Best performing debt funds
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.