Top 5 Credit Opportunities Mutual funds in India

Credit Opportunities Fund in IndiaTop 5 Credit Opportunities Mutual funds in India

One of the newest category, which is emerging in mutual funds is credit opportunities mutual funds. Generally, Opportunities mutual funds look for opportunities in various sectors in large cap, mid-cap and small cap segment. However Credit Opportunities Mutual funds on the other hand look for opportunities in the fixed income segment. Fixed income segment includes debt instruments and money market instruments. What are credit opportunities mutual funds? How these are emerging as new segments of mutual funds? Are these better than any short term mutual funds?

Also Read: How opportunity mutual funds can create wealth for you?

What are credit Opportunities Mutual funds?

Credit opportunities funds are those which generate income by investing in debt and money market securities across the credit spectrum. These provide liquidity and optimal returns to investors as they invest in debt related instruments.

How do Credit Opportunties Funds work exactly?

They invest across the credit spectrum. They aim to provide higher returns and invest in low credit rated debt instruments which are below “AA” rated. Low credit rated debt instruments provide high returns as these are high risk investments. Though these mutual fund schemes are already existing, they are moving towards the objective this credit spectrum opportunities now in the recent years. 

Short term funds Vs Credit Opportunities Funds

Short term funds invest in short term debt and money market instruments. However, they invest in top and high rated instruments. They provide less returns. On the other hand, Credit Opportunities funds invests in low credit rated instruments. They provide good returns if an investor invests for 6 months to 2 year time frame.

Long term debt funds Vs Credit Opportunities Funds

Long term funds invest in debt related instruments which provide good benefit in the long term. However, even these funds invest in top and high rated instruments. They provide less opportunities for higher returns. Credit Opportunities in other hand invests in medium term debt options and aims to generate more turns in medium term of 2 to 3 years.

How does the returns from Credit Opportunities Funds taxed?

Credit Opportunities mutual funds invests the majority of its portfolio in debt instruments, hence these are treated like any other debt fund.

  • In case of short term capital gain <  1  year – Returns / Capital gain are added to individual income and income tax is paid based on individual tax slab.
  • In case of long term capital gain > 1 Year – Returns would be taxed based on indexation – Income tax of 10% without indexation or income tax of 20% after indexation.

Top 5 Credit Opportunities Mutual funds in India

Top 5 Credit Opportunities Fund in India

Also Read: Global mutual funds can help you to tap opportunities outisde India

Who can invest in Credit Opportunities Mutual funds?

These schemes invest in credit spectrum, which could of low rated debt instruments. While they also invest in high rated and safe Govt. Securities, investing in low rated securities, it poses some risk. Investors who are willing to take moderate risk and willing to lock the money for 6 months to 2 year period and want to earn higher returns than bank fixed deposits can look for investing in these mutual funds.

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Top 5 Credit Opportunities Mutual funds in India

Suresh KP


  1. Hello Sureshji,

    Can you please tell us what are the top performing credit opportunity funds in 2016?
    Are they safe to invest for 2-3 year period as they are delivering good returns around 9-10%.


      1. Dear Sureshji,
        Please share your view on credit opportunities fund investment if you have done the analysis.
        Thank you.
        Harsh Patel

    1. Mani, please check this article.

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