Top Debt Mutual Funds to invest in 2016 in India

Top Debt Mutual Funds to invest in India in 2016Top Debt Mutual Funds to invest in 2016 in India

We have seen that RBI continues to cut rates and banks would continue to reduce FD interest rates. If you are planning to invest in fixed income schemes, but want to get higher returns than bank FD’s, best way is to invest in top debt mutual funds. I have analyzed best debt funds to invest in, which have been giving good returns in last 5 years. Which are the top debt mutual funds to invest in 2016 in India? Which are the best debt funds to invest in, which are  good for short term and long term?

Also Read: Best Sector Mutual Funds to invest in 2016

Parameters on how picked up Top Debt Mutual Funds to invest

These debt mutual fund schemes have been analyzed and shortlisted based on some of the important parameters.

  • These are picked based on highest returns received in the last 5 years.
  • These debt mutual fund schemes which are rated as 5-Star (5/5), 4-Star (4/5) and 3-Star (3/5) by value research online.
  • Funds, which are rated by Crisil as Rank-1, Rank-2, Rank-3 and Rank-4 which indicates top performance across various market cycles. Two funds have not been rated by Crisil, however, I have picked the same based on other parameters.
  • AUM (Assets under management) > Rs 100 Crores. This proves investor confidence among these top 10 mutual funds. As an exception, I have considered one good fund, which has an AUM of Rs 97 Crores.
  • Some of the funds might be a repetition from my earlier recommendation.

Top Debt Mutual Funds to invest in 2016 in India

I have segregated them in under various heads like the ultra short term, income funds and gilt mutual funds.

1) Ultra Short Term Debt funds

Ultra short-term funds invest in fixed-income instruments which are generally liquid and have short term maturities within 90 days. These short term funds offer investors good protection against interest rate risk compared to other funds. An investor who is willing to invest for 3-9 months can invest in these ultra short term mutual funds. I advise you to invest in these debt mutual fund schemes for at least for 3-9 months to get good returns.

2) Debt – Income funds

Debt income funds invest in various fixed income options, maturing between medium term to long term. If you are willing to park your money for medium term to long term of 1 to 5 years, you can invest in these income funds. Note that these funds does not limit to investing in Govt bonds, but invests in corporate bonds too.

3) Gilt-Medium/Long Term

Gilt Funds are those funds that invest only in government securities. They debt mutual fund schemes are preferred to conservative investors who wish to invest in indirectly in government bonds. Since gilt funds invest only in government bonds, investors are protected from credit risk.

Also Read: Top Mid-cap Mutual Funds to invest in India

List of Top Debt Mutual Funds to invest in 2016 in India

Conclusion: I believe in investing in these debt mutual funds which gives higher returns compared to bank FD interest rates. If you can invest for at least 36 months in income/gilt mutual funds, you can get indexation benefit and tax on such debt funds would be very low.

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Top Debt Mutual Funds to invest in 2016 in India

Suresh KP


  1. Dear Suresh ,please do suggest the following

    1) Suggest me the TWO  BEST HIGH YEILDING  DEBT FUNDS for SWP as direct model for a 10 to 15 years investment for regular income for myself and my wife 

    2) How much i need to invest apxt for SWP of Rs 35000  Per Month , for the next 10 -15 years or so ,or what % of the invested money can be as SWP for say next 10 to 15 years 

    3) Retired no debts Goal: Daughter Marriage/Higher studies time frame 5 yrs, 2022/23 ROI 13-20% YOY suggest top 3 Growth based direct mutual funds scheme names, for 1 Crore LUMP SUM investment

    I am retired age 55 and has own house and only one daughter doing her final year UG at USA 

  2. Dear Sureh, please give your views on these three debt funds:

    1. ICICI pru flexible income plan (Ultra short term debt fund)

    2. HDFC short term opportunities (Short term debt fund)

    3. Birla sun life Dynamic bond (Dynamic bond)

    Thanks & Regards

    Jayant Ganguly

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