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  • 1. ICICI Prudential Short Term Fund
  • 2. Aditya Birla Sun Life Short Term Fund
  • 3. Nippon India Corporate Bond Fund
  • 4. Aditya Birla Sun Life Corporate Bond Fund
  • 5. ICICI Prudential Corporate Bond Fund
  • 6. Nippon India Short-term Fund
  • 7. HDFC Corporate Bond Fund
  • 8. HDFC Short Term Debt Fund
  • 9. Axis Short Duration Fund
  • 10. Kotak Banking and PSU Debt Fund
  • Comparing the top 10 debt funds

Top Debt Funds That Delivered Better Returns Than Fixed Deposits

10 top-performing debt funds that provide better returns and investment opportunities than FDs

Rs. 500 SIP = Rs. 10 lakh + in 15 yrs. Start your journey today

Article 3

When you start your investment journey, it is common to get confused about which options to go for. In this regard, fixed deposits or FDs have always been one of the most popular investment vehicles for lakhs of Indian investors. However, in the recent decade, mutual funds such as debt funds, equity funds have seen an increasing number of investors. Moreover, while traditional FDs come with a return of around 5-6%, the right debt funds have the potential to grow at a much faster rate. Debt funds also provides stable long term returns and usually have less associated risk.

Here are a few of the best debt mutual funds that provide better returns as compared to fixed deposits:

1. ICICI Prudential Short Term Fund

This is a short term debt fund that is known for its strong performance over the years. With assets under management of Rs. 19,611 crores, this fund has delivered great returns of 7.43% per annum which is significantly higher than most FDs. 

Key takeaways

  • Debt mutual funds can yield returns of over 7% that are relatively higher than traditional fixed deposits.
  • Investing in corporate bonds and government securities makes debt funds a safer choice for conservative investors.
  • Most debt mutual funds have low expense ratios that allow for greater net gains on your investments.

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2. Aditya Birla Sun Life Short Term Fund

This short duration debt fund has an AUM of Rs. 8,315 crores and it has generated returns of 7.27% per annum last year. Moreover, it also has a relatively low expense ratio of 0.38%. That ensures you secure the maximum net returns on your investment

3. Nippon India Corporate Bond Fund

Nippon India’s Corporate Bond Fund is another great alternative to FDs with a focus on corporate debt securities. This fund currently has an AUM of Rs. 3,437 crores and has generated a return of 7.24% per annum since its inception 11 years ago.

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4. Aditya Birla Sun Life Corporate Bond Fund

This corporate bond fund manages an overall AUM of Rs. 21,437 crores and it has given returns of 7.09% per annum since its inception. The fund’s expense ratio stands at 0.34% that makes it a cost friendly investment option.

5. ICICI Prudential Corporate Bond Fund

ICICI Prudential’s Corporate Bond Fund manages one of the largest AUMs totalling over Rs.26,907 crores. With a 7.03% per annum return over 11 years, and it carries a low expense ratio of 0.35%.

6. Nippon India Short-term Fund

This fund has an AUM of Rs. 6,974 crores and has delivered a return of 7.00% per annum. Moreover, it is a short duration focused debt fund with a moderately low expense ratio of 0.37% that helps you maximise your returns.

7. HDFC Corporate Bond Fund

The HDFC Corporate Bond Fund has an AUM of Rs. 30,371 crores and provides stability and returns of 6.99% per annum. With an expense ratio of 0.36%, this fund remains a popular choice among investors who seek better returns than FDs.

8. HDFC Short Term Debt Fund

HDFC’s Short Term Debt Fund manages around Rs. 14,105 crores and has been offering returns of 6.97% per annum over the last decade.The fund has an expense ratio of 0.4%, slightly higher than others but still competitive.

9. Axis Short Duration Fund

Axis Short Duration Fund has been a strong performer in the short duration debt category for quite some time now. With an AUM of Rs.9,121 crores, it has offered returns of 6.89% per annum, and an expense ratio of 0.36%.

10. Kotak Banking and PSU Debt Fund

This fund focuses on debt securities issued by banks and public sector undertakings that make it a safer option for conservative investors. It has an AUM of Rs. 5,811 crores and it has delivered a return of 6.88% per annum.

Comparing the top 10 debt funds

Here is a table that lists the features of the 10 debt funds that provide better returns than fixed deposits:

Fund Name

Category

AUM (in Rs. crores)

Returns (per annum)

ICICI Prudential Short Term Fund

Short Duration

19,611

7.43%

Aditya Birla Sun Life Short Term Fund

Short Duration

8,315

7.27%

Nippon India Corporate Bond Fund

Corporate Bond

3,437

7.24%

Aditya Birla Sun Life Corporate Bond Fund

Corporate Bond

21,437

7.09%

ICICI Prudential Corporate Bond Fund

Corporate Bond

26,907

7.03%

Nippon India Short-term Fund

Short Duration

6,974

7.00%

HDFC Corporate Bond Fund

Corporate Bond

30,371

6.99%

HDFC Short Term Debt Fund

Short Duration

14,105

6.97%

Axis Short Duration Fund

Short Duration

9,121

6.89%

Kotak Banking and PSU Debt FundBanking & PSU5,8116.88%


Planning on investing in mutual funds? visit the easy to use Bajaj Finance mutual fund platform and explore over 1,000 mutual fund schemes. Use the Mutual Fund Calculator and do not forget to compare mutual funds before investing.

Frequently asked questions

What is a debt fund and how does it differ from FDs?

Debt funds invest in fixed-income instruments like bonds and government securities, offering higher returns than FDs.

Are debt funds safe for conservative investors?

Yes, debt funds, particularly those investing in government securities or PSU bonds, are considered safer than equity funds.

How long should I stay invested in a debt fund to see good returns?

For optimal returns, it is advisable to stay invested for at least 2-3 years in short-duration or corporate bond funds, as these funds perform better over the medium term.

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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form.

(ii) carry customized/personalized suitability assessment.

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.


Disclosure
: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finance Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.

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