Best Corporate Bond Funds in India 2026: Expert Picks for You

Do you know that there is an investment option that can generate higher returns and a fixed income for you? No, they are not FDs (Fixed Deposits). Today, the talk of the town is Corporate Bond Funds in India, which balance yield and safety while giving you 7-8% returns from high-rated corporate bonds, higher than traditional FDs at 6-7%.

But the question is, should you invest in these mutual funds in 2026 and which are the best Corporate Bond Funds that are suitable for you?

Let us bring an end to your confusion with this post. Here, you will get a complete list of the top corporate bond mutual funds in India, along with their benefits and taxation. Do not forget to read the last section, as it will inform you whether you are suitable to invest in this fund. So, let us dive in to discover the smartest fixed-income strategy for 2026.

What are Corporate Bond Funds in India?

A corporate bond fund is one of the types of debt mutual funds that primarily invests in high-rated corporate bonds (specifically AA+ or above rated). It invests at least 80% of its assets in these bonds. Companies issue these bonds to raise money for their business needs.

SEBI regulates these funds and their main aim is to provide investors with a steady income source while protecting their capital. They carry lower credit risk than other debt options that might include lower-rated securities.

The following are the key features of the corporate bond mutual funds:

• Your investments in these funds are managed by professionals.
• The funds invest across a variety of bonds from different companies and sectors.
• These funds offer high liquidity and potential returns.
• Now, let us look at the list of the top corporate bonds in India.

Must Read: Best Debt Mutual Funds in 2026 for Stable and Safe Returns

Now, let us look at the list of top funds in India.

Listing Top 5 Corporate Bond Funds in India 

The best corporate bond funds in India are usually determined by their performance, their total AUM (Assets Under Management) and credit ratings from agencies like CRISIL. Here are some of the top corporate bond mutual funds in India with their returns:

Fund Name	Launch Date	AUM (Cr)	3 Yrs Avg. Returns	5 Yrs Avg. Returns
Nippon India Corp Bond	05-10-2009	₹ 10,431	7.56%	6.42%
ICICI Prudential Corp Bond	12-06-2009	₹ 33,871	7.67%	6.36%
Kotak Corp Bond	21-09-2007	₹ 18,841	7.47%	6.03%
HDFC Corp Bond	01-06-2010	₹ 34,805	7.46%	5.97%
SBI Corp Bond	05-01-2019	₹ 24,607	7.24%	5.68%

After looking at the list, let us dive in deeper and explore each fund one by one in the next part.

Overview of Top Corporate Bond Funds

Here are the details of the best corporate bond mutual funds to invest in India:

Nippon India Corporate Bond Fund

It is an open-ended debt mutual fund scheme that primarily invests in corporate and government bonds in India. The fund has an AUM of Rs 10,430 crore and a NAV of Rs 64 (as of January 21, 2026). Launched on October 5, 2009, this fund marks its performance against the Nifty Corporate Bond Index A-II benchmark. It has an expense ratio of 0.36%. It is managed by Vivek Sharma, Divya Dutt Sharma and Lokesh Maru.

ICICI Prudential Corporate Bond Fund

Launched on June 12, 2009, this mutual fund has an impressive AUM of Rs 33,871 crores and an expense ratio of 0.35%. Manish Banthia and Ritesh Lunawat manage this fund. As of January 21, 2026, the NAV of this fund is Rs 32 and its returns are marked against the Nifty Corporate Bond Index A-II. It carries a moderate risk profile.

Kotak Corporate Bond Fund

The returns of this fund are measured against the Nifty Corporate Bond Index A-II benchmark. The investment in this fund carries a moderate risk level with an expense ratio of 0.36%. Managed by Deepak Agrawal and Manu Sharma, this fund was launched on September 21, 2007 and currently has a NAV of Rs 4,054. The fund has an AUM of Rs 18,840 crore.

HDFC Corporate Bond Fund

This corporate bond fund has a solid AUM of Rs 34,805 crores and 0.36% expense ratio. With a NAV of Rs 34, the fund's performance is analysed against the Nifty Corporate Bond Index A-II. Launched on June 1, 2010, the mutual fund is managed by Anupam Joshi.

SBI Corporate Bond Fund

The fund managers of this debt mutual fund scheme are Rajeev Radhakrishnan, Ardhendu Bhattacharya and Pradeep Kesavan. As of January 21, 2026, the NAV of the fund is recorded at Rs 16. The fund has increased its AUM to Rs 24,607 crores. Launched on January 5, 2019, this fund is compared to the Nifty Corporate Bond Index A-II benchmark.

