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Corporate Bond Funds: Know the Important Aspects
A Corporate Bond Fund is a category of debt mutual fund mandated by SEBI to invest at least 80% of its total assets, typically those with AAA or AA+ ratings. Top Corporate Bonds like ICICI Life Corporate Bond, Nippon India Corporate Bond, Kotak Corporate Bond, Axis Corporate Bond and many more, act as a "middle path" for investors. They offer higher yields than government securities while maintaining significantly lower credit risk than lower-rated debt instruments.
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Corporate Bond Funds and Salient Features
These bonds come with interesting features, some of which are:
- Ideal for the money you won't use for at least two years.
- Funds in this group have a higher rate of return than Bank Fixed Deposits of the same name.
- Holding them for three years or longer would result in tax-efficient returns due to indexation benefits.
Since the associated costs are lower than bank loans, corporate bond funds are becoming more popular as a debt instrument for businesses to raise required funds.
Top 10 Corporate Bond Funds in India
Here are the top 10 Corporate Bond Funds:
| Fund Name | AUM | Return 3 Years | Return 5 Years | Return 10 Years | Minimum Investment | Return Since Launch |
|---|---|---|---|---|---|---|
| ICICI Prudential Corporate Bond Fund Direct Plan-Growth | ₹27,505.54 Crs | 7.27% | 6.75% | 7.32% | ₹100 | 7.99% |
| Nippon India Corporate Bond Fund Direct-Growth | ₹8,739.44 Crs | 7.43% | 6.77% | 7.21% | ₹1,000 | 7.79% |
| HSBC Fixed Term Series 46 Regular-Growth | NA | N/A | N/A | N/A | ₹10,000 | N/A |
| Aditya Birla Sun Life Corporate Bond Fund Regular-Growth | ₹24,067.87 Crs | 6.76% | 6.17% | 7.05% | ₹100 | 8.72% |
| Axis Corporate Bond Fund Regular-Growth | ₹7,309.37 Crs | 6.97% | 6.13% | N/A | ₹100 | 6.66% |
| HDFC Corporate Bond Fund Regular-Growth | ₹28,928.40 Crs | 6.63% | 5.94% | 6.92% | ₹100 | 7.84% |
| SBI Corporate Bond Fund Regular-Growth | ₹21,803.13 Crs | 6.67% | 5.84% | N/A | ₹5,000 | 6.65% |
| Bandhan Corporate Bond Fund Regular-Growth | ₹13,428.03 Crs | 6.76% | 5.83% | 6.59% | ₹1,000 | 6.9% |
| Franklin India Corporate Bond Fund Direct-Growth | ₹1,408.69 Crs | 7.85% | 6.75% | 7.5% | ₹10,000 | 8.25% |
| Axis Corporate Bond Fund Direct-Growth | ₹7,309.37 Crs | 7.6% | 6.8% | N/A | ₹100 | 7.41% |
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ICICI Life Corporate Bond Fund Direct Plan - Growth
Predominantly invests in AA+ and above-rated bonds to balance safety and liquidity. It is known for its high Asset Under Management (AUM) and consistent track record in providing stable, short-to-medium-term returns.
Parameters Details Fund Name ICICI Prudential Corporate Bond Fund Direct Plan-Growth NAV AUM ₹27,505.54 Crs Expense Ratio 0.37% Return 5 Years 6.75% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 1st January, 2013 Asset Allocation Debt: 99.34%, Others: 0.66% Top Sectors NA Top Holdings - Cash Margin
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- CENTRAL GOVERNMENT LOAN 23277 GOI 22SP33 FLT FV RS 100
- GOVERNMENT OF INDIA 36574 GOI 06OT35 6.48 FV RS 100
- LIC HOUSING FINANCE LTD TR 454 7.58 NCD 23MR35 FVRS1LAC
- Others IRS
- Net Current Assets
- Repo
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- SIDDHIVINAYAK SECURITISATION TRUST SD TRUST PTC 15SEPT25
Fund Managers - Manish Banthia
- Ritesh Lunawat
Fund Type Open-ended -
Nippon India Corporate Bond Fund Direct - Growth
This fund focuses on a mix of AAA corporate papers and sovereign debt, aiming to maximise income while maintaining a portfolio duration of roughly 1.5 to 1.75 years.
