Fearful of risk? Here are the top debt mutual funds picks for you

Top debt mutual funds: Are you considering mutual fund investments but prefer to avoid high risks? Debt mutual funds could be a good option for you. Historically, these funds have demonstrated better returns than bank deposits like FDs over similar periods.

Their lower risk profile also appeals to investors who typically opt for bank FDs due to their risk tolerance. 

A debt mutual fund primarily invests in securities and bonds that offer fixed income, making it a stable investment choice. 

If stability and consistent returns align with your investment goals, exploring debt mutual funds could be a prudent financial decision.

Here’s a look at some of the top-performing debt mutual funds:

Aditya Birla Sun Life Medium Term Plan Direct Growth

Several top-performing debt mutual fund schemes have garnered attention for their consistent performance and returns. One such standout is the Aditya Birla Sun Life Medium Term Plan Direct Growth, which has delivered annualised returns of 13.36per cent over the past three years and 9.54 per cent over five years, according to data from Groww. 

UTI Medium to Long Duration Fund Direct Growth

Another notable performer is the UTI Medium to Long Duration Fund Direct Growth, offering annualised returns of 10.23 per cent over three years and 6.93 per cent over five years. With a minimum investment requirement of Rs 500 for both lump sum and SIP, this fund has attracted investors looking for steady income streams. 

Nippon India Strategic Debt Fund Direct Growth

On the other hand, the Nippon India Strategic Debt Fund Direct Growth, despite its lower five-year returns of 0.81 per cent, has shown a strong three-year performance with annualised returns of 10.07 per cent. This fund requires a minimum investment of Rs 5,000 for lump sum investments and Rs 100 for SIP.

HDFC Regular Savings Fund Direct Growth

Investors interested in slightly lower-risk options have found the HDFC Regular Savings Fund Direct Growth appealing, delivering annualised returns of 8.88 per cent over three years and 8.94 per cent over five years. 

ICICI Prudential Dynamic Bond Direct Plan Growth

The ICICI Prudential Dynamic Bond Direct Plan Growth, with annualised returns of 8.63 per cent over three years and 8.38 per cent over five years, has also been favoured amongst investors seeking stability in their portfolios. 

Both funds come under the debt category of HDFC Mutual Funds and ICICI Prudential Mutual Funds, respectively, with minimum investments starting from Rs 5,000 for lump sum and Rs 300 to Rs 1,000 for SIP.

These funds have shown impressive performance over the past few years, with annualised returns ranging from 8.63 per cent to 13.36 per cent for the three-year period and from 0.81 per cent to 9.54 per cent over five years. 

Investors have been particularly drawn to their stability and the potential for consistent growth, making them attractive options in the current economic climate.

Debt mutual funds are favoured for their relatively lower risk compared to equity funds, making them suitable for investors looking to balance their portfolio with stable income-generating assets.

Investors interested in these schemes can start with minimum investments as low as Rs 500 to Rs 5,000, depending on the fund and investment method (lump sum or SIP). As always, it is advisable for investors to consult with financial experts or advisors to align their investment choices with their financial goals and risk appetite.