Why Invest in Debt Funds?
  • Best for low duration term period.
  • Less risky as compared to equity funds.
  • Meant for conservative investors.
  • Offers stability in the portfolio.
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Top funds 3Y Return 5Y Return
Kotak Corporate Bond Fund (G) 8.08% 9.08% Invest
SBI Magnum Low Duration Fund (G) 7.53% 8.03% Invest
DHFL Pramerica Ultra Short Term Fund - Growth 7.7% - Invest
Franklin India Income Opportunities Fund (G) 9.28% 9.16% Invest
HDFC Short Term Debt Fund (G) 7.72% 8.38% Invest
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Jan 09, 2019 7 min read

5 Best Debt Funds to Invest in 2019

Read to know all about the best debt funds to invest in 2019.

There is a time for everything,” once said a wise man. Well, going with the views of the market experts and professionals, 2019 can be a good year for debt funds. After all the tumbling and falling in the year 2018, debt funds are very well placed in the market as of now, and they should offer good returns to the investors. This is the reason the experts at MySIPonline are asking investors to keep an eye on their debt mutual funds for the year ahead and gain the maximum from the opportunity.

Why Debt Mutual Funds Important As of Now?

Investors should understand that debt funds are essential for the overall portfolio in the long run. As far as this year is concerned, with the inflation remaining benign, investors should continue investing in them due to two primary reasons:

  1.  Yields are expected to do better in 2019
  2.  We might see rate easing by April 2019

In 2018, the debt funds also witnessed a lot of volatility, the volatility which was primarily attributed to uncertain macroeconomic indicators. The main reasons for the same were a rise in crude oil prices, currency depreciation, yields going up, and liquidity tightening. However, despite the volatility, debt funds were the chart-toppers in the last one year where liquid fund category was the best performer with 6.89% return, followed by long duration debt funds and gilt funds with 6.84% and 6.56% return, respectively.


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SBI Magnum Low Duration Fund

SBI Magnum Low Duration Fund is one of the best mutual funds available in the market for fulfilling the short-term and mid-term objectives of the investors. It is a low duration debt fund, resembles closely to that of a high-end liquid fund which people usually choose to invest in to satiate their short-term needs. However, unlike liquid funds that invest in those securities that have a maturity of nearly six months to 12 months.

Basic Information- SBI Magnum Low Duration Fund
Category Debt: Low Duration
Benchmark NIFTY Low Duration Debt TRI
Launch Date 27-Jul-07
Asset Size Rs. 6421 crore (As on Nov 30, 2018)
Expense Ratio 0.47% (As on Nov 30, 2018)
Minimum investment Rs. 5000
Minimum Additional Investment Rs. 1000
Return Since Inception 7.82%
Exit Load 0

HDFC Short Term Debt Fund

HDFC Short Term Debt Fund is a short duration mutual fund scheme which invests in debt and money market instruments which have low duration maturity. Formerly, the fund was popular with the name HDFC Short-term Opportunities Fund. Being managed by Mr. Anil Bamboli since 2010, it provides lower interest rates as compared to the long-term mutual funds. Considering the risk measure, HDFC Short Term Debt Fund is a low-risk product which is perfectly suitable for risk-averse investors.

Basic Information- HDFC Short Term Debt Fund
Category Debt: Short Duration
Benchmark CRISIL Short-Term Bond
Launch Date 25-Jun-10
Asset Size Rs. 8985 crore (As on Nov 30, 2018)
Expense Ratio 0.40% (As on Nov 30, 2018)
Minimum investment Rs. 5000
Minimum Additional Investment Rs. 1000
Return Since Inception 8.58%
Exit Load 0

DHFL Pramerica Ultra Short Term Fund

DHFL Pramerica Ultra Short Term Fund aims to provide liquidity and generate returns by investing in a mix of short term debt and money market instruments. It is an exceptional ultra-short duration debt fund which has an assets base amounting to Rs. 379 crore as on Nov 30, 2018. It is being managed by Kumaresh Ramakrishnan and Kunal Jain who preferably invests in AAA, A1+, and AA rated instruments. The average return since its inception that it has produced amounted to 8.25%.

Basic Information- DHFL Pramerica Ultra Short Term Fund
Category Debt: Ultra Short Duration
Benchmark CRISIL Liquid
Launch Date 3-Jul-08
Asset Size Rs. 379 crore (As on Nov 30, 2018)
Expense Ratio 0.50% (As on Nov 30, 2018)
Minimum investment Rs. 5000
Minimum Additional Investment Rs. 500
Return Since Inception 8.25%
Exit Load 0

Kotak Corporate Bond Fund

Kotak Corporate Bond Fund is one of the best corporate bond funds of Kotak Mutual Fund. It looks forward to generating income by investing in debt as well as money market securities across the yield curve, and predominately in AA+ and above rated corporate instruments. Mr. Deepak Agarwal exceptionally manages it since January 2015. It holds an assets base amounting to Rs. 745 crore as on Nov 30, 2018. The past year return of the scheme was 7.51 percent which was much better than both the category as well as the benchmark.

Basic Information- kotak Corporate Bond Fund
Category Debt: Corporate Bond
Benchmark CRISIL Corporate Bond Fund
Launch Date 21-Sep-07
Asset Size Rs. 745 crore (As on Nov 30, 2018)
Expense Ratio 0.58% (As on Nov 30, 2018)
Minimum investment Rs. 5000
Minimum Additional Investment Rs. 1000
Return Since Inception 8.11%
Exit Load 0

Franklin India Income Opportunities Fund

Being a medium duration debt scheme, Franklin India Income Opportunities Fund aims to generate regular income by investing in fixed income securities across the yield curve. With a whopping asset under management worth Rs 3779 crore as on November 30, 2018, it has earned the trust of several investors who put faith in low-risk funds. It has successfully generated 8.98% returns on an average since its inception.

Basic Information- Franklin India Income Opportunities Fund
Category Debt: Medium Duration
Benchmark CRISIL Short-Term Bond
Launch Date 11-Dec-09
Asset Size Rs. 3779 crore (As on Nov 30, 2018)
Expense Ratio 1.70% (As on Nov 30, 2018)
Minimum investment Rs. 5000
Minimum Additional Investment Rs. 1000
Return Since Inception 8.98%
Exit Load For units in excess of 10% of the investment,3% will be charged for redemption within 365 days
For units in excess of 10% of the investment,2% will be charged for redemption between 366 - 540 days
For units in excess of 10% of the investment,1% will be charged for redemption between 541 - 730 days


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The Final Note

It is important for the mutual fund experts to understand that even though 2019 is expected to be a great year for debt mutual funds, they shouldn’t be considered as the flavor of the season. One must stick to one’s asset allocation and invest accordingly. We hope you can find a good debt fund for yourself from the list mentioned above. To seek personized recommendation in this context, consult the experts associated with MySIPonline. Further, if you have any query related to regular funds, just mention it in the link provided below, and we will be happy to answer.

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