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Best Debt Funds in India

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best debt funds in indiaA balanced portfolio is one of the salient features of successful investing, which makes it mandatory to adjust your investment portfolio as per the product mix which you have selected. Therefore, an attempt has been made in this write-up to highlight the best debt funds in India under different categories.

What are Debt Funds?

Debt funds are the type of mutual funds that invest in fixed income securities like bonds and treasury bills and therefore are not linked to the equity markets. The main objective of the Debt funds is to generate stable returns while preserving the capital invested. Since the investments in these funds bear low risk, returns are also low as compared to the equity mutual funds.

The benefits of investing in a Debt Mutual Fund could be summed in terms of:

  • Less volatility as compared to the equity market volatility
  • Stability to the investment portfolio
  • Ease of withdrawing money as and when required
  • Better post tax returns

Debt Funds in India could be categorized under different categories in line with the investments of different time horizon, which are further discussed in detail. The returns are given on per annum basis for the past 1 Month, 3 Month, 1 Year, 3 Years and 5 Years.

1. Â Debt Liquid Funds

Liquid funds invest in highly liquid money market instruments and are best suited to corporate and individual investors who wish to invest their surplus for a very short period of time. The Returns on these funds tend to fluctuate less when compared to other funds.Â

Fund NameLaunch DateFund ManagerNet Assets (In Crores)1 M3M1 Yr3 Yr5 Yr
Escorts Liquid FundSept-2005Anuj Jain175.870.882.459.6910.108.80
ICICI Pru Money MarketMar- 2006Manish Banthia1,986.040.762.439.058.797.04
BNP Paribas OvernightSep- 2004Chirag Doshi514.250.842.619.089.238.07
Birla Sun Life Floating RateOct -2005Sunaina Da Cunha/Kautubh Gupta3,396.730.872.639.189.217.80
SBI Magnum Insta Cash Liquid FloaterAug -2005R Arun204.550.712.478.848.967.64

Net Assets:(As on Sep,30,2013)

2.  Debt Ultra Short Term Funds

Ultra short term funds, earlier known as Liquid Plus funds, invest in short term debt securities with maturity of up to 1 year. Therefore, these funds could be targeted for investment horizon of 1-9 months by the investors. These funds generate slightly higher returns than the liquid funds.

Fund NameLaunch DateFund ManagerNet Assets (In Crores)1 M3M1 Yr3 Yr5 Yr
SBI Magnum Income Floating Rate LTPJul-04R Arun75.631.
Sundaram Ultra ST RegApr-07Dwijendra Srivastava/ Siddharth Chaudhary1067.681.12.939.779.668.22
SBI Magnum Floating Rate Savings Plus BondJul-04R Arun146.830.872.619.079.378.54
Escorts Short Term DebtDec-05Anuj Jain8.740.972.339.8710.248.9
Reliance Money ManagerMar-07Amit Tripathi/Anju Chajjer6825.561.12.759.39.287.99

Net Assets:(As on Sep,30,2013)

3. Â Debt Short Term Funds

These funds invest in debt securities having a maturity of up to 3 Yrs. These funds deliver more returns than the liquid and ultra-short term funds and are meant for investors who are looking to invest for 9-12 months. These funds perform well when short term interest rates are high and stand to benefit  from capital gains as liquidity bounces back to the market and interest rates go down.

Fund NameLaunch DateFund ManagerNet Assets (In Crores)1 M3M1 Yr3 Yr5 Yr
Sundaram Select Debt Short-termAug-02Dwijendra Srivastava/ Siddharth Chaudhary305.371.242.7510.1910.927.53
UTI Short-term Income RegularJun-03Sudhir Agrawal3523.681.533.159.29.638.88
Templeton India ST Income RetJan-02Sachin Desai/Umesh Sharma6966.351.612.728.939.249.66
DWS Short Maturity RegJan-03Nitish Gupta/Kumaresh Ramakrishnan2741.921.
IDFC SSI Short Term Plan DSep-05Suyash Choudhary3368.221.482.758.29.119.2

Net Assets:(As on Sep,30,2013)

These funds are suitable for investors having low to moderate risk taking appetite and an investment horizon of 9 to 12 months.

4. Â Debt Long Term Funds

These funds invest in a basket of instruments having different maturity lines like in corporate bonds, money market instruments and government bonds. These funds try to gain in both scenarios i.e.  declining and rising interest rate scenarios by managing the portfolio actively. They seek to generate interest income by holding the instruments till maturity or achieve gains by selling them in the debt market if the price of the instrument rallies well.

Fund Name

Launch Date

Fund Manager

Net Assets (In Crores)

1 M


1 Yr

3 Yr

5 Yr

Escorts Income


Anuj Jain







Sahara Income


Ashwini Kumar







Birla SL Short Term


Prasad Dhonde







Reliance Regular Savings Debt


Prashant R Pimple







ICICI Pru Long-term Ret


Manish Banthia







Net Assets:(As on Sep,30,2013)

These funds are suitable for investors who are willing to take a relatively higher risk as compared to the other debt categories and have a longer investment horizon. However, they are highly exposed to the interest rate changes. The performance of these funds in your portfolio depends on the time of entry into them.

About the Author:

Reenika is a Certified Financial Planner and has more than 6 years of experience in the financial service industry. She can be reached at expert@investmentyogi.com


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