What are the best debt funds in India?

Debt mutual funds are gaining popularity as retail investors realise the superior returns that debt mutual funds are generating over traditional investment options like fixed deposits, PPF, EPF, Post office savings etc. While debt mutual funds are relatively safer than equity mutual funds, investors should analyse their risk profile and investment objective before investing in the best debt funds.

Debt funds invest in government securities, corporate and government bonds, money market instruments, etc. Debt funds invest a minimum of 65% of its investible corpus in these debt or debt related instruments.

The rest of the allocation is done in other assets that helps investors to take maximum advantage from diversification. Debt funds offer a multitude of benefits like stable returns, regular income, fits for both short term and long term investment horizon, etc.

Here are the best debt funds in India for 2021

Investment Period Schemes MF Rating Strength 1 Yr 3 Yr 5 Yr
Up to 90 days Axis Liquid Fund - Regular Growth Strength 4.31% 6.14% 6.55%
Icici Prudential Liquid Fund - Growth Strength 4.31% 6.10% 6.52%
91 days to 6 months Aditya Birla Sun Life Savings Fund - Growth Strength 7.01% 7.69% 7.92%
Icici Prudential Ultra Short Term Fund - Growth Strength 6.55% 7.48% 7.86%
6 months to 1 year L&t Low Duration Fund - Growth Strength 6.89% 6.18% 7.34%
Icici Prudential Ultra Short Term Fund - Growth Strength 6.38% 4.75% 5.69%
1 year to 3 years Hdfc Short Term Debt Fund - Regular Plan - Growth Strength 10.38% 9.14% 8.67%
Icici Prudential Short Term Fund - Growth Option Strength 10.53% 8.60% 8.61%
3 years & above Idfc Government Securities Fund- Investment Plan-regular Plan-growth Strength 13.75% 11.26% 10.22%
Sbi Corporate Bond Fund - Regular Plan Growth Strength 10.32% - -

* The above ranking is as on 23rd December 2020. To check the latest data and ranking of all mutual funds click here.

Note: Sbi Corporate Bond Fund - Regular Plan Growth is relatively new in the markets. Hence, not enough data is available to calculate its returns. Also, know the right time to invest in these right funds so that you avoid buying overvalued funds. For more details, visit RankMF.com

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Where should one invest with an investment period of up to 3 months?
Liquid funds can be the best option for such investors that comes with a maturity of up to 91 days.
Debt funds can be a better option than other traditional investment options?
Debt funds may yield better returns than FDs and other traditional options. They also don’t have any lock-in period unlike FDs and other options.
Debt funds are suited for long term or short term?
Debt funds fit in for all types of investors - long term and short term investors.

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