Top Performing Credit Risk Funds in 10 Years

The below table shows a list Of the Top Performing Credit Risk Funds in 10 Years Based on AUM, NAV, and minimum SIP.

Introduction to Top Performing Credit Risk Funds in 10 Years

HDFC Credit Risk Debt Fund  

HDFC Credit Risk Debt Fund is a Credit Risk mutual fund scheme from HDFC Mutual Fund. This fund has been operational for 10 years and 6 months, having been launched on March 6, 2014.

HDFC Credit Risk Debt Fund falls under the Credit Risk Fund category with an AUM of ₹7,859.27 crores, a 5-year CAGR of 7.95%, an exit load of 0.5%, and an expense ratio of 0.96%. The SEBI risk category is Moderately High. Its asset allocation includes 77.92% in Corporate Debt, 10.07% in Government Securities, 5.03% in Secured Debt, 4.38% in REITs & InvIT, 1.65% in Cash & Equivalents, and 0.94% in Others.

ICICI Prudential Credit Risk Fund  

ICICI Prudential Credit Risk Fund is a Credit Risk mutual fund scheme from ICICI Prudential Mutual Fund. This fund has been operational for 11 years and 8 months, having been launched on January 1, 2013.

ICICI Prudential Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹6,763.39 crores, a 5-year CAGR of 8.26%, an exit load of 1%, and an expense ratio of 0.77%. The SEBI risk category is High. Its asset allocation includes 66.93% in Corporate Debt, 9.33% in Certificate of Deposit, 9.21% in Government Securities, 7.23% in REITs & InvIT, 6.99% in Cash & Equivalents, and 0.31% in Others.

SBI Credit Risk Fund  

SBI Credit Risk Fund is a Credit Risk mutual fund scheme from SBI Mutual Fund. This fund has been operational for 11 years and 8 months, having been launched on January 1, 2013.

SBI Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹2,433.86 crores, a 5-year CAGR of 7.69%, an exit load of 0.75%, and an expense ratio of 0.89%. The SEBI risk category is High. Its asset allocation includes 73.29% in Corporate Debt, 16.10% in Government Securities, 7.64% in REITs & InvIT, 2.66% in Cash & Equivalents, and 0.31% in Others.

Aditya Birla Sun Life Credit Risk Fund  

Aditya Birla Sun Life Credit Risk Fund is a Credit Risk mutual fund scheme from Aditya Birla Sun Life Mutual Fund. This fund has been operational for 9 years and 5 months, having been launched on March 30, 2015.

Aditya Birla Sun Life Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹915.42 crores, a 5-year CAGR of 7.69%, an exit load of 2%, and an expense ratio of 0.67%. The SEBI risk category is Moderately High. Its asset allocation includes 58.46% in Corporate Debt, 21.45% in Government Securities, 8.53% in REITs & InvIT, 7.55% in Floating-rate Debt, 3.24% in Cash & Equivalents, and 0.77% in Others.

Kotak Credit Risk Fund  

Kotak Credit Risk Fund is a Credit Risk mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been operational for 11 years and 8 months, having been launched on January 1, 2013.

Kotak Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹783.04 crores, a 5-year CAGR of 6.71%, an exit load of 1%, and an expense ratio of 0.79%. The SEBI risk category is High. Its asset allocation includes 68.74% in Corporate Debt, 10.93% in Government Securities, 9.66% in REITs & InvIT, 5.84% in Secured Debt, 4.36% in Cash & Equivalents, and 0.47% in Others.

Axis Credit Risk Fund  

Axis Credit Risk Fund is a Credit Risk mutual fund scheme from Axis Mutual Fund. This fund has been operational for 10 years and 2 months, having been launched on June 25, 2014.

Axis Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹440.65 crores, a 5-year CAGR of 7.65%, an exit load of 1%, and an expense ratio of 0.80%. The SEBI risk category is Moderately High. Its asset allocation includes 76.43% in Corporate Debt, 19.14% in Government Securities, 2.93% in REITs & InvIT, 0.70% in Cash & Equivalents, and 0.37% in Others.

DSP Credit Risk Fund  

DSP Credit Risk Fund is a Credit Risk mutual fund scheme from DSP Mutual Fund. This fund has been operational for 11 years and 8 months, having been launched on January 1, 2013.

DSP Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹193.16 crores, a 5-year CAGR of 8.98%, an exit load of 1%, and an expense ratio of 0.40%. The SEBI risk category is Moderately High. Its asset allocation includes 72.64% in Corporate Debt, 21.69% in Government Securities, 5.35% in Cash & Equivalents, and 0.32% in Others.

Baroda BNP Paribas Credit Risk Fund  

Baroda BNP Paribas Credit Risk Fund is a Credit Risk mutual fund scheme from Baroda Mutual Fund. This fund has been operational for 8 years and 8 months, having been launched on January 23, 2015.

