Risk-averse investors in India have long preferred bank fixed deposits (FDs). But now it is not so. Interest rates on FDs have come down over the years, which has also reduced the attractiveness of investors towards it. Corporate bonds can be a good alternative to bank FDs for investors looking for low-risk investment options. So let’s take a look at the best corporate bond funds to invest in and the reasons to invest in them.
Know what are Corporate Bond Funds
Corporate bond funds, also known as non-convertible debentures, are debt funds that invest at least 80% of their capital in a corporation with the best credit rating. A credit rating given by a rating agency like CRISIL or Value Research can be used to assess the safety of a corporate bond. Corporate bond funds delivered an average return of around 7% in the past year. Their three- and five-year average returns are over 8% and 9% respectively. Which is better than the interest rates offered on FDs by major banks like SBI, HDFC. Know further about the Best 4 Corporate Bond Funds.
Aditya Birla Sun Life Corporate Bond Fund
Aditya Birla Sun Life Corporate Bond Fund has got a 5 star rating from Value Research. The one-year return of this fund is 7.99 percent and the 3-year return is 9.45 percent. Companies in which it has invested include National Bank for Agriculture and Rural Development, Rural Electrification Corporation Limited, Housing Development Finance Corporation Limited, HDB Financial Services Limited and State of Madhya Pradesh.
ICICI Prudential Corporate Bond Fund
ICICI Prudential Corporate Bond Fund has also received a 5 star rating from Value Research. The one-year return of this fund is 7.47 per cent and the three-year return is 9.15 per cent. The fund has an Asset Under Management (AUM) of Rs 19706 crore. The fund has investments in companies such as National Bank for Agriculture and Rural Development, Housing Development Finance Corp Ltd, Rural Electrification Corp Ltd and LIC Housing Finance Ltd.
Kotak Corporate Bond Fund
Kotak Corporate Bond Fund has a 4-star rating from Value Research. The one-year return of this fund is 6.90 per cent and the 3-year return is 8.43 per cent. The three year, five year and ten year returns of this fund are higher than the average returns of all the categories. The AUM of this fund is Rs 9310 crore. Explain that AUM is the total money that has been invested by the investors in a scheme / fund.
Axis Corporate Debt Fund
Axis Corporate Debt Fund has given one year return of 9.09 per cent and 3-year return of 8.92 per cent. This fund has got 3 star rating from Value Research. The AUM of this fund is Rs 4089 crore.