Best performing debt funds

Best performing debt funds

Shashikant Singh
/ Categories: Mutual Fund

There is turmoil in the debt funds after Franklin Templeton India closed six of its debt mutual funds. This created panic among many investors, who are pondering over the fact whether it’s safe to invest in debt mutual funds or not.

One of the main reasons for such low confidence among investors in debt mutual fund is a series of credit events that have spooked debt market. It all started with IL & FS crisis in the month of September 2018, which highlighted the soft belly of debt mutual funds. Post IL & FS other credit events such as fall of DHFL, the problem with RDAG and Indiabulls Housing finance made the situation even worse. COVID-19 and lockdown proved to be a further dampener to the confidence of investors.

Nonetheless, if we analyse the returns of the debt funds, we see that there are only two categories of funds that have generated a negative return on an average in the last month. The first obvious one is credit risk fund and the second is medium duration fund. Even within 22 credit risk funds, there were seven funds that have generated positive returns.

 

Average Return (per cent)

Category

One Month

Three Month

One Year

Five Year

Banking & PSU

0.47

1.79

9.92

7.89

Corporate Bond

0.48

1.83

8.11

7.36

Credit Risk

-3.01

-5.08

-5.16

3.88

Dynamic Bond

0.91

2.92

9.10

7.12

Floater

0.40

1.47

7.87

7.45

Gilt

2.14

3.93

13.58

8.17

Gilt (10 year constant duration)

1.76

4.87

16.99

9.97

Liquid

0.45

1.35

5.86

6.91

Long Duration

0.80

3.91

13.61

7.73

Low Duration

0.35

-0.02

0.41

5.86

Medium Duration

-0.46

-1.23

1.73

5.97

Medium to Long Duration

0.87

2.82

8.80

6.61

Money Market

0.71

1.61

7.24

7.30

Overnight

0.21

0.95

4.88

6.04

Short Duration

0.16

1.27

4.20

6.32

Ultra Short Duration

0.52

1.36

6.13

6.92

    

If we exclude these categories of funds, all other categories on an average generated positive results in the last one month.

Following are the funds that have created best returns in the last one month.

Funds

AUM(in Rs crore)

Category

 NAV

Return One Month

Return Three Month

Return six month

Return 1 year

Axis Gilt Fund-Reg(G)

61.3

Debt : Gilt

18.78

2.87

6.32

7.79

17.38

Kotak Gilt Fund-Reg(G)

448.8

Debt : Gilt

72.33

2.71

6.3

7.75

15.33

Aditya Birla SL G-Sec Fund(G)

272.4

Debt : Gilt

60.28

2.42

5.36

6.79

15.78

Nippon India Dynamic Bond(G)

807.3

Debt : Dynamic Bond

27.48

2.42

4.88

5.49

12.25

UTI Dynamic Bond Fund-Reg(G)

365.8

Debt : Dynamic Bond

20.02

2.15

2.51

1.31

-2.73

 

Therefore, all is not lost in debt funds and one can still pick debt funds that suit their risk profile.

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