Baroda BNP Paribas Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹142.46 crores, a 5-year CAGR of 8.60%, an exit load of 1%, and an expense ratio of 0.79%. The SEBI risk category is Moderately High. Its asset allocation includes 76.33% in Corporate Debt, 14.08% in Government Securities, 8.17% in REITs & InvIT, 1.08% in Cash & Equivalents, and 0.34% in Others.

Invesco India Credit Risk Fund  

Invesco India Credit Risk Fund is a Credit Risk mutual fund scheme from Invesco Mutual Fund. This fund has been operational for 10 years and 1 month, having been launched on August 14, 2014.

Invesco India Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹140.83 crores, a 5-year CAGR of 7.56%, an exit load of 4%, and an expense ratio of 0.28%. The SEBI risk category is Moderate. Its asset allocation includes 53.38% in Corporate Debt, 36.34% in Government Securities, 9.99% in Cash & Equivalents, and 0.29% in Others.

Bank of India Credit Risk Fund  

Bank of India Credit Risk Fund is a Credit Risk mutual fund scheme from Bank of India Mutual Fund. This fund has been operational for 9 years and 7 months, having been launched on February 6, 2015.

Bank of India Credit Risk Fund falls under the Credit Risk Fund category with an AUM of ₹126.72 crores, a 5-year CAGR of 10.55%, an exit load of 3%, and an expense ratio of 1.19%. The SEBI risk category is Moderately High. Its asset allocation includes 63.77% in Corporate Debt, 22.03% in Government Securities, 12.09% in Certificate of Deposit, 1.73% in Cash & Equivalents, and 0.38% in Others.

What Are Credit Risk Funds?

Credit Risk Funds are a category of debt mutual funds that invest at least 65% of their assets in lower-rated corporate bonds. These funds aim to generate higher returns by taking on greater credit risk and investing in bonds with credit ratings below the highest grade (AAA) offered by credit rating agencies.

These funds typically invest in bonds rated AA and below, which offer higher yields due to their increased risk of default. The fund managers conduct thorough credit analysis to identify potentially undervalued bonds with strong fundamentals despite their lower ratings.

Credit Risk Funds are suitable for investors with a higher risk appetite who are seeking potentially higher returns than traditional debt funds. However, they also carry a higher risk of default and potential capital loss compared to funds investing in higher-rated securities.

Features Of Top Performing Credit Risk Funds in 10 Years

The main features of top-performing Credit Risk Funds in 10 years include higher yield potential, active credit management, diversification within lower-rated bonds, and professional risk assessment. These funds aim to capitalize on opportunities in the lower-rated corporate bond market.

• Higher yield potential: Credit Risk Funds invest in lower-rated bonds that typically offer higher yields compared to higher-rated securities, potentially leading to better returns.

• Active credit management: Fund managers actively monitor and analyze the creditworthiness of issuers, aiming to identify improving credit profiles and manage default risks.

• Diversification: These funds typically hold a diversified portfolio of lower-rated bonds across various sectors to spread credit risk and potentially enhance overall returns.

• Professional risk assessment: Experienced fund managers conduct thorough credit analysis to evaluate the risk-reward trade-off of each investment, aiming to optimize the portfolio’s risk-return profile.

Best Performing Credit Risk Funds in 10 Years

The table below shows the Best Performing Credit Risk Funds in 10 Years Based on the lowest to highest expense ratio.

Top Performing Credit Risk Funds in 10 Years In India

The table below shows the Top Performing Credit Risk Funds in 10 Years In India based on the Highest 3Y CAGR.

Top Performing Credit Risk Funds in 10 Years List

The table below shows the Top Performing Credit Risk Funds in 10 Years 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 10 Years

The main factors to consider when investing in top-performing Credit Risk Funds in 10 years include credit quality of holdings, fund manager expertise, diversification, liquidity management, and your risk tolerance. These factors can significantly impact the fund’s performance and suitability for your portfolio.

• Credit quality: Analyze the fund’s portfolio composition, focusing on the credit ratings of its holdings and the fund’s exposure to different rating categories.

• Fund manager expertise: Evaluate the fund manager’s experience and track record in managing credit risk funds, as their expertise in credit analysis is crucial.

• Diversification: Look for funds that maintain a well-diversified portfolio across sectors and issuers to help mitigate individual credit risks.

• Liquidity management: Assess the fund’s approach to managing liquidity, as lower-rated bonds can be less liquid in stressed market conditions.

• Risk tolerance: Ensure your risk appetite aligns with the higher risk profile of credit risk funds. These funds can be more volatile than other debt fund categories.

How To Invest In Top Performing Credit Risk Funds in 10 Years?