Parameters Details Fund Name Nippon India Corporate Bond Fund Direct-Growth NAV AUM ₹8,739.44 Crs Expense Ratio 0.37% Return 5 Years 6.77% Minimum Investment SIP ₹1000 & Lumpsum ₹1,000 Risk Level Principal at moderate risk Launch Date 1st January, 2013 Asset Allocation Debt: 89.8%, Others: 10.21% Top Sectors NA Top Holdings - Repo
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- Reverse Repo
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25G 7.48 BD 15SP28 FVRS1LAC
- Net Current Assets
- GOVERNMENT OF INDIA 34587 GOI 18JU31 7.02 FV RS 100
- GOVERNMENT OF INDIA 35031 GOI 07OT34 6.79 FV RS 100
- GOVERNMENT OF INDIA 35152 GOI 18NV39 6.92 FV RS 100
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- GOVERNMENT OF INDIA 36981 GOI 27JN33 6.68 FV RS 100
Fund Managers NA Fund Type Open-ended -
Kotak Corporate Bond Fund Direct-Growth
A low-to-moderate risk fund that actively manages a portfolio of high-quality corporate debt. It has historically demonstrated a strong ability to control losses during market downturns.
Parameters Details Fund Name Kotak Corporate Bond Fund Direct-Growth NAV AUM ₹14,825.62 Crs Expense Ratio 0.36% Return 5 Years 6.47% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 1st January, 2013 Asset Allocation Debt: 97.14%, Others: 2.86% Top Sectors NA Top Holdings - GOI Sec 7.18 14/08/2033
- GOVERNMENT OF INDIA 36574 GOI 06OT35 6.48 FV RS 100
- GOVERNMENT OF INDIA 34733 GOI 05AG54 7.09 FV RS 100
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- Net Current Assets
- Repo
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25G 7.48 BD 15SP28 FVRS1LAC
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25C 7.44 BD 24FB28 FVRS1LAC
- SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SR VII 7.42 BD 12MR29 FVRS1LAC
Fund Managers - Deepak Agrawal
- Manu Sharma
Fund Type Open-ended -
Aditya Birla Sun Life Corporate Bond Fund Regular - Growth
Formerly the ABSL Short Term Fund, it seeks capital growth and regular income through an active management style across high-quality debt and money market instruments.
Parameters Details Fund Name Aditya Birla Sun Life Corporate Bond Fund Regular-Growth NAV AUM ₹24,067.87 Crs Expense Ratio 0.52% Return 5 Years 6.17% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 3rd March, 1997 Asset Allocation Debt: 94.78%, Others: 5.25% Top Sectors NA Top Holdings - GOVERNMENT OF INDIA 35152 GOI 18NV39 6.92 FV RS 100
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- GOVERNMENT OF INDIA 35031 GOI 07OT34 6.79 FV RS 100
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- GOVERNMENT OF INDIA 36574 GOI 06OT35 6.48 FV RS 100
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25G 7.48 BD 15SP28 FVRS1LAC
- Net Receivables
- BHARTI TELECOM LIMITED SR XXVII 7.30 NCD 01DC27 FVRS1LAC
- GOVERNMENT OF INDIA 34238 GOI 22AP64 7.34 FV RS 100
- GOVERNMENT OF INDIA 35943 GOI 05MY35 6.33 FV RS 100
Fund Managers NA Fund Type Open-ended -
Axis Corporate Bond Fund Regular - Growth
Aimed at providing regular income over the short-to-medium term, this fund focuses on high diversification across sectors like banking, finance, and manufacturing to mitigate concentration risk.
