Top Performing Credit Risk Funds in 1 Year

The below table shows a list Of the Best Credit Risk Funds Based on AUM, NAV, and minimum SIP.

Introduction to Top Performing Credit Risk Funds in 1 Year

HDFC Credit Risk Debt Fund

HDFC Credit Risk Debt Fund Direct-Growth is a Credit Risk mutual fund scheme from HDFC Mutual Fund. This fund has been in existence for 10 years and 6 months, having been launched on 06/03/2014.

HDFC Credit Risk Debt Fund Direct-Growth as a credit risk fund, manages assets valued at ₹ 7669.18 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.97%. This fund has an exit load of 0.5% and an expense ratio of 0.96%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 90.61%, and Other – 9.39%.

ICICI Pru Credit Risk Fund

ICICI Prudential Credit Risk Fund Direct Plan-Growth is a Credit Risk 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 Credit Risk Fund Direct Plan-Growth as a credit risk fund, manages assets valued at ₹6569.99 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 8.29%. This fund has an exit load of 1% and an expense ratio of 0.77%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 87.31%, and Other – 12.69%.

SBI Credit Risk Fund

SBI Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

SBI Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹2401.55 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.74%. This fund has an exit load of 0.75% and an expense ratio of 0.89%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 89.7%, and Other – 10.3%.

Nippon India Credit Risk Fund

Nippon India Credit Risk Fund Direct-Growth is a Credit Risk 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 Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹1027.94 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.61%. This fund has an exit load of 1% and an expense ratio of 0.69%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 94.07%, and Other – 5.93%.

Kotak Credit Risk Fund

Kotak Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

Kotak Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹779.46 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.74%. This fund has an exit load of 1% and an expense ratio of 0.79%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 85.44%, and Other – 14.56%.

HSBC Credit Risk Fund

HSBC Credit Risk Fund – Regular Plan – Growth is a Credit Risk mutual fund scheme from HSBC Mutual Fund. This fund has been in existence for 14 years and 11 months, having been launched on 08/10/2009.

HSBC Credit Risk Fund – Regular Plan – Growth as a credit risk fund, manages assets valued at ₹571.2 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.86%. This fund has an exit load of 3% and an expense ratio of 0.86%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises Equity, Debt – 99.56%, and Other – 0.44%.

Axis Credit Risk Fund

Axis Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from Axis Mutual Fund. This fund has been in existence for 10 years and 2 months, having been launched on 25/06/2014.

Axis Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹436.83 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.63%. This fund has an exit load of 1% and an expense ratio of 0.8%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 97.04%, and Other – 2.96%.

UTI Credit Risk Fund

UTI Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from UTI Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

UTI Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹370.47 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 0.32%. This fund has an exit load of 1% and an expense ratio of 0.9%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 90.44%, and Other – 9.56%.

Bandhan Credit Risk Fund

Bandhan Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from Bandhan Mutual Fund. This fund has been in existence for 7 years and 6 months, having been launched on 14/02/2017. 

Bandhan Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹330.45 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.55%. This fund has an exit load of 1% and an expense ratio of 0.68%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 96.35%, and Other – 3.65%.

Baroda BNP Paribas Credit Risk Fund

Baroda BNP Paribas Credit Risk Fund Direct-Growth is a Credit Risk mutual fund scheme from Baroda Bnp Paribas Mutual Fund. This fund has been in existence for 9 years and 8 months, having been launched on 08/01/2015.

Baroda BNP Paribas Credit Risk Fund Direct-Growth as a credit risk fund, manages assets valued at ₹141.08 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 8.74%. This fund has an exit load of 1% and an expense ratio of 0.79%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt – 95.94%, and Other – 4.06%.

What Are Credit Risk Funds?

Credit risk funds are a type of mutual fund that primarily invests in bonds and other debt securities with lower credit ratings. They aim to generate higher returns by taking on higher risk associated with these lower-rated investments.

These funds focus on bonds issued by companies with weaker credit ratings or high yields, which means they carry a greater risk of default compared to investment-grade bonds. The potential for higher returns compensates for this increased risk.

Investors in credit risk funds should be aware that while the potential returns can be attractive, the risk of loss is higher compared to funds investing in higher-rated, more secure debt.

Features Of Top Performing Credit Risk Funds in 1 Year

The main features of top-performing credit risk funds in 1 year include high returns, strong credit analysis, effective risk management, and liquidity. These funds excel by identifying high-yield opportunities while maintaining strategies to manage potential credit losses and ensuring ease of investor exit.

• High Returns: Top-performing credit risk funds generate substantial returns by investing in high-yield, lower-rated debt securities. Their superior performance in a favorable credit environment contributes to attractive yields compared to more conservative funds.
• Strong Credit Analysis: These funds rely on thorough credit analysis to select bonds with the best risk-reward profiles. Rigorous evaluation of issuer creditworthiness helps in minimizing defaults and optimizing portfolio returns.
• Effective Risk Management: Proactive risk management strategies are crucial. Top funds employ techniques like diversification, credit quality assessment, and monitoring to mitigate the impact of potential defaults and manage overall risk exposure.
• Liquidity: Good liquidity ensures that investors can buy or sell their fund units without significant price impact. Top-performing funds maintain adequate liquidity to meet redemption requests and capitalize on market opportunities effectively.

Best Performing Credit Risk Funds in 1 Year

The table below shows the Best-performing Credit Risk Funds Based on the highest to lowest expense ratio.

Top Performing Credit Risk Funds in 1 Year In India

The table below shows the Best Credit Risk Funds Based on the Highest 3Y CAGR.

Top Performing Credit Risk Funds in 1 Year List

The table below shows Best Performing Credit Risk Funds In India Based on Exit Load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.

