Looking to invest in debt mutual funds which have delivered higher returns than your fixed deposit schemes? Well there are at least 116 such plans with superior income on investments but we have picked the top five for you.
In debt MFs, returns up to 1 year are simple annualised as against equity mutual funds where returns up to one year are absolute.
While interest rates on fixed deposits vary from bank to bank, a standard annualized rate of 8% per annum has been taken as the benchmark. Five debt MFs which have given higher returns are:
1) DSP Credit Risk Direct Plan(G)
The DSP Credit Risk Direct Plan(G) has given an annualised 1-year returns of 17.18%. This fund is a mix of high yielding and lower-rated debt securities and it invests in debt instruments across different credit ratings, with at least 65% in AA and below rated securities. The total Assets Under Management (AUM) stood at Rs 205.15 crore as on January 31, 2024 while the net asset value (NAV) as on February 27 stood at Rs 42.56%.
2) Invesco India Credit Risk Fund(G)-Direct Plan
The 1-year annualised returns delivered by Invesco India Credit Risk Fund(G)-Direct Plan stands at 13.60%. The average AUM at the December ended quarter stood at Rs 139 crore with NAV reported at Rs 1878.44 as on February 27. The fund invests in corporate debt securities of varying maturities across the credit spectrum and its investments are in corporate bonds rated 'AA' or below.
3) DSP Strategic Bond Fund(G)-Direct Plan
The 1-year annualised returns given by DSP Strategic Bond Fund(G)-Direct Plan stand at 11.32%. This fund invests in high-quality government and corporate debt securities with 100% investments in AAA or higher rated instruments. One of DSP's oldest debt funds with a 14 year+ track record, it is a highly liquid portfolio with actively managed portfolio duration based on future interest rate movement predictions.
The AUM as on January 31, 2024 stood at Rs 911.74 crores while the NAV as on February 27, 2024 was Rs 3,039.78.
SBI Long Duration Fund(G)-Direct Plan
The 1-year annualised returns given by SBI Long Duration Fund(G)-Direct Plan stand at 11.15%. The NAV as of February 27, 2024 is Rs 11.25 for Growth option of its Direct plan while the AUM as on January 31, 2024 stood at Rs 1227.31 crore. It is an open-ended debt scheme investing in instruments such that the Macaulay duration of the portfolio is greater than 7 Years.
HDFC Long Duration Debt Fund(G)-Direct Plan
The 1-year annualised returns given by HDFC Long Duration Debt Fund(G)-Direct Plan stand at 10.86%. This is also an open ended debt scheme investing in instruments such that the Macaulay Duration of the portfolio is greater than 7 years. The scheme was launched in January 2023. The AUM as on January 31, 2024 stood at Rs 1,738.27 crore while the NAV at Rs 11.11.
Also Read: Rs 6 lakh investment doubles in 5 years with this large & midcap mutual fund scheme. Check details
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
FAQs
Debt mutual funds offer marginally higher returns than by fixed deposits (FDs). At the same time, interest given by FDs are relatively more stable. There are 16 sub-categories of debt mutual funds such as overnight funds, liquid funds, money market funds, short duration and medium-duration funds.
Can mutual funds deliver higher returns than fixed deposits? ›
Adhil Shetty, CEO of BankBazaar.com, says mutual funds are long-term investments that offer comparatively higher returns than fixed deposits. They also carry a higher degree of risk. “Fixed deposits are a low-risk saving option which can lend stability to your portfolio with stable returns.
Which debt fund gives the highest return? ›
Best Performing Debt Mutual Funds
| Scheme Name | Expense Ratio | 1Y Return |
|---|
| Nippon India Corporate Bond Fund #1 of 15 in Corporate Bond | 0.35% | 7.07% p.a. |
| SBI Magnum Low Duration Fund #1 of 20 in Low Duration | 0.43% | 7.35% p.a. |
| ICICI Prudential Medium Term Bond Fund #1 of 12 in Medium Duration | 0.73% | 7.22% p.a. |
7 more rowsQuant Small Cap Fund(G) tops the chart with over 39% returns followed by Quant Mid Cap Fund(G), Nippon India Small Cap Fund(G), Quant Flexi Cap Fund(G) and Motilal Oswal Midcap Fund-Reg(G) in the same pecking order. 1.
Which scheme is better than Fixed Deposit? ›
Top 9 Alternatives Of FD. Debt mutual funds invest primarily in debt instruments. Like a regular mutual fund, it offers a diversified portfolio managed by professional fund managers. Since the fund invests in debt, the credit risk is lower than equity mutual funds, and you can earn inflation-adjusted returns.
