Top Debt Mutual Funds - Best Funds, Benefits & Risks
Debt mutual funds in India are investment funds that primarily invest in fixed-income instruments such as government securities (G-secs), corporate bonds, debentures, treasury bills, and money market instruments.
Top Debt Mutual Funds in 2025
Showing 1 - 20 of 523 results
last updated at 8:00 AM IST
| NameMFs (523)↓ | ↓Sub CategorySub Category↓ | ↓PlanPlan↓ | ↓AUMAUM↓ | ↓NAVNAV↓ | ↓Absolute Returns - 3MAbsolute Ret. - 3M↓ | ↓Absolute Returns - 1YAbsolute Ret. - 1Y↓ | ↓CAGR 3YCAGR 3Y↓ | ↓Expense RatioExpense Ratio↓ | ↓Exit LoadExit Load↓ | ↓VolatilityVolatility↓ | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1. | SBI Liquid Fund SBI Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 71,091.78 71,091.78 | 4,224.63 4,224.63 | 1.43 1.43 | 6.60 6.60 | 7.02 7.02 | 0.19 0.19 | 0.01 0.01 | 0.11 0.11 | |
| 2. | HDFC Liquid Fund HDFC Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 63,736.88 63,736.88 | 5,306.80 5,306.80 | 1.44 1.44 | 6.66 6.66 | 7.04 7.04 | 0.20 0.20 | 0.01 0.01 | 0.13 0.13 | |
| 3. | Aditya Birla SL Liquid Fund Aditya Birla SL Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 56,938.32 56,938.32 | 436.48 436.48 | 1.47 1.47 | 6.73 6.73 | 7.13 7.13 | 0.21 0.21 | 0.01 0.01 | 0.12 0.12 | |
| 4. | ICICI Pru Liquid Fund ICICI Pru Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 50,120.55 50,120.55 | 399.95 399.95 | 1.44 1.44 | 6.65 6.65 | 7.06 7.06 | 0.20 0.20 | 0.01 0.01 | 0.11 0.11 | |
| 5. | Tata Money Market Fund Tata Money Market Fund | Money Market Fund Money Market Fund | Growth Growth | 40,598.26 40,598.26 | 4,951.00 4,951.00 | 1.55 1.55 | 7.77 7.77 | 7.81 7.81 | 0.15 0.15 | - - | 0.41 0.41 | |
| 6. | SBI Savings Fund SBI Savings Fund | Money Market Fund Money Market Fund | Growth Growth | 37,973.57 37,973.57 | 45.74 45.74 | 1.52 1.52 | 7.60 7.60 | 7.63 7.63 | 0.25 0.25 | - - | 0.40 0.40 | |
| 7. | HDFC Money Market Fund HDFC Money Market Fund | Money Market Fund Money Market Fund | Growth Growth | 37,517.18 37,517.18 | 5,996.35 5,996.35 | 1.52 1.52 | 7.64 7.64 | 7.66 7.66 | 0.23 0.23 | - - | 0.41 0.41 | |
| 8. | HDFC Corp Bond Fund HDFC Corp Bond Fund | Corporate Bond Fund Corporate Bond Fund | Growth Growth | 36,381.68 36,381.68 | 34.15 34.15 | 1.95 1.95 | 7.80 7.80 | 8.05 8.05 | 0.36 0.36 | - - | 1.21 1.21 | |
| 9. | Axis Liquid Fund Axis Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 35,360.42 35,360.42 | 3,005.44 3,005.44 | 1.46 1.46 | 6.73 6.73 | 7.10 7.10 | 0.14 0.14 | 0.01 0.01 | 0.11 0.11 | |
| 10. | Kotak Money Market Fund Kotak Money Market Fund | Money Market Fund Money Market Fund | Growth Growth | 35,100.22 35,100.22 | 4,662.36 4,662.36 | 1.53 1.53 | 7.60 7.60 | 7.63 7.63 | 0.21 0.21 | - - | 0.40 0.40 | |
| 11. | ICICI Pru Money Market Fund ICICI Pru Money Market Fund | Money Market Fund Money Market Fund | Growth Growth | 35,011.13 35,011.13 | 395.13 395.13 | 1.52 1.52 | 7.64 7.64 | 7.65 7.65 | 0.21 0.21 | - - | 0.42 0.42 | |
| 12. | ICICI Pru Corp Bond Fund ICICI Pru Corp Bond Fund | Corporate Bond Fund Corporate Bond Fund | Growth Growth | 34,629.50 34,629.50 | 32.21 32.21 | 2.03 2.03 | 8.34 8.34 | 8.13 8.13 | 0.35 0.35 | - - | 0.86 0.86 | |
| 13. | Kotak Liquid Fund Kotak Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 34,080.38 34,080.38 | 5,460.15 5,460.15 | 1.45 1.45 | 6.68 6.68 | 7.06 7.06 | 0.20 0.20 | 0.01 0.01 | 0.12 0.12 | |
