The table below shows a list Of the Best Floating Rate Mutual Funds Based on AUM, NAV, and minimum SIP.
| Name | AUM (Cr) | NAV (Rs) | Minimum SIP (Rs) |
| HDFC Floating Rate Debt Fund | 15,209.67 | 47.72 | 100.00 |
| Aditya Birla SL Floating Rate Fund | 12,671.53 | 335.15 | 1000 |
| ICICI Pru Floating Interest Fund | 8,965.52 | 433.9 | 100 |
| Nippon India Floating Rate Fund | 7,764.33 | 44.39 | 100.00 |
| Kotak Floating Rate Fund | 4,086.92 | 1,442.91 | 100 |
| UTI Floater Fund | 1,367.69 | 1,472.15 | 500.00 |
| SBI Floating Rate Debt Fund | 1,126.76 | 12.63 | 1,000.00 |
| DSP Floater Fund | 891.77 | 12.51 | 100 |
| Franklin India Floating Rate Fund | 303.63 | 41.5 | 500 |
| Bandhan Floating Rate Fund | 277.49 | 12.3 | 100 |
Introduction to Floating Rate Mutual Funds
HDFC Floating Rate Debt Fund
HDFC Floating Rate Debt Fund Direct Plan-Growth is a Floater mutual fund scheme from HDFC Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.
HDFC Floating Rate Debt Fund as a floating rate mutual fund, manages assets valued at ₹15,209.67 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.99%. This fund has an exit load of 0.1% and an expense ratio of 0.26%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 96.16%, and Other – 3.84%.
Aditya Birla SL Floating Rate Fund
Aditya Birla Sun Life Floating Rate Direct Fund-Growth is a Floater mutual fund scheme from Aditya Birla Sun Life Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.
Aditya Birla Sun Life Floating Rate Direct Fund-Growth as a floating rate mutual fund, manages assets valued at ₹12,671.53 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.67%. This fund has no exit load and an expense ratio of 0.23%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 96.94%, and Other – 3.06%.
ICICI Pru Floating Interest Fund
ICICI Prudential Floating Interest Fund Direct Plan-Growth is a Floater mutual fund scheme from ICICI Prudential Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.
ICICI Prudential Floating Interest Fund as a floating rate mutual fund, manages assets valued at ₹8,965.52 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.44%. This fund has no exit load and an expense ratio of 0.56%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 94.75%, and Other – 5.25%.
Nippon India Floating Rate Fund
Nippon India Floating Rate Fund Direct-Growth is a Floater mutual fund scheme from Nippon India Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.
Nippon India Floating Rate Fund as a floating rate mutual fund, manages assets valued at ₹7,764.33 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.15%. This fund has no exit load and an expense ratio of 0.31%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 94.84%, and Other – 5.16%.
Kotak Floating Rate Fund
Kotak Floating Rate Fund Direct-Growth is a Floater mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 5 years and 4 months, having been launched on 09/05/2019.
Kotak Floating Rate Fund as a floating rate mutual fund, manages assets valued at ₹4,086.92 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.05%. This fund has no exit load and an expense ratio of 0.24%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 97.58%, and Other – 2.42%.
UTI Floater Fund
UTI Floater Fund Direct-Growth is a Floater mutual fund scheme from UTI Mutual Fund. This fund has been in existence for 5 years and 11 months, having been launched on 12/10/2018.
UTI Floater Fund Direct – Growth as a floating rate mutual fund, manages assets valued at ₹1,367.69 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.28%. This fund has no exit load and an expense ratio of 0.43%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 89.98%, and Other – 10.02%.
SBI Floating Rate Debt Fund
SBI Floating Rate Debt Fund Direct-Growth is a Floater mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 3 years and 11 months, having been launched on 06/10/2020.
SBI Floating Rate Debt Fund Direct-Growth as a floating rate mutual fund, manages assets valued at ₹1,126.76 crores. Over the past 3 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.47%. This fund has no exit load and an expense ratio of 0.26%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 95.85%, and Other – 4.15%.
DSP Floater Fund
DSP Floater Fund Direct-Growth is a Floater mutual fund scheme from DSP Mutual Fund. This fund has been in existence for 3 years and 6 months, having been launched on 04/03/2021.