Must Read: Equity vs Debt vs Hybrid Mutual Funds: What Should You Pick?

In the next heading, you will explore the benefits of investing in these funds, so stay invested in this blog.

Benefits of Investing in Corporate Bond Funds in 2026

As the RBI is likely to keep interest rates stable, it gives a cautiously optimistic outlook for these mutual funds. Here are the primary benefits of investing in corporate bond funds in 2026:

• Higher Returns
  These funds give higher returns than FDs because corporate bonds offer higher yields than traditional FDs.

• Stability
  The returns from these bonds are more predictable & less volatile than equity mutual fund investments, adding stability to your portfolio.

• Diversification
  These mutual funds do not move in the same direction as the stock market, allowing you to create a balanced investment mix and reduce risk.

• Experienced Fund Managers
  These funds are managed by their expert managers who actively monitor credit quality and interest rate changes and make informed decisions.

• Liquidity
  These funds provide easy access to your money compared to holding individual bonds directly.

• SIP (Systematic Investment Plan)
  These funds are suitable for investments done through SIP, as with this, you can take advantage of rupee cost averaging in the long term.

• 2026 Market Conditions
  Many companies are planning to issue bonds in India in 2026. Secure strong yields now, before prices increase due to future rate cuts.

Pro Tip: Use a SIP Calculator and estimate the future returns of your SIP investment easily.

In the next section, let us look at the taxation associated with this fund's returns.

Tax Rates of Corporate Bond Mutual Funds

The taxation of the corporate bond funds in India depends on the purchase date of the units. There are two primary scenarios for tax treatment: purchase on or after April 1, 2023 & purchase of units before April 1, 2023. Here are the tax rates for these mutual funds:

Investment Date	Holding Period	Tax Treatment	Rate	Indexation
After Apr 1, 2023	Any duration	STCG	Slab rate	No
Before Apr 1, 2023	Less than or equal to 24 months	STCG	Slab rate	No
Before Apr 1, 2023	More than 24 months	LTCG	12.5% flat	No

Investors should think about the tax effects when comparing the post-tax returns of corporate bond funds to other fixed-income options like bank fixed deposits. The interest income from both is taxed at the individual’s tax rate.

Now, the main question here is what type of investors are suitable to invest in these funds in 2026. Let us find out.

Who Should Invest in Corporate Bond Funds in 2026?

Corporate bond funds in 2026 are a good option for investors who want stable income with moderate risk and better returns than traditional FDs. Here is who should think about investing in corporate bond funds:

• Investors who want stability in their income and not aggressive growth.
• Who are comfortable with a moderate risk level.
• Individuals looking for a regular and steady source of income.
• Those who can stay invested in these funds for 2-5 years.
• Individuals who wish to diversify their portfolio and reduce overall risk.
• Investors who want liquidity in their investments.
• Investors who prefer disciplined, regular investing through SIPs.

Conclusion

In short, funds like Nippon India, ICICI Pru and HDFC Corporate Bond are some of the best corporate bond funds in India for placing an investment in 2026.

They offer yields of 7-8% from AA+ bonds, which professional managers handle. This means they can provide better returns than fixed deposits while keeping risks low. For 2026, investing in these funds through a SIP and a 4-5 year investment horizon is the best thing to do.

Related Blogs:

1. Top 5 Mutual Funds for Lumpsum Investment 2026: Expert Picks
2. Top 10 Mutual Funds for SIP in 2026: Best Picks to Grow Wealth

FAQs

1. Corporate bond funds vs FDs, which is better?
   

   Corporate bonds offer returns of 7-8%, while FDs provide 6-7%. Bond returns depend on market conditions, but an FD has guaranteed returns.

2. What is the minimum SIP amount for corporate bond funds?
   

   You can invest between Rs 100 and Rs 500 in top corporate bond mutual funds. The minimum amount for a lump sum investment is Rs 5,000.

3. Are corporate bond funds a safe investment?
   

   SEBI requires that over 80% of the bonds be rated AA or AAA. This means there is low credit risk and moderate interest rate risk.

4. Corporate bond funds vs corporate bonds direct investment, which is better?
   

   Funds provide diversification by including over 50 bonds. Professionals manage them and offer daily access to your money.

5. How do interest rate changes affect corporate bond funds?
   

   When interest rates rise, the NAV falls due to duration risk. When rates fall, the NAV rises.

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Disclaimer: The views and opinions expressed in this blog are for informational purpose only and do not constitute financial, investment or legal advice. Mutual Fund investments are subject to market risks, always read the scheme documents carefully. It is advisable to consult a qualified financial advisor before making any investment or trading choices.