| 14. | Nippon India Liquid Fund Nippon India Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 30,230.36 30,230.36 | 6,614.94 6,614.94 | 1.45 1.45 | 6.70 6.70 | 7.08 7.08 | 0.20 0.20 | 0.01 0.01 | 0.12 0.12 | |
| 15. | Aditya Birla SL Corp Bond Fund Aditya Birla SL Corp Bond Fund | Corporate Bond Fund Corporate Bond Fund | Growth Growth | 30,131.30 30,131.30 | 117.96 117.96 | 2.08 2.08 | 7.82 7.82 | 8.03 8.03 | 0.33 0.33 | - - | 1.27 1.27 | |
| 16. | Aditya Birla SL Money Manager Fund Aditya Birla SL Money Manager Fund | Money Market Fund Money Market Fund | Growth Growth | 29,881.73 29,881.73 | 385.68 385.68 | 1.54 1.54 | 7.63 7.63 | 7.71 7.71 | 0.22 0.22 | - - | 0.39 0.39 | |
| 17. | ICICI Pru Savings Fund ICICI Pru Savings Fund | Low Duration Fund Low Duration Fund | Growth Growth | 28,908.38 28,908.38 | 568.23 568.23 | 1.78 1.78 | 7.94 7.94 | 7.89 7.89 | 0.42 0.42 | - - | 0.48 0.48 | |
| 18. | UTI Liquid Fund UTI Liquid Fund | Liquid Fund Liquid Fund | Growth Growth | 28,884.74 28,884.74 | 4,429.96 4,429.96 | 1.45 1.45 | 6.68 6.68 | 7.07 7.07 | 0.16 0.16 | 0.01 0.01 | 0.12 0.12 | |
| 19. | HDFC Low Duration Fund HDFC Low Duration Fund | Low Duration Fund Low Duration Fund | Growth Growth | 25,756.51 25,756.51 | 64.50 64.50 | 1.74 1.74 | 7.96 7.96 | 7.90 7.90 | 0.45 0.45 | - - | 0.50 0.50 | |
| 20. | SBI Overnight Fund SBI Overnight Fund | Overnight Fund Overnight Fund | Growth Growth | 25,408.85 25,408.85 | 4,308.50 4,308.50 | 1.34 1.34 | 5.90 5.90 | 6.40 6.40 | 0.08 0.08 | - - | 0.02 0.02 |
Disclaimer: Please note that the above table is for informational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Mutual Fund Screener and is subject to real-time updates.
Selection criteria: Category: Debt | AUM: Sorted from Highest to Lowest
Selection criteria: Category: Debt | AUM: Sorted from Highest to Lowest
What are Debt Funds
Debt mutual funds are investment schemes that mainly put money into fixed-income and money market instruments such as government securities, corporate bonds, commercial papers, certificates of deposit, and treasury bills. According to SEBI, debt funds are further divided based on factors like investment duration and type of securities held. For example, funds may be grouped as short-duration, medium-duration, or long-duration funds depending on how long they hold debt instruments.
Overview of the Top Debt Funds
SBI Liquid Fund
SBI Liquid Fund invests in short-term money market instruments like treasury bills, commercial papers, and certificates of deposit. Managed by SBI Mutual Fund, it aims to provide quick liquidity, low risk, and steady short-term returns. Investors often use it to park surplus cash safely for a few days or weeks.
HDFC Liquid Fund
HDFC Liquid Fund, managed by HDFC Asset Management Company, invests in high-quality short-term debt instruments. The fund focuses on safety and easy access to money while offering slightly higher returns than a savings account. It suits investors who want to earn returns without taking much risk.
Aditya Birla SL Liquid Fund
This fund by Aditya Birla Sun Life AMC invests in money market and short-duration debt securities with strong credit ratings. It works to preserve capital while providing liquidity and regular income. Investors often use it for short-term goals or temporary investments.