DSP Floater Fund Direct – Growth as a floating rate mutual fund, manages assets valued at ₹891.77 crore. Over the past 3 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.5%. This fund has no exit load and an expense ratio of 0.24%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 98.9%, and Other – 1.1%.
Franklin India Floating Rate Fund
Franklin India Floating Rate Fund Direct-Growth is a Floater mutual fund scheme from Franklin Templeton Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.
Franklin India Floating Rate Fund as a floating rate mutual fund, manages assets valued at ₹303.63 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.54%. This fund has no exit load and an expense ratio of 0.24%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 98.65%, and Other – 1.35%.
Bandhan Floating Rate Fund
Bandhan Floating Rate Fund Direct-Growth is a Floater mutual fund scheme from Bandhan Mutual Fund. This fund has been in existence for 3 years and 7 months, having been launched on 10/02/2021.
Bandhan Floating Rate Fund as a floating rate mutual fund, manages assets valued at ₹277.49 crore. Over the past 3 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.2%. This fund has no exit load and an expense ratio of 0.3%. According to SEBI, it falls under the moderate-risk category. The fund’s asset allocation comprises: No Equity, Debt – 94.54%, and Other – 5.46%.
Floating Rate Fund Meaning
A floating rate fund is a type of investment vehicle that primarily invests in debt securities with interest rates that adjust periodically. These adjustments are typically linked to a benchmark rate, such as LIBOR or the U.S. Treasury yield.
The main advantage of floating rate funds is their potential to provide protection against rising interest rates. As rates increase, the interest income from the underlying securities rises as well, which can help preserve the fund’s value compared to fixed-rate bonds.
Investors in floating rate funds often seek diversification and relatively stable income. These funds can be appealing during periods of economic uncertainty, as they tend to have lower interest rate risk, making them a strategic choice for conservative investors.
Features of the Best Floating Rate Mutual Fund India
The main features of the best floating rate mutual funds in India include lower interest rate risk, enhanced liquidity, diversified portfolios, and potential for attractive returns. These attributes make them appealing for investors seeking stable income while mitigating the impact of rising interest rates.
- Lower Interest Rate Risk: Floating rate funds adjust their interest payments based on market rates, reducing exposure to interest rate fluctuations. This feature helps protect capital during periods of rising rates, making them a safer investment compared to fixed-rate funds.
- Enhanced Liquidity: Many floating rate mutual funds offer daily liquidity, allowing investors to enter or exit their positions with ease. This feature provides flexibility and convenience, appealing to those who may need quick access to their investments.
- Diversified Portfolios: These funds typically invest in a variety of debt instruments, including corporate bonds, government securities, and other floating rate assets. This diversification helps spread risk and enhances the potential for consistent returns over time.
- Potential for Attractive Returns: By linking returns to market interest rates, floating rate funds can provide attractive yields, particularly in a rising rate environment. This makes them an appealing option for income-seeking investors looking to maximize their returns while managing risk.
Top Floating Rate Mutual Funds Based on Expense Ratio
The table below shows the Best-performing Floating Rate Mutual Funds Based on the highest to lowest expense ratio.
| Name | Expense Ratio (%) | Minimum SIP (Rs) |
| ICICI Pru Floating Interest Fund | 0.56 | 100 |
| UTI Floater Fund | 0.43 | 500.00 |
| Nippon India Floating Rate Fund | 0.31 | 100.00 |
| Bandhan Floating Rate Fund | 0.3 | 100 |
| Tata Floating Rate Fund | 0.3 | 500 |
| HDFC Floating Rate Debt Fund | 0.26 | 100.00 |
| SBI Floating Rate Debt Fund | 0.26 | 1,000.00 |
| Kotak Floating Rate Fund | 0.24 | 100 |
| DSP Floater Fund | 0.24 | 100 |
| Franklin India Floating Rate Fund | 0.24 | 500 |
Best Floating Rate Mutual Funds Based on 3Y CAGR
The table below shows the Best Floating Rate Mutual Funds Based on the Highest 3Y CAGR.
