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Five Best Credit Risk Debt Funds to Invest in

Highlights

  • Want to invest in credit risk funds? Choose from these options
  • The options include HDFC Credit Risk Fund, ICICI Credit Risk Fund, etc.

A credit risk fund is a debt fund that invests in corporate bonds and commercial papers. The money you invest in a credit risk fund goes to the mutual fund company, which further lends it to corporates. What makes credit risk funds distinct is that a minimum 65% of the portfolio should be invested in lower rated corporate debt.

The rating of the bonds in a credit risk fund is below AA, the highest rating for a corporate bond is AAA. Companies with healthy balance sheets and good credit history have a higher rating. These ratings are reviewed regularly and changes are made basis the company’s financial performance. A company’s rating could be upgraded or downgraded based on its performance.

Top Mutual Funds to Invest in Now

To know more about credit risk funds and if you should invest, you can read another post of ours- https://www.wishfin.com/mutual-fund/what-are-credit-risk-mutual-funds-and-should-you-invest-in-them/

Best Performing Credit Risk Debt Funds

HDFC Credit Risk Fund

This fund is offered by HDFC Mutual Fund. These are the key points about this fund:

  • This fund was launched on 25th March 2014 and has delivered 8.89% annualized returns since launch.
  • The fund manages an AUM of INR 6,309 crores.
  • The benchmark is the Nifty Credit Risk Bond Index.
  • It is rated four stars by Value Research.
  • The portfolio has 93 securities with an average maturity of 3.02 years and a yield to maturity of 10.05%
  • The credit quality of the portfolio is a mix with a major allocation of 40% in AA and 30% in AAA-rated securities.
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ICICI Prudential Credit Risk Fund

This fund is offered by ICICI Prudential Mutual Fund. These are the key points about this fund:

  • This fund was launched on 3rd Dec 2010 and has delivered 8.74% annualized returns since launch.
  • The fund manages an AUM of INR 6,562 crores.
  • The benchmark is CRISIL Short Term Credit Risk Index.
  • It is rated five stars by Value Research.
  • The portfolio has 75 securities with an average maturity of 1.91 years and a yield to maturity of 9.29%
  • The credit quality of the portfolio is a mix with a major allocation of 40% in AA and 30% in AAA-rated securities.

IDFC Credit Risk Fund

This fund is offered by IDFC Mutual Fund. These are the key points about this fund:

  • This fund was launched on 3rd March 2017 and has delivered 7.13% annualized returns since launch.
  • The fund manages an AUM of INR 837 crores.
  • The benchmark is Nifty AA Short Duration (65) and Nifty AAA Short Duration (35) Index.
  • It is rated five stars by Value Research.
  • The portfolio has 22 securities with an average maturity of 3.58 years and a yield to maturity of 6.89%
  • The credit quality of the portfolio is a mix with a major allocation of 30% in AA and 45% in AAA-rated securities.

SBI Credit Risk Fund

This fund is offered by SBI Mutual Fund. These are the key points about this fund:

  • This fund was launched on 14th July 2004 and has delivered 7.68% annualized returns since launch.
  • The fund manages an AUM of INR 3,895 crores.
  • The benchmark is CRISIL Composite Risk Index
  • It is rated four stars by Value Research.
  • The portfolio has 63 securities with an average maturity of 2.02 years and a yield to maturity of 8.77%
  • The credit quality of the portfolio is a mix with a major allocation of 40% in AA and 20% in AAA-rated securities.
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Invesco India Credit Risk Fund

This fund is offered by Invesco Mutual Fund. These are the key points about this fund:

  • This fund was launched on 4th Sep 2014 and has delivered 6.06% annualized returns since launch.
  • The fund manages an AUM of INR 146 crores.
  • The benchmark is CRISIL Composite AA Short Bond Index.
  • It is rated two stars by Value Research.
  • The portfolio has 15 securities with an average maturity of 1.51 years and a yield to maturity of 5.73%
  • The credit quality of the portfolio is good with more than 70% in AAA and sovereign- rated papers; the rest 30% is in AA+ rated papers

Let us now look at the returns delivered by these funds.

Returns of Credit Risk Debt Funds

The table below shows the returns of these credit risk debt funds in % terms for regular plans.

Fund NameLast 6 MonthsLast 1 YearLast 3 Years
ICICI Credit Risk4.8710.167.92
HDFC Credit Risk5.029.537.21
IDFC Credit Risk3.978.286.79
SBI Credit Risk4.838.906.76
Invesco Credit Risk5.289.182.49

These returns are dated 12th July 2020

If you are looking for investment in debt funds with no risk, it is advisable to invest in overnight or liquid funds. To know the best overnight and liquid funds, you can read other posts of ours.

Best Overnight Funds- https://www.wishfin.com/mutual-fund/five-best-overnight-debt-funds-to-invest-in/

Best Liquid Funds- https://www.wishfin.com/mutual-fund/5-best-performing-liquid-funds-to-invest-in/

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