Parameters Details Fund Name Axis Corporate Bond Fund Regular-Growth NAV AUM ₹7,309.37 Crs Expense Ratio 0.96% Return 5 Years 6.13% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 13th July, 2017 Asset Allocation Debt: 95.4%, Others: 4.6% Top Sectors NA Top Holdings - Others CBLO
- GOVERNMENT OF INDIA 35031 GOI 07OT34 6.79 FV RS 100
- GOI Sec 7.18 14/08/2033
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- GOVERNMENT OF INDIA 34208 GOI 08AP34 7.1 FV RS 100
- Net Receivables
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SR V 7.22 BD 10AP29 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 26B 6.85 BD 19JN29 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25E 7.53 BD 24MR28 FVRS1LAC
Fund Managers - Devang Shah
- Hardik Shah
Fund Type Open-ended -
HDFC Corporate Bond Fund Regular - Growth
One of the largest in the category, it maintains a massive portfolio of top-rated bonds. It is highly regarded for its low expense ratio and steady performance over longer 3-to-5-year horizons.
Parameters Details Fund Name HDFC Corporate Bond Fund Regular-Growth NAV AUM ₹28,928.40 Crs Expense Ratio 0.63% Return 5 Years 5.94% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 29th June, 2010 Asset Allocation Debt: 95.79%, Others: 4.22% Top Sectors NA Top Holdings - GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- GOVERNMENT OF INDIA 35152 GOI 18NV39 6.92 FV RS 100
- GOVERNMENT OF INDIA 35840 GOI 15AP65 6.9 FV RS 100
- Net Current Assets
- BAJAJ FINANCE LIMITED 7.55 NCD 03AP35 FVRS1LAC
- CENTRAL GOVERNMENT LOAN 23277 GOI 22SP33 FLT FV RS 100
- STATE BANK OF INDIA SR 2 7.33 BD 20SP39 FVRS1CR
- LIC HOUSING FINANCE LIMITED TR 434 OP I 7.70 LOA 16MY28 FVRS10LAC
- SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SR V 7.51 BD 12JU28 FVRS1LAC
- HDFC BANK LIMITED SR US002 7.80 NCD 03MY33 FVRS1LAC
Fund Managers - Anupam Joshi
- Dhruv Muchhal
Fund Type Open-ended -
SBI Corporate Bond Fund Regular - Growth
Backed by the reliability of India’s largest bank, it targets additional yield spreads from high-quality corporate debt while keeping a healthy portion in liquid money market instruments.
Parameters Details Fund Name SBI Corporate Bond Fund Regular-Growth NAV AUM ₹21,803.13 Crs Expense Ratio 0.76% Return 5 Years 5.84% Minimum Investment SIP ₹1000 & Lumpsum ₹5,000 Risk Level Principal at moderate risk Launch Date 1st February, 2019 Asset Allocation Debt: 92.46%, Others: 7.54% Top Sectors NA Top Holdings - Repo
- GOVERNMENT OF INDIA 35943 GOI 05MY35 6.33 FV RS 100
- GOVERNMENT OF INDIA 35031 GOI 07OT34 6.79 FV RS 100
- GOVERNMENT OF INDIA 36232 GOI 21JL30 6.01 FV RS 100
- Cash Margin
- GOVERNMENT OF INDIA 36574 GOI 06OT35 6.48 FV RS 100
- PIPELINE INFRASTRUCTURE LIMITED SR 3 7.96 NCD 11MR29 FVRS1LAC
- BAJAJ FINANCE LIMITED 7.82% NCD 31JN34 FVRS1LAC
- GOVERNMENT OF INDIA 35840 GOI 15AP65 6.9 FV RS 100
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
Fund Managers - Rajeev Radhakrishnan
- Ardhendu Bhattacharya
- Pradeep Kesavan
Fund Type Open-ended -
Bandhan Corporate Bond Fund Regular - Growth
Focuses on providing a "haven" for debt investors by sticking strictly to high-quality issuers. It features a transparent portfolio with significant allocations to AAA and Government of India securities.