ICICI Pru Liquid Fund
ICICI Prudential Liquid Fund, managed by ICICI Prudential Mutual Fund, invests in high-quality, ultra-short-term debt instruments. The fund aims to deliver stable returns with low risk and allows investors to withdraw money quickly, often within a day.
Tata Money Market Fund
Tata Money Market Fund, managed by Tata Mutual Fund, invests in money market and short-term debt instruments with maturities up to one year. The fund focuses on providing reasonable returns and high liquidity, making it suitable for short-term savings or emergency funds.
How to Invest in Debt Mutual Funds?
Here’s how you can identify and invest in top debt mutual funds with Tickertape Mutual Fund Screener -
- Launch Tickertape Mutual Fund Screener.
- Under the category, select “debt”.
- Sort out the top debt mutual funds based on over 50 fundamental and technical filters.
- After identifying the debt mutual fund that aligns with your investment thesis, click on “Place Order” to invest in the mutual fund.
With Tickertape Mutual Fund Screener, you can invest via ‘lumpsum’ or start a ‘SIP’ in debt mutual funds. Moreover, by connecting your portfolio, you can do a deep analysis of your portfolio and assess its performance.
Taxation of Debt Mutual Funds
Here is how debt funds are taxed as per the new tax rules
| Capital Gains Tax | Description |
|---|---|
| Short-Term Capital Gains (STCG) | If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab. |
| Long-Term Capital Gains (LTCG) | For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits. |
Types of Debt Mutual Funds
- Overnight Funds: Overnight funds invest in debt instruments with a one-day maturity. They are extremely safe and work like savings accounts, offering quick access to money with minimal risk.
- Liquid Funds: Liquid funds invest in debt securities that mature within 1 to 91 days. They carry low risk and provide stable, low returns, making them suitable for short-term parking of surplus cash.
- Low Duration Funds: Low-duration funds invest in debt instruments with maturities of 6 months to 1 year. They offer moderate returns and carry slightly higher risk than ultra-short duration funds.
- Ultra Short Duration Funds: These funds invest in securities that mature within 3 to 6 months. They aim to provide better returns than savings or fixed deposits while keeping risk relatively low.
- Money Market Funds: Money market funds invest in short-term money market instruments with maturities of up to one year. They focus on preserving capital and maintaining liquidity.
- Short Duration Funds: Short-duration funds invest in government and corporate bonds or debentures with maturities of 1 to 3 years. They balance stability and moderate returns.
- Medium Duration Funds: Medium-duration funds invest in debt instruments that mature in 3 to 4 years. They carry moderate interest rate risk and are suitable for medium-term goals.
- Medium to Long Duration Funds:These funds invest in securities that mature within 4 to 7 years. They perform better when interest rates fall but carry a higher risk during rate hikes.
- Long Duration Funds: Long-duration funds invest in instruments with maturities of more than 7 years. They have a higher interest rate risk but a lower overall risk compared to equity funds.
- Corporate Bond Funds: Corporate bond funds invest mainly in high-rated corporate debt. They aim to offer safety and a stable income, making them suitable for conservative investors.
- Banking and PSU Funds: These funds invest at least 80% of their assets in debt issued by banks, public sector undertakings (PSUs), and public financial institutions. They focus on safety and stability.
- Gilt Funds:Gilt funds invest at least 80% of their money in government securities of varying maturities. They have low default risk but are sensitive to changes in interest rates.
- Gilt Funds with 10-Year Constant Duration: These funds invest at least 80% in government securities that have a constant maturity of 10 years. They offer predictability but are sensitive to interest rate movements.
- Dynamic Bond Funds: Dynamic bond funds adjust their portfolio based on market conditions and interest rate trends. The fund manager actively changes duration and composition to manage risk and returns.
- Credit Risk Funds: Credit risk funds invest at least 65% in lower-rated corporate bonds. They offer higher potential returns but carry higher default risk, making them suitable only for investors with higher risk tolerance.
- Floater Funds: Floater funds invest at least 65% in floating-rate bonds. Their returns rise or fall with market interest rate changes, providing flexibility in different rate environments.
- Fixed Maturity Plans (FMPs): FMPs are close-ended debt funds that invest for a fixed duration, such as months or years. They help avoid frequent market fluctuations and offer predictable returns.
- Sectoral Infrastructure (Debt) Funds: These funds invest in the debt of companies in the infrastructure sector. They are usually sponsored by non-banking financial companies (NBFCs) or corporates.
- Debt Interval Funds: Debt interval funds combine features of open-ended and closed-ended funds. Investors can buy or sell units only during specific intervals, offering limited liquidity.