| Name | CAGR 3Y (Cr) | Minimum SIP (Rs) |
| Axis Floater Fund | 7.08 | 1,000.00 |
| Franklin India Floating Rate Fund | 6.82 | 500 |
| ICICI Pru Floating Interest Fund | 6.71 | 100 |
| HDFC Floating Rate Debt Fund | 6.57 | 100.00 |
| DSP Floater Fund | 6.5 | 100 |
| SBI Floating Rate Debt Fund | 6.47 | 1,000.00 |
| Aditya Birla SL Floating Rate Fund | 6.42 | 1000 |
| Tata Floating Rate Fund | 6.37 | 500 |
| Bandhan Floating Rate Fund | 6.2 | 100 |
| Nippon India Floating Rate Fund | 6.15 | 100.00 |
List Of Floating Rate Mutual Funds Based on Exit Load
The table below shows Best Performing Floating Rate Mutual Funds In India Based on Exit Load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.
| Name | AMC | Exit Load (%) |
| SBI Floating Rate Debt Fund | SBI Funds Management Limited | 0.1 |
| Axis Floater Fund | Axis Asset Management Company Ltd. | 0 |
| Franklin India Floating Rate Fund | Franklin Templeton Asset Management (India) Private Limited | 0 |
| ICICI Pru Floating Interest Fund | ICICI Prudential Asset Management Company Limited | 0 |
| HDFC Floating Rate Debt Fund | HDFC Asset Management Company Limited | 0 |
| DSP Floater Fund | DSP Investment Managers Private Limited | 0 |
| Aditya Birla SL Floating Rate Fund | Aditya Birla Sun Life AMC Limited | 0 |
| Tata Floating Rate Fund | Tata Asset Management Private Limited | 0 |
| Bandhan Floating Rate Fund | Bandhan AMC Limited | 0 |
| Nippon India Floating Rate Fund | Nippon Life India Asset Management Limited | 0 |
Floating Rate Mutual Funds Returns
The table below shows Floating Rate Mutual Funds Returns Based on 1-year returns.
| Name | Absolute Returns – 1Y (%) | Minimum SIP (Rs) |
| Axis Floater Fund | 10.17 | 1,000.00 |
| DSP Floater Fund | 9.26 | 100 |
| Franklin India Floating Rate Fund | 8.69 | 500 |
| Bandhan Floating Rate Fund | 8.28 | 100 |
| SBI Floating Rate Debt Fund | 8.21 | 1,000.00 |
| Kotak Floating Rate Fund | 8.2 | 100 |
| ICICI Pru Floating Interest Fund | 8.17 | 100 |
| HDFC Floating Rate Debt Fund | 8.16 | 100.00 |
| Nippon India Floating Rate Fund | 8.08 | 100.00 |
| Aditya Birla SL Floating Rate Fund | 7.82 | 1000 |
Historical Performance of Floating Rate Funds
The table below shows the Historical Performance Of Floating Rate Mutual Funds based on 5Y return
| Name | CAGR 5Y (Cr) | Minimum SIP (Rs) |
| ICICI Pru Floating Interest Fund | 7.44 | 100 |
| Nippon India Floating Rate Fund | 7.15 | 100.00 |
| Kotak Floating Rate Fund | 7.05 | 100 |
| HDFC Floating Rate Debt Fund | 6.99 | 100.00 |
| Aditya Birla SL Floating Rate Fund | 6.67 | 1000 |
| Franklin India Floating Rate Fund | 6.54 | 500 |
| UTI Floater Fund | 6.28 | 500.00 |
Factors to Consider When Investing in Floating Rate Mutual Funds
The main factors to consider when investing in floating rate mutual funds include the credit quality of underlying securities, expense ratios, interest rate outlook, and the fund manager’s experience. Evaluating these aspects can help investors make informed decisions for their portfolios.
- Credit Quality of Underlying Securities: Assessing the creditworthiness of the bonds within the fund is crucial. Higher credit quality reduces default risk, while lower quality may offer higher yields but increases potential volatility. A balanced approach can enhance overall fund stability.
- Expense Ratios: The expense ratio reflects the cost of managing the fund, impacting net returns. Lower expense ratios are generally preferable, as they allow more of the fund’s earnings to be passed on to investors. Comparing ratios across similar funds is essential.
- Interest Rate Outlook: Understanding current and projected interest rate trends is vital when investing in floating rate funds. A rising rate environment typically benefits these funds, while declining rates may limit their appeal. Keeping abreast of economic indicators can guide investment timing.
