Top 8 Debt Mutual Funds To Invest in 2024

Choosing the appropriate investment paths is crucial in changing financial markets for those seeking steady earnings at a lower risk level. Debt mutual funds are a unique alternative since they are instruments that predominantly invest in fixed-income securities, providing investors with a return that is balanced between risk and return.

Finding the best-performing debt mutual funds becomes essential in the present economic situation. This article will provide a thorough rundown of funds that demonstrate stability, caution, and the possibility for profitable returns, given the current state of the market.

What are Debt Mutual Funds?

Debt mutual funds buy assets and bonds with fixed income issued by businesses and the government. Fixed-income instruments include corporate bonds, government securities, money market instruments, treasury bills, and other securities.

Debt mutual funds are less risky, particularly when contrasted with stocks. Compared to conventional savings products, these mutual funds can allow investors to generate higher returns.

Top 8 Debt Mutual Funds to Invest

Below are the top 8 debt mutual funds to invest in based on their five-year annualised return.

Bank of India Short-Term Income Fund

An open-ended, short-term debt plan that invests in securities with a portfolio's Macaulay duration ranging from one to three years. The Scheme invests in a diverse debt and money market asset portfolio to produce income and capital growth. There are no loads on entry or exit.

Aditya Birla Sun Life Medium Term Plan

The assets invested in this open-ended, medium-term debt fund span three to four years. It's a high-rate fund that has a considerable credit risk. This is an excellent option if you're searching for a medium-term debt investment that could yield a higher return than conventional fixed-income instruments.

SBI Mutual Fund (Magnum Medium Duration)

This fund from SBI mutual fund is also open-ended, with moderate liquidity and good returns. The fund's duration is three to four years, and the money is invested in money markets and debt instruments. There is no entry load; however, an exit load is there.

DSP Credit Risk Fund

The CRISIL Credit Risk Debt C-III Index is the benchmark for this debt-income, credit-risk portfolio. This fund is classified as having a moderately high-risk rating. The DSP Credit Risk fund invests strategically in various lower-rated and high-yielding debt instruments.

ICICI Prudential Short-Term Fund

This ICICI mutual fund scheme is best for people looking to invest in various money markets and debt instruments. Here, maturities vary according to the instrument invested in, ranging between 1 and 3 years. It is an open-ended fund with a minimum amount of Rs. 5000 needed for investment.

Nippon India Nivesh Lakshya Fund

For the portfolio, this open-ended debt strategy invests in securities with a Macaulay duration of more than seven years. The Scheme aims to produce optimal returns while maintaining a modest risk. As a result, most investments will be made in debt and money market instruments.

Baroda BNP Paribas Credit Risk Fund

It is an open-ended debt fund primarily investing in AA and below-rated corporate bonds (excluding AA+ rated corporate bonds). The principal aim of the Scheme is to yield profits through the investment in debt and money market instruments over the whole credit range. The units redeemed determine the exit load; there is no entry burden.

Sundaram Low Duration Fund

This fund invests in G-Secs/SDLs, highly rated Corporate Bonds, Bank CDs, and money market instruments. It employs a short-term approach that would be followed for one to three years. Those looking to invest in a portfolio of fixed-income securities with maturities ranging from one to three years who seek income and capital appreciation may find this product appealing.

Conclusion

These top-performing debt mutual funds provide a stable and profitable investing option for navigating the 2023 investment landscape. Select carefully so that your financial objectives match the state of the market.