Floater funds have been seeing a lot of interest of late and the former is on account of anticipations around interest rate hike, which tends to increase the prospects of this debt fund category.
So, here are some of the funds from the space based on 5-year returns:
1. HDFC Floating Rate Fund-Direct Plan:
The fund invests primarily in bonds that keep seeing change in interest rate in line with prevailing interest rate in the economy. In existence since the year 2013, the fund has offered a return of 8.34% and its benchmark is CRISIL liquid fund index. Assets of the fund as on July 31 is Rs. 20,211 crore. Expense ratio is 0.23%.
SIP in the fund can be started for Rs. 500 and in a span of 5 years, Rs. 10000 monthly SIP has grown in value to Rs. 7.28 lakh.
Top investments of the fund include floating rate debt instruments, fixed rate instruments, swapped for floating rate returns and money market instruments.
2. ICICI Prudential Floating Interest Fund - Direct Plan – Growth:
These fund show less of volatility in response to changing interest rate dynamics. Since its existence the fund has yielded returns of over 8 percent. Benchmark of the fund is CRISIL Low Duration Debt fund. Assets under the fund are over Rs. 12000 crore and the fund as per the mutual fund risk-o-meter carries a moderate risk.
SIP in the fund can be initiated for Rs. 100 and in 5-years time monthly SIP of Rs. 10000 is now worth Rs. 7.39 lakh.
The fund's investments are deployed into GoI bonds, floating rate bond,NCDs, state development loans, zero coupon bonds etc.
3. Nippon India Floating Rate fund -Direct Plan:
The fund since its existence 2013 has been providing 8.59% and is low to moderate on risk. The fund asset size is Rs. 17,587 crore. Benchmark of the fund is CRISIL Short term bond Index. Expense ratio of the fund is 0.24% as on July 31, 2021.
SIP in the fund can be initiated with Rs. 100 and the fund's portfolio includes investments across GOI, CD, Treasury Bill, NCD and Bonds, and Commercial Papers.
Top 3 Floater Funds Based On 5-Year Returns
|Floater funds||Rating||5-Year Annualised Return||5-Yr SIP Annualised return|
|HDFC Floating Rate Fund-Direct Plan||CRISIL 3Star and Morning Star 5-Star||7.71%||7.71%|
|ICICI Prudential Floating Interest Fund - Direct Plan - Growth||CRISIL 1 Star rated and||8.27%||8.3%|
|Nippon India Floating Rate fund -Direct Plan||3-Star CRISIL and 5-Star Morning Star||7.98%||8.31%|
So, investors who want to tap on the prospects of rising interest rates in the economy can bet on these funds which as against other debt funds benefit from rising interest rates. Nonetheless, here the data is collated just for the purpose of information.