- Fund Manager’s Experience: The expertise and track record of the fund manager play a significant role in the fund’s performance. Experienced managers are better equipped to navigate market fluctuations and make strategic decisions, enhancing the potential for consistent returns over time.
How to Invest in Top Floating Rate Funds?
To invest in top floating rate funds, start by researching various options available in the market. Look for funds with a strong track record, low expense ratios, and a diversified portfolio. Understanding fund performance and management style is crucial before making a decision.
Once you’ve shortlisted potential funds, choose a reliable brokerage platform for your investment. Platforms like Alice Blue offer user-friendly interfaces and a wide range of mutual funds, including floating rate options. They provide tools and resources to help you compare funds effectively.
After selecting a fund, open an account with your chosen brokerage, such as Alice Blue. Complete the necessary KYC procedures and fund your account. You can then purchase your desired floating rate mutual fund units, either as a lump sum or through a systematic investment plan (SIP).
Impact of Market Trends on Top Floating Rate Mutual Funds
Market trends significantly influence floating rate mutual funds, primarily through interest rate movements. As central banks adjust rates to control inflation, floating rate funds benefit from higher yields when interest rates rise, enhancing their overall performance and attractiveness to investors.
Economic conditions also play a crucial role in shaping investor sentiment. During periods of uncertainty or recession, demand for floating rate funds may increase as they offer better protection against rising rates compared to fixed-income investments. This shift can lead to higher inflows and improved fund performance.
Additionally, credit market trends affect the underlying securities of floating rate funds. A tightening credit environment can increase default risk, impacting fund returns. Conversely, a favorable credit environment can enhance the stability and performance of these funds, making them appealing to risk-averse investors.
How Floating Rate Funds Perform in Volatile Markets?
Floating rate funds generally perform well in volatile markets, particularly during periods of rising interest rates. Their interest payments adjust regularly, allowing them to capture higher yields, which can help maintain their value compared to fixed-rate investments that may decline.
In uncertain economic conditions, investors often seek safer investment options, increasing demand for floating rate funds. This heightened interest can lead to increased inflows, providing the funds with additional capital for diversification and stability, ultimately enhancing their performance during market turbulence.
However, floating rate funds are not immune to risks. If volatility leads to wider credit spreads or increased defaults among underlying securities, it could negatively impact fund returns. Therefore, while they offer some protection, investors should remain vigilant about the quality of the securities held within the fund.
Advantages of Investing in Floating Rate Mutual Funds
The main advantages of investing in floating rate mutual funds include reduced interest rate risk, potential for higher returns, diversification benefits, and liquidity. These features make them an appealing option for investors seeking stability and income in fluctuating interest rate environments.
- Reduced Interest Rate Risk: Floating rate mutual funds adjust their interest payments based on market rates, which helps mitigate the impact of rising interest rates. This characteristic provides a safeguard for capital compared to fixed-rate investments, enhancing overall portfolio stability.
- Potential for Higher Returns: These funds typically offer attractive yields, especially in a rising interest rate environment. As interest rates increase, the fund’s income also rises, providing investors with the opportunity for enhanced returns compared to traditional fixed-income securities.
- Diversification Benefits: Investing in floating rate mutual funds allows for exposure to a range of debt instruments, including corporate bonds and government securities. This diversification can reduce overall portfolio risk while providing opportunities for steady income from various sources.
- Liquidity: Floating rate mutual funds often offer daily liquidity, allowing investors to buy or sell shares easily. This feature provides flexibility and quick access to funds, making them suitable for investors who may need immediate access to their capital.
Risks of Investing in Floating Rate Mutual Funds
The main risks of investing in floating rate mutual funds include credit risk, market risk, interest rate risk, and liquidity risk. Understanding these risks is crucial for investors to make informed decisions and manage their portfolios effectively.
- Credit Risk: Floating rate funds invest in various debt instruments, which may carry varying levels of credit quality. If a borrower defaults, it can negatively impact the fund’s performance. Investors should assess the creditworthiness of the underlying securities to mitigate this risk.
- Market Risk: These funds are still subject to market fluctuations that can affect their value. Economic downturns or changes in investor sentiment can lead to volatility, potentially resulting in capital losses. Investors should be prepared for short-term price fluctuations.