Factors To Consider When Investing In Top Performing Credit Risk Funds in 1 Year

The main factors to consider when investing in top-performing credit risk funds in 1 year are the fund’s historical performance, credit quality of investments, risk management strategies, and fund manager’s expertise. Evaluating these aspects helps ensure that the fund aligns with your investment goals.

• Historical Performance: Review the fund’s past performance over one year to gauge its ability to deliver consistent returns. High past performance can be indicative of effective investment strategies but should be assessed alongside other factors for a balanced view.
• Credit Quality of Investments: Examine the credit ratings of the bonds in the fund’s portfolio. Higher-rated bonds generally imply lower risk, while lower-rated bonds, though riskier, can offer higher returns. A mix of both can influence the fund’s performance and risk.
• Risk Management Strategies: Assess the fund’s approach to managing credit risk. Effective risk management practices, such as diversification and regular monitoring, help mitigate potential losses from defaults and enhance the stability of returns.
• Fund Manager’s Expertise: Consider the experience and track record of the fund manager. A skilled manager with a strong background in credit risk management and investment strategies can significantly impact the fund’s performance and risk profile.

How To Invest In Top Performing Credit Risk Funds in 1 Year?

To invest in top-performing credit risk funds, start by researching and selecting funds with a strong track record over the past year. Evaluate their performance, risk management, and credit quality of investments to ensure they meet your investment goals.

Next, open an account with Alice Blue that offers access to a wide range of credit risk funds. Many platforms provide tools and resources to compare different funds and track their performance effectively.

Once your account is set up, use the brokerage platform to purchase shares of the chosen funds. Regularly monitor the fund’s performance and make adjustments as needed to stay aligned with your investment objectives.

Advantages Of Investing In Top Performing Credit Risk Funds in 1 Year

The main advantages of investing in top-performing credit risk funds in 1 year include potentially higher returns, diversification benefits, active risk management, and the expertise of fund managers. These factors contribute to optimizing returns while managing associated credit risks effectively.

• Potentially Higher Returns: Top-performing credit risk funds often invest in high-yield, lower-rated securities. This can lead to higher returns compared to more conservative investments, especially in a favorable economic environment where credit risk is well managed.
• Diversification Benefits: These funds typically hold a diverse portfolio of bonds, which helps spread credit risk across different issuers and sectors. Diversification reduces the impact of any single default on the overall fund performance.
• Active Risk Management: Top-performing funds employ rigorous risk management techniques to minimize potential losses from defaults. This includes continuous monitoring, credit analysis, and strategic adjustments to the portfolio to maintain risk within acceptable levels.
• Expertise of Fund Managers: Investing in these funds gives access to experienced fund managers who specialize in credit risk. Their expertise in analyzing and selecting high-yield investments can enhance the fund’s performance and effectively manage credit risk.

Risks Of Investing In Top Performing Credit Risk Funds in 1 Year

The main risks of investing in top-performing credit risk funds in 1 year include credit risk, market volatility, liquidity risk, and interest rate risk. Understanding these risks helps investors make informed decisions and manage potential downsides associated with high-yield investments.

• Credit Risk: Credit risk refers to the possibility of defaults by the bond issuers. Investing in lower-rated securities increases the likelihood of credit events, which can adversely affect the fund’s performance and result in losses.
• Market Volatility: Credit risk funds can be sensitive to market fluctuations. Changes in economic conditions or investor sentiment can lead to significant price volatility, impacting the fund’s returns and potentially causing short-term losses.
• Liquidity Risk: Liquidity risk involves the difficulty of selling fund holdings quickly without affecting their market price. Credit risk funds with lower liquidity might face challenges in meeting redemption requests or capitalizing on investment opportunities.
• Interest Rate Risk: Interest rate risk arises when rising rates decrease the value of fixed-income securities. As interest rates increase, the prices of bonds in the fund’s portfolio may drop, affecting the fund’s overall performance and returns.

Importance of Credit Risk Funds

Credit risk funds play a crucial role in diversifying investment portfolios by offering exposure to high-yield, lower-rated debt securities. They provide opportunities for higher returns compared to traditional investment-grade bonds, catering to investors seeking higher income.

These funds also help in balancing overall risk by including bonds with varying credit ratings. While they come with higher risk, their potential for increased returns and diversification benefits make them a valuable component for investors looking to enhance their portfolio’s income and growth potential.

How Long to Stay Invested in Credit Risk Funds?

The ideal investment horizon for credit risk funds is typically medium to long-term, ranging from 3 to 5 years. This duration allows investors to ride out market fluctuations and benefit from the higher yields associated with credit-risk investments.

Staying invested for an extended period helps mitigate the impact of short-term volatility and potential credit events. It also aligns with the nature of these funds, which require time to realize their full potential returns and manage associated risks effectively.

Tax Implications of Investing in Credit Risk Mutual Funds

Investing in credit-risk mutual funds can have various tax implications. Capital gains from the sale of units are subject to taxation, with short-term gains (holding period of less than three years) taxed at the investor’s income tax slab rate.

Long-term capital gains (holding period of more than three years) are taxed at a reduced rate of 20% with indexation benefits. Additionally, interest income from debt securities within the fund is taxed as per the investor’s applicable income tax slab.

Future of Credit Risk Funds

The future of credit risk funds appears promising due to the increasing demand for higher yields in a low-interest-rate environment. Investors seeking enhanced returns and diversification may drive growth in these funds, despite their higher risk profile.

Advancements in credit analysis and risk management techniques will likely improve fund performance and stability. As financial markets evolve, credit risk funds may adapt to new strategies and innovations to meet investor needs while managing credit risks more effectively.

Top Performing Credit Risk Funds in 1 Year FAQs  

Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.