Is it advisable to invest in debt funds? ›
Debt Funds can be a wise choice if you want to diversify your investment portfolio. Not only do they offer stability but they also have the potential for returns.
Which mutual fund gives 12% return? ›
The large cap mutual funds that have delivered healthy CAGR returns of more than 12 percent per annum in the past five years include Nippon India Large Cap Fund, Canara Robeco Bluechip Equity Fund, ICICI Prudential Bluechip Fund, Baroda BNP Paribas Large Cap Fund, SBI Bluechip Fund and HDFC Top 100 Fund.
Which type of mutual fund has a better potential for high returns? ›
Stock mutual funds = higher potential returns (or losses)
Stock mutual funds, also known as equity mutual funds, carry the highest potential rewards, but also higher inherent risks — and different categories of stock mutual funds carry different risks.
Which company gives highest return on fixed deposit? ›
Best FD Interest Rates in India 2024
| Name | Bank / NBFC | Regular FD Rates |
|---|
| Bajaj Finance Ltd. (NBFC) | NBFC | 8.25% |
| SBI Bank | Bank | 7.10% |
| ICICI Bank | Bank | 7.20% |
| Axis Bank | Bank | 7.20% |
13 more rowsIn general, the safest investments with the potential for higher returns than a regular savings account are FDIC-insured certificates of deposit (CDs), money market accounts, Treasury securities, investment-grade municipal and corporate bonds, and dividend-paying stocks.
Investment-grade long-term bond funds often reward investors with higher returns than government and municipal bond funds. But the greater rewards come with some added risk. Investment-grade long-term bond funds often reward investors with higher returns than government and municipal bond funds.
What are the highest returning funds? ›
100 Highest 5 Year ETF Returns
| Symbol | Name | 5-Year Return |
|---|
| QQQ | Invesco QQQ Trust Series I | 22.54% |
| IETC | iShares U.S. Tech Independence Focused ETF | 22.50% |
| IGM | iShares Expanded Tech Sector ETF | 22.47% |
| XHB | SPDR S&P Homebuilders ETF | 22.32% |
93 more rowsHere's the list of top 10 best mutual funds to invest in 2024:
- HDFC Mid-Cap Opportunities Fund.
- Parag Parikh Flexi Cap Fund.
- ICICI Pru Bluechip Fund.
- HDFC Flexi Cap Fund.
- Nippon India Small Cap Fund.
- HDFC Balanced Advantage Fund.
- ICICI Prudential Equity & Debt Fund.
- ICICI Prudential Corporate Bond Fund.
What are ELSS funds?
| ELSS Funds | 3-year-returns (%) (regular) |
|---|
| Nippon India ELSS Tax Saver Fund | 21.96 |
| Parag Parikh ELSS Tax Saver Fund | 21.76 |
| Quant ELSS Tax Saver Fund | 31.08 |
| SBI Long Term Equity Fund | 28.22 |
8 more rowsApr 21, 2024
Highest Return Mutual Funds in Last 10 Years
| Fund Name | 5 Years Return | 10 Years Return |
|---|
| HSBC Small Cap Fund Fund (G) | 24.9% | 20.8% |
| Motilal Oswal Midcap fund (G) | 26.2% | 20.4% |
| Quant Flexi Cap Fund (G) | 30.1% | 20.1% |
| Quant Small Cap Fund (G) | 38.3% | 20.0% |
16 more rowsInvesting in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc. But the key risks which needs be considered before investing in Debt funds are Credit Risk and Interest Rate Risk; Credit Risk (Default Risk):
Can debt funds give negative returns? ›
Debt mutual funds are considered to be relatively less volatile than equity mutual funds. While this may be true, especially over a long time, the probability of negative returns cannot be ruled out in the shorter term.
What is better than fixed term deposit? ›
While term deposits can be used for this purpose, a high interest savings account allows you instant access to your cash at any time and may offer a better interest rate than a shorter-length term deposit. These are goals you are planning to accomplish within the next one to five years.
What is the best alternative to fixed deposits? ›
Table of Contents
- Top Alternatives to Fixed Deposits.
- Mutual Funds.
- Public Provident Fund (PPF)
- Gold Investments.
- Real Estate Investment Trusts (REITs)
- Systematic Investment Plans (SIPs)
- Equity-Linked Savings Schemes (ELSS)
- National Pension System (NPS)
