Apr 24, 2024 6 min read

Best Fixed income mutual funds to invest in 2024

Overview of Fixed Income Mutual Fund

A Fixed income or Debt Fund is similar to a savings account, except that instead of depositing your money in a bank, you give it to a mutual fund that invests it in various types of Bonds. These bonds have similar arrangements to loans where investor's money is given to governments, large corporations and state governments in the form of loans against a promise of returning the principal amount at the time of maturity and regular interest payments. That is why Debt Mutual Funds are known as fixed-income funds as they receive regular interest on the bonds that have been purchased in the portfolio.

While debt funds can provide an ongoing source of income, it is important to understand that they also have two major risks default and market risk. In default risk corporates delay or default in paying interest or principal amount.

Market risk associated with the change in interest rate by RBI. As these bonds are tradable in the market prices are moderately speculated based on the interest rate.

Key Factors that Influence Fixed Income Funds

Several factors play a significant role that puts a great impact on these funds are as follows:

Interest Rate Outlook

The interest rates are important because they can have a negative impact on bond prices. If interest rates are expected to increase in the near future, bond prices will likely fall. Therefore, you must closely monitor the interest rate changes to make informed investment decisions.

Credit Quality

Bonds are rated based on their credit quality, with ratings ranging from AAA (the highest quality) to D (default). Higher credit quality ratings show a lower risk of default, making them a safer investment option. You should properly analyse the credit quality of bonds before investing in them.

Duration

Duration measures how sensitive a bond's price is to changes in interest rates. The longer the duration, the more sensitive the bond is to interest rate changes. This means that if interest rates rise, bonds with longer durations will experience greater price declines than those with shorter durations.

Fund Manager's Performance

This includes analyzing their track record in achieving stable returns and how well they have handled past market changes. A fund manager with a proven track record of managing market volatility and delivering stable returns can provide you with greater confidence in your investment decision.

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Top Fixed Income Mutual Funds for 2024

Scheme Name3 Yrs Returns5 Yrs ReturnsCredit QualityAverage IntrestFund Managers
ICICI Prudential Medium Term Bond Fund 5.80% 7.22% AA+ 7.71 Akhil Kakkar
ICICI Prudential All Seasons Bond Fund 5.83% 7.55% AA+ 7.4 Nikhil Kabra
HDFC Dynamic Debt Fund 6.11% 6.37% AAA 7.07 Anil Bamboli
SBI MAGNUM GILT FUND 5.60% 7.92% AAA 7.13  Tejas Soman
Nippon India Corporate Bond Fund 5.87% 6.56% AAA 7.74  Vivek Sharma

 

ICICI Prudential Medium Term Bond Fund

The ICICI Prudential Medium Term Bond Fund is a medium-term bond fund managed by Mr Akhil Kakkar. Over the years, investors have usually earned about 5.80% annually, which is pretty good. But when compared to others, it's slightly lower, around 7.22%. The bonds in the fund are rated AA+, which means they're safe bets with low risk. On average, the bonds in the fund take about 7.71 years to mature, showing a careful balance between risk and reward.

ICICI Prudential All Seasons Bond Fund

The ICICI Prudential All Seasons Bond Fund is managed by Mr Nikhil Kabra. On average, investors typically receive around 5.83% back each year. It's performing well compared to similar funds, which have a benchmark return of 7.55%. The bonds in the fund are highly rated (AA+), making them very safe. On average, these bonds take about 7.4 years to pay back.

HDFC Dynamic Debt Fund

The HDFC Dynamic Debt Fund, managed by Mr Anil Bamboli, typically delivers an average annual return of 6.11% to investors. This indicates a reliable opportunity for investors to grow their investments over time. The fund holds bonds with a top-notch AAA rating, ensuring total safety for investors' capital. These bonds have an average maturity period of 7.07 years, providing a stable and predictable investment horizon.

SBI Magnum GILT Fund

The SBI Magnum Gilt Fund, managed by Mr Tejas Soman, delivers a reliable average annual return of 5.60%. Although slightly below the benchmark return of 7.92% for similar funds, it offers the security of AAA-rated bonds with an average maturity period of 7.13 years. Overall, it provides investors with a stable and secure investment option under expert management.

Nippon India Corporate Bond Fund

The Nippon India Corporate Bond Fund, managed by Mr Vivek Sharma, provides investors with a reliable average annual return of 5.87%. Despite a slightly lower return compared to similar funds, it offers secure investments with AAA-rated bonds and a long-term investment horizon of 7.74 years. Overall, it presents investors with a stable and dependable investment option.

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Conclusion

If you want to protect your investments while still earning better returns than fixed deposits, a debt mutual fund is the best investment option for you. By considering key factors such as interest rates, credit quality, duration, and fund manager performance, make informed decisions to choose the best fixed-income mutual funds for 2024. Save, invest via SIP and secure your future today. 

Best Funds

Top funds 1M Return 6M Return 1Y Return 3Y Return 5Y Return
  • 1M Return
  • 6M Return
  • 1Y Return
  • 3Y Return
  • 5Y Return
SBI Long Term Equity Fund - Regular Plan- Growth 3.74% 26.91% 57.64% 25.74% 21.1% Invest
Nippon India Ultra Short Duration Fund- Growth Option 0.63% 3.34% 7.01% 6.59% 4.89% Invest
ICICI Prudential Long Term Bond Fund - Growth 1.13% 5% 9.58% 5.11% 6.8% Invest
HDFC Dynamic Debt Fund - Growth Option 0.99% 4.36% 8.31% 6.35% 6.32% Invest
Parag Parikh Liquid Fund Regular - Growth 0.57% 3.38% 6.78% 5.01% 4.76% Invest
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