Advantages of Investing in Debt Mutual Funds
Lower Market Volatility
Since debt funds are not directly linked to stock market movements, their performance tends to remain steadier. The primary risks involved are interest rate changes and the credit quality of issuers.
Return Stability
Debt mutual funds invest in fixed-income instruments such as government securities, corporate bonds, and treasury bills. The income from these instruments may make the fund’s returns relatively less volatile, though the actual performance depends on factors like interest rate movements and credit quality.
Variety of Options
Debt mutual funds come in multiple categories based on duration, credit quality, and structure. Investors can choose schemes that align with their investment thesis or risk preference.
Risks of Investing in Debt Mutual Funds
Interest Rate Risk
Debt fund prices move inversely to interest rates. When interest rates rise, the value of existing bonds tends to fall, which can reduce the fund’s net asset value (NAV). Longer-duration funds are usually more sensitive to rate changes.
Credit Risk
If the issuer of a bond or security in the fund’s portfolio fails to repay on time, the fund may face a loss. This risk is higher in funds that invest in lower-rated or non-sovereign securities.
Reinvestment Risk
Reinvestment risk occurs when interest rates drop, and the fund has to reinvest the money from matured bonds or interest payments at lower rates. This reduces the overall return of the fund.
Concentration Risk
Concentration risk arises when a fund invests a large portion of its money in a few companies or sectors. If any of them face financial trouble or poor performance, the fund’s value can decline.
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Factors to Consider Before Investing in Debt Mutual Funds
Interest Rate Movements
Debt fund returns change with interest rates. When interest rates rise, bond prices usually fall, which can lower the fund’s value. Understanding how interest rates affect bonds helps explain changes in fund performance.
Credit Quality
The credit rating of the bonds or securities in a fund shows how reliable the issuers are in repaying debt. Higher-rated bonds are generally safer, while lower-rated ones carry more risk but may offer higher returns.
Investment Duration
Each debt fund type suits a different time frame. Short-term funds invest in securities that mature quickly, while long-term funds hold bonds for several years. Matching the fund’s duration with your time frame helps manage risk and expectations.
Fund Objective
Each fund has a defined goal, such as earning a steady income, managing interest rate changes, or focusing on high-quality bonds. Knowing the fund’s objective helps understand how it aims to generate returns.
Conclusion
Debt mutual funds offer a wide range of options across durations, credit qualities, and risk levels. Their performance depends on factors such as interest rate movements, credit ratings, and market conditions. While they tend to show lower volatility than equity funds, returns can still vary based on economic trends and fund strategy. Investors must conduct thorough research, review the fund’s portfolio and objectives, and understand associated risks before making any investment decisions.
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Frequently Asked Questions About Debt Mutual Funds
What are debt funds?
Debt funds are mutual fund schemes that invest mainly in fixed-income instruments such as government securities, corporate bonds, treasury bills, and money market instruments.What are the best debt funds?
Here are the top debt mutual funds based on their 5Y CAGR:
- Bank of India Credit Risk Fund
- IL&FS Infra Debt Fund - Series 2-B
- IL&FS Infra Debt Fund - Series 2-A
- IL&FS Infra Debt Fund - Series 2-C
- Aditya Birla SL Medium Term Plan
Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.Is a debt fund 100% safe?
Debt funds are generally less volatile but are not risk-free. They face risks such as interest rate changes, credit defaults, and liquidity challenges that can affect returns.
Disclaimer: Investors should understand that these funds are subject to market risks and should review their financial goals, risk tolerance, and time horizon before investing.Which is better, FD or debt mutual fund?
Fixed deposits (FDs) and debt funds differ in structure, risk, and liquidity. FDs offer fixed returns, while debt funds fluctuate with market conditions. The choice depends on individual risk tolerance, time horizon, and financial needs.
Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.Is SIP good for debt funds?
A Systematic Investment Plan (SIP) in debt funds helps spread investments over time, but its suitability depends on the fund type and the investor’s financial goals. Whether it is good or not depends on the investor’s investment thesis.
Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.What are the disadvantages of debt mutual funds?
Debt mutual funds may face risks like interest rate fluctuations, credit downgrades, or lower returns during certain market conditions. They also lack guaranteed returns, unlike fixed deposits.Where do debt mutual funds invest?
Debt mutual funds invest in a mix of fixed-income instruments such as government securities, corporate bonds, debentures, treasury bills, and other money market instruments, depending on their category and investment strategy.