- Interest Rate Risk: Although floating rate funds adjust to rising interest rates, they can still experience declines in value during periods of falling rates. In such scenarios, the income generated may also decrease, affecting overall returns and investor expectations.
- Liquidity Risk: While many floating rate mutual funds offer daily liquidity, some may hold illiquid securities that can be challenging to sell in unfavorable market conditions. This risk can hinder investors’ ability to access their funds promptly when needed.
Contribution of Floating Rate Funds to Portfolio Diversification
Floating rate funds contribute significantly to portfolio diversification by providing exposure to interest-sensitive debt instruments. Their unique ability to adjust interest payments in response to market rates helps mitigate interest rate risk, balancing the overall risk profile of a diversified investment portfolio.
Incorporating floating rate funds can enhance returns, especially during periods of rising rates. They offer a steady income stream while reducing correlation with traditional fixed-income securities. This characteristic makes them an appealing choice for investors seeking to optimize returns while managing risk across various asset classes.
Who Should Invest in Floating Rate Funds?
Investors seeking protection against rising interest rates should consider floating rate funds. These funds are ideal for those looking for a relatively stable income with lower interest rate risk, making them suitable for conservative investors or those nearing retirement who prioritize capital preservation.
Additionally, floating rate funds are appropriate for individuals looking to diversify their investment portfolios. They can be a strategic choice for those wanting to balance fixed-income exposure while capturing potential yields in a fluctuating interest rate environment, enhancing overall portfolio performance.
Impact of Fund Manager Expertise on Floating Rate Mutual Funds Performance
The expertise of fund managers plays a critical role in the performance of floating rate mutual funds. Experienced managers can make informed decisions about interest rate trends, credit quality, and market dynamics, ultimately impacting the fund’s returns and risk management strategies.
Additionally, skilled fund managers can enhance portfolio diversification by selecting high-quality securities that align with the fund’s objectives. Their ability to navigate volatile markets and adapt strategies accordingly can lead to better performance, ensuring that investors benefit from stable income and capital preservation.
How Much Money Should I Invest In Floating Rate Funds?
The amount to invest in floating rate funds depends on individual financial goals, risk tolerance, and overall portfolio allocation. Typically, financial advisors recommend allocating a portion of fixed-income investments to these funds to enhance income while mitigating interest rate risk.
Consider investing a percentage that aligns with your long-term objectives, such as 10-20% of your fixed-income allocation. Regularly review your investment strategy and adjust based on changing market conditions and personal financial circumstances to ensure that your allocation remains appropriate and effective.
FAQs – List Of Floating Rate Mutual Funds
A floating rate fund is a type of mutual fund that primarily invests in debt securities with interest rates that fluctuate based on market benchmarks. These funds aim to provide income while minimizing interest rate risk, making them appealing during rising rate environments.
Top Floating Rate Mutual Funds #1: HDFC Floating Rate Debt Fund
Top Floating Rate Mutual Funds #2: Aditya Birla SL Floating Rate Fund
Top Floating Rate Mutual Funds #3: ICICI Pru Floating Interest Fund
Top Floating Rate Mutual Funds #4: Nippon India Floating Rate Fund
Top Floating Rate Mutual Funds #5: Kotak Floating Rate Fund
These funds are listed based on the Highest AUM.
The Best Floating Rate Mutual Funds based on expense ratio include ICICI Pru Floating Interest Fund, UTI Floater Fund, Nippon India Floating Rate Fund, Bandhan Floating Rate Fund, and Tata Floating Rate Fund.
Investing in floating rate funds is generally considered safer than fixed-rate funds, as they adjust interest payments with market rates, reducing interest rate risk. However, they still carry credit risk and market volatility, so assessing individual risk tolerance is essential.
The best Floating Rate Mutual Funds based on the highest 3 Year CAGR include Axis Floater Fund, Franklin India Floating Rate Fund, ICICI Pru Floating Interest Fund, HDFC Floating Rate Debt Fund, and DSP Floater Fund.
To invest in the best floating rate mutual fund, research fund options based on performance, expense ratios, and credit quality. Use a reliable brokerage platform like Alice Blue to facilitate your investment, and consider setting up a systematic investment plan (SIP) for consistent contributions.
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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change over time.