Parameters Details Fund Name Bandhan Corporate Bond Fund Regular-Growth NAV AUM ₹13,428.03 Crs Expense Ratio 0.68% Return 5 Years 5.83% Minimum Investment SIP ₹1000 & Lumpsum ₹1,000 Risk Level Principal at low to moderate risk Launch Date 12th January, 2016 Asset Allocation Debt: 89.31%, Others: 10.71% Top Sectors NA Top Holdings - Reverse Repo
- GOI Sec 7.18 14/08/2033
- GOVERNMENT OF INDIA 35943 GOI 05MY35 6.33 FV RS 100
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- GOVERNMENT OF INDIA 36232 GOI 21JL30 6.01 FV RS 100
- CENTRAL GOVERNMENT LOAN 31280 GOI 17JN32 6.54 FV RS 100
- BANK OF BARODA CD 06MAR26
- GOVERNMENT OF INDIA 32584 GOI 06FB33 7.26 FV RS 100
- BAJAJ HOUSING FINANCE LIMITED 7.78 NCD 26MY26 FVRS10LAC
- Net Current Assets
Fund Managers - Suyash Choudhary
- Gautam Kaul
- Brijesh Shah
Fund Type Open-ended -
Franklin India Corporate Debt Fund Direct - Growth
This fund is unique for its flexible maturity approach to capture interest rate movements while maintaining a portfolio where roughly 90% is in AAA equivalent instruments.
Parameters Details Fund Name Franklin India Corporate Bond Fund Direct-Growth NAV AUM ₹1,408.69 Crs Expense Ratio 0.26% Return 5 Years 6.75% Minimum Investment SIP ₹1000 & Lumpsum ₹10,000 Risk Level Principal at low to moderate risk Launch Date 1st January, 2013 Asset Allocation Debt: 73.12%, Others: 26.88% Top Sectors NA Top Holdings - Cash Margin
- Net Current Assets
- Cash/Net Current Assets
- GOVERNMENT OF INDIA 35840 GOI 15AP65 6.9 FV RS 100
- POONAWALLA FINCORP LIMITED SR G1 TR 1 7.55 NCD 25MR27 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 23H 7.58 LOA 31JL26 FVRS1LAC
- JUBILANT BEVCO LIMITED NCD 31MY28 FVRS1LAC
- JAMNAGAR UTILITIES & POWER PRIVATE LIMITED SR PPD7 7.90 LOA 10AG28 FVRS1LAC
- POWER FINANCE CORPORATION LIMITED SR 258B 7.24 BD 17FB31 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 24E 7.80 BD 15MR27 FVRS1LAC
Fund Managers - Rahul Goswami
- Anuj Tagra
- Chandni Gupta
Fund Type Open-ended -
Axis Corporate Bond Fund Direct - Growth
Axis Corporate Bond Fund remains a top-tier choice in the debt category, recently earning a 5-star rating from major analysts like Morningstar and Value Research.
Parameters Details Fund Name Axis Corporate Bond Fund Direct-Growth NAV AUM ₹7,309.37 Crs Expense Ratio 0.36% Return 5 Years 6.8% Minimum Investment SIP ₹1000 & Lumpsum ₹100 Risk Level Principal at moderate risk Launch Date 13th July, 2017 Asset Allocation Debt: 95.4%, Others: 4.6% Top Sectors NA Top Holdings - Others CBLO
- GOVERNMENT OF INDIA 35031 GOI 07OT34 6.79 FV RS 100
- GOI Sec 7.18 14/08/2033
- GOVERNMENT OF INDIA 37426 GOI 11MY36 6.94 FV RS 100
- GOVERNMENT OF INDIA 34208 GOI 08AP34 7.1 FV RS 100
- Net Receivables
- GOVERNMENT OF INDIA 36185 GOI 07JL40 6.68 FV RS 100
- SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SR V 7.22 BD 10AP29 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 26B 6.85 BD 19JN29 FVRS