The fund's expense ratio is 1.54 percent, which is greater than the expense ratios charged by most other Credit Risk funds.

SBI Credit Risk Fund's 1-year growth returns are 6.98 percent. It has had an average yearly return of 7.64 percent since its inception. GOI, IndInfravit Trust, Tata International Ltd., Flometallic India Pvt. Ltd., and Godrej Industries Ltd. are among the fund's top holdings.

Who Should Invest in Debt Funds?

Who Should Invest in Debt Funds?

Debt funds are great for investors who want a steady stream of income but don't want to take any risks. Debt funds are less riskier than equities funds since they are less volatile. Debt mutual funds may be a better alternative if you've been saving in traditional fixed income products like Term Deposits and are looking for consistent returns with low volatility. They help you achieve your financial goals in a more tax-efficient manner and hence earn greater returns.

Debt funds are similar to other mutual fund schemes in that they invest in stocks and bonds. They do, however, outperform stock mutual funds in terms of safety. When the market collapses, for example, the NAVs of your stock funds fall sharply, whereas the NAVs of your debt funds do not fall as sharply. However, debt funds can only provide moderate returns, whereas high-risk equity funds can provide significant returns over a longer time horizon.

The difficulty in suggesting mutual fund schemes is that no single mutual fund scheme can maintain a 5-star rating for an extended length of time. As a result, a mutual fund strategy that appears to be profitable now may not be profitable tomorrow. Kindly be aware that the Nifty is near 16,000 points, a new high, indicating that the markets are not only pricey, but extremely overpriced.

Disclaimer

Disclaimer

Market risks apply to mutual fund investments; read all scheme-related papers carefully. The NAVs of the schemes may rise or fall in response to variables and pressures impacting the securities market, such as interest rate variations. The opinions and investment information offered by Greynium Information Technologies' authors and employees should not be taken as investment advice to purchase or sell stocks, gold, currency, or other commodities. Investors should not make any trading or investment decisions solely on the basis of information presented on GoodReturns.in.

Read more about: mutual funds debt mutual funds
Story first published: Sunday, July 18, 2021, 16:18 [IST]
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