Nowadays, your income alone cannot guarantee your financial security of. No matter how well you earn, only a systematic investment can grow your money to meet the major milestones of life. In recent times, no other investment options could fetch you as high a return as mutual fund investments. Based on the amount of risk factor associated with the fund investments, there can be three categories of mutual fund investments. They are:

  • Equity Fund Investments
  • Mixed Fund Investments
  • Debt Fund Investments

Equity fund investments have a high risk of loss but at the same time have the potential of yielding great returns. Mixed fund investments can also be called as balanced funds as they invest a portion of your invested amount in equities and the other portion in securities or fixed income instruments. A risk factor is lower than that of equities. While debt fund investments offer you the safest form of fixed income investment opportunity. These funds have the lowest risk of loss such as in HDFC debt funds.

What Does Debt Mutual Fund Mean?

Debt mutual fund is a type of mutual fund investment which invests your money in fixed return yielding securities such as government treasury bills and bonds. In debt mutual fund, investments can be made for the long term, medium term or for a short period. You can choose the tenure of investment according to your requirement. Various ICICI debt mutual funds and HDFC mutual fund plans present you some of the best debt fund investment options in India. These types of investment plans are the most suitable corpus building instruments for individuals who do have risk appetite and intend to invest in safer devices.

Who are Suitable Investors for Debt Funds?

The investors who want to avoid risk factors in the investments but wish to grow corpus are the most suitable investors of debt funds. These are called conservative investors who want their investments subjected to safer and lesser volatile investments. In most cases, short to medium tenure debt funds are best mutual funds to invest in India and preferred by the investors. For instance,short-term fund offered by ICICI debt mutual funds are best for those who wish for liquid funds. These short-term funds provide great returns along with any time withdrawal facility to the investors. If you are fine with the rate of return interest fluctuation, you may find greater return value than short-term funds by investing in medium length debt mutual funds of HDFC debt funds or HDFC debt mutual fund plans. These medium-term debt funds can yield better returns than 5yr tax saving bank deposit schemes.

10 Best Debt Mutual Funds in India

You can make the tremendousgrowth of your invested fund by investing in debt mutual funds this year without even bothering about the risk of loss. The current scenario of debt funds shows great 1-month annualized return rates. Double-digit returns have been seen on annual one-month returns. This double-digit return even touched 57 percent. ‘Indiabulls Income Fund’ has given 57 percent which is the highest percentage of annualized return so far. ICICI debt mutual funds are also not lagging much behind. ‘ICICI Pru Income Fund’ has offered 51.66 percent of return rate while ‘Reliance Income Fund’ has offered 44 percent and HDFC debt mutual fund plans offer 40 percent return rate. Check out the top 10 debt mutual funds in India that could grow your corpus in no time:

  1. ‘Indiabulls Income Fund’ – This is a high yielding debt mutual fund which can offer you a medium tenure and open-ended investment instrument for conservative investors. The primary objective of this income fund is to create a sturdy source of income by investing the fund into fixed earning securities without posing a highrisk to your invested amount. The maximum duration of investment ranges between 3yrs to 4yrs ensuring return percentage as high as 57 percent.T he similar facility can be availed with medium tenure ICICI debt mutual funds.
  2. ‘HDFC Income Fund’ – This income fund HDFC is a medium tenure,andopen-ended investment scheme which belongs to the category of HDFC debt mutual fund plans. In this scheme, the invested amount goes in securities which pose the fund to much lower risk. The fund promises high return as per the current rate,e., 40.04 percent. You can stay invested for 4yrs to 7yrs to gain maximum benefit from this high yielding HDFC debt mutual fund plans.
  3. ‘Reliance Income Fund’ – This income yielding investment instrument aims at providing the investors sturdy return from their invested amount while posing a moderate risk factor.This is a debt mutual fund scheme which offers a very high rate of annualized return just as ICICI debt mutual funds. The current return percentage of this income fund is 44 percent, which is recorded as the third highest return rate this financial year so far. You can invest your money for 4yrs to 7yrs just like HDFC debt mutual fund plans. It is, too, a medium periodopen-ended fund investment scheme.
  4. ‘ICICI Pru Income Fund’–This is among one of the best ICICI debt mutual funds. This fund investment device aims at raising your corpus through safe investment options like through fixed income yielding securities. It has offered a very high return rate,e., 51.66 percent this year.ICICI debt mutual funds like ‘ICICI Pru Income’ allow capital appreciation by maintaining an optimal balance between liquidity, return and safety of the invested amount.
  5. ‘Aditya Birla SL Income Plus’ – This is also a high income yielding mutual debt fund which aims at corpus building through low-risk investment instruments. This fund investment option can be availed both as a medium tenure and long tenure open-ended Just as HDFC debt mutual fund plans and ICICI debt mutual funds this scheme offers highone month return percentage of 40.54 percent.
  6. ‘Canara Robeco Dynamic Bond fund’–An open-ended debt scheme, this dynamic bond fund is yet another well-performing debt fund investment option like ICICI debt mutual funds and HDFC debt mutual fund plans. However, this offers a long tenure investment opportunity which promises high yield one month rate of return,e., 44.07 percent. The fund invests in money market securities.
  7. ‘HSBC Debt Fund’ – This is another debt mutual fund investment which aims at creating wealth by investing in secured investment devices such as securities. It offers medium as well as long tenure investment options like HDFC debt funds and ICICI debt mutual funds. It imposes moderate risk factor to the invested amount. It offers high one-month rate f return which is lesser than ICICI debt mutual funds interest rate but higher than HDFC debt funds.
  8. ‘L&T Flexi Bond Fund’ –This is a dynamic debt mutual fund which aims at providing a moderate return by investing in fixed income yielding securities. This poses a lower risk of loss to the invested amount of money just as in HDFC debt mutual fund plans and ICICI debt mutual funds. The scheme allows the investors to stay invested for 4yrs. It is a good debt investment instrument for a mediumperiod. The plan shows a high percentage of 1 month of an annualized rate of return,e., 43.96 percent which is more than the HDFC debt funds.
  9. ‘Escorts Income Plan’–The primary objective of the scheme is to produce a sturdy source of current income by investing the money in safe investment devices such as money market debt securities. In recent times the fund shows a high 1month annualized rate of return that is less than the ICICI debt mutual funds but slightly greater than HDFC debt mutual fund plans. This plan can be considered for low-risk
  10. ‘Reliance Dynamic Bond’ – This scheme is a dynamic debt mutual fund that provides an open-ended investment instrument. One of the main objectives of the scheme is to build corpus through various investments in securities like money market and debt.

How to Choose Debt Mutual Funds?

In choosing debt mutual fund investment, there are certain aspects that one needs to remember. Following are the factors that should be judged before picking up a debt fund:

  • The high return debt fund plans might show a double-digit rate of 1month annualized return for a limited period. So, it is recommended to stick to short tenure debt fund schemes. The rates may lower soon.
  • It is wise to check out the history of the debt fund you intend to invest your sum. Mutual fund plans like HDFC debt funds perform consistently in the investment industry. Do not choose the fund option only considering the present rate of return. Knowing the fund history helps you choose the right fund.
  • While checking the fund history, you should also consider checking the return yielded by the debt fund for short, medium and long tenure investment options. All fund investment companies may not offer a different length of tenures on debt fund as in ICICI debt mutual funds.
  • Another important factor to be judged before making a debt investment is to check the expense ratio of the fund. Always opt for the fund investment which shows lesser expense ratio and higher performance background. Lower the expense ratio of the fund, higher returns you earn.