- Date : 30/12/2022
- Read: 3 mins
Investing in bond funds might be more effective than buying individual bonds.
Bond funds are mutual funds that only invest in bonds and are also called debt funds. These funds have a principal repayment date of maturity, and you must make monthly payments for interest. You get immediate diversification with bond funds for a small investment. The best bond funds have higher interest rate risk because of an inverse relationship between bond prices and interest rates. Investors satisfied with market volatility can opt for the best bond funds in India in 2023.
Also Read: What are corporate bond funds?
Best Bonds funds to Buy in India in 2023
These are the best bond funds to buy in India next year:
Tata Income Fund Direct-Growth (3Y Annualized return: 5.97%)
Among the best bond funds to invest in, the Tata Income Fund Direct-Growth provides capital appreciation/income distribution over the long to medium term. Its returns have overtaken the benchmark in the past three years. Interestingly it has 0 exit load. Its average credit rating is AAA, and its holdings are of high quality.
ICICI Prudential Long-Term Bond Fund Direct-Plan-Growth (3Y Annualized return: 4.88%)
Another one of the best bond funds to invest in, this fund tries to generate returns regularly by investing 75% in debt instruments. It invests the remaining 25% in the money market. The idea is to get optimum safety, liquidity, and yield balance. The fund has constantly been top-ranked and has 0 exit load. Its average credit rating is AAA, and its holdings are of high quality.
Nippon India Income Fund (Growth) (3Y Annualized return: 5.07%)
Among the best bond funds to buy in India, Nippon India Mutual Fund launched the Nippon India Income Fund (Growth). Investors were able to invest in it on June 30, 1995. The current fund manager of the scheme is Prashant R. Pimple. It seeks to get capital appreciation and moderately risked optimal returns. It majorly invests in debt instruments. However, it also invests in the money market.
Also Read: Key differences between debentures and bonds.
UTI Bond Fund Direct-Growth (3Y Annualized return: 7.30%)
Among the best bond funds to buy in India, the fund tries to get optimal returns by investing in money market instruments and debt with adequate liquidity. It aims for a Macaulay portfolio duration of 4-7 years. Its returns have overtaken the benchmark in the past three years.
LIC MF Bond Fund Growth (3Y Annualized return: 4.35%)
Among the best bond funds to invest in, LIC Mutual Fund launched this debt mutual fund on April 20, 1994. The current fund manager is Maraban Iran. It seeks to gain good returns by investing in money market securities and quality debt. It can even expose itself to 20% equity.
Conclusion
Good bond funds invest predominantly in debentures, government securities, corporate bonds, and treasury bills. They try to maximize returns and produce higher gains through diversification. Bond funds are a good option for investors as they are generally considered stable. We hope you now know which are the best bond funds to buy in India in 2023.