To invest in top-performing Credit Risk Funds in 10 years, start by researching and comparing different funds based on their performance, credit quality of holdings, and fund manager expertise. Once you’ve selected a fund that aligns with your risk tolerance and investment goals, you can invest through Alice Blue.

Alice Blue is a user-friendly online investment platform that provides tools and resources to help you make informed investment decisions. You can choose to invest a lump sum amount or opt for a Systematic Investment Plan (SIP), which allows you to invest a fixed amount regularly.

Remember that Credit Risk Funds carry higher risk compared to other debt fund categories. It’s advisable to invest only a portion of your debt portfolio in these funds and maintain a long-term investment horizon to potentially benefit from the higher yields while managing the associated risks.

Advantages Of Investing In Top Performing Credit Risk Funds in 10 Years?

The main advantages of investing in top-performing Credit Risk Funds in 10 years include the potential for higher returns, yield enhancement, exposure to improving credits, and professional credit management. These funds offer opportunities to capitalize on the higher yields of lower-rated bonds.

• Higher return potential: Credit Risk Funds invest in lower-rated bonds that typically offer higher yields, potentially leading to better overall returns compared to funds investing in only high-rated securities.

• Yield enhancement: These funds can serve as a yield-enhancing component in a diversified debt portfolio, potentially boosting overall portfolio returns.

• Exposure to improving credits: Credit Risk Funds may benefit from credit rating upgrades of their holdings, which can lead to capital appreciation in addition to yield returns.

• Professional credit management: Experienced fund managers conduct thorough credit analysis and actively manage the portfolio, potentially identifying undervalued opportunities in the lower-rated bond market.

Risks Of Investing In Top Performing Credit Risk Funds in 10 Years?

The main risks of investing in top-performing Credit Risk Funds in 10 years include credit default risk, liquidity risk, interest rate risk, and potential for higher volatility. These factors can impact the fund’s performance and lead to potential capital loss.

• Credit default risk: The primary risk is the potential for bond issuers to default on their payments, which can lead to significant capital loss for the fund.

• Liquidity risk: Lower-rated bonds may be less liquid, potentially making it difficult for the fund to sell holdings in stressed market conditions without incurring losses.

• Interest rate risk: Like all debt funds, Credit Risk Funds are subject to interest rate risk, where rising rates can lead to a decline in bond prices.

• Higher volatility: These funds can experience higher volatility compared to other debt fund categories, especially during periods of economic uncertainty or market stress.

Importance of Credit Risk Funds

The main importance of Credit Risk Funds lies in their potential to offer higher yields, provide exposure to a broader credit spectrum, and serve as a yield-enhancing component in diversified portfolios. These funds play a crucial role for certain investors seeking higher returns in the debt market.

• Higher yield potential: Credit Risk Funds offer exposure to higher-yielding lower-rated bonds, potentially providing better returns compared to funds investing only in high-grade securities.

• Broader credit exposure: These funds allow investors to access a wider spectrum of the corporate bond market, including potentially undervalued securities with improving credit profiles.

• Portfolio diversification: Credit Risk Funds can serve as a yield-enhancing component in a diversified debt portfolio, potentially improving overall portfolio returns.

• Professional credit analysis: These funds provide retail investors access to professional credit analysis and management, which may not be feasible for individual investors in the complex corporate bond market.

How Long to Stay Invested in Credit Risk Funds?

The ideal investment horizon for Credit Risk Funds is typically 3-5 years or longer. This extended timeframe allows investors to potentially benefit from the higher yields of lower-rated bonds while providing time for the fund to manage and recover from any potential credit events or market volatility.

A longer investment period also aligns with the credit cycle, giving time for potential credit rating upgrades of fund holdings. However, it’s important to regularly review your investment and reassess your risk tolerance, as the credit market conditions and fund performance can change over time.

Tax Implications of Investing in Credit Risk Funds

Credit Risk Funds are taxed as debt mutual funds in India. For holding periods up to 3 years, gains are considered short-term capital gains and taxed at the investor’s income tax slab rate. For holding periods over 3 years, gains are treated as long-term capital gains.

Long-term capital gains from Credit Risk Funds are taxed at 20% with indexation benefits. Indexation adjusts the purchase price for inflation, potentially reducing the tax liability. This tax treatment can make Credit Risk Funds more tax-efficient for long-term investors compared to fixed deposits or other interest-bearing instruments.

Future of Credit Risk Funds

The future of Credit Risk Funds in India remains uncertain, influenced by factors such as regulatory changes, market dynamics, and investor sentiment. These funds have faced challenges in recent years due to high-profile defaults and liquidity issues in the corporate bond market.

However, as the credit market evolves and risk management practices improve, Credit Risk Funds may continue to play a role for investors seeking higher yields. The future performance and popularity of these funds will likely depend on their ability to effectively manage risks and deliver consistent returns in varying market conditions.

Top Performing Credit Risk Funds in 10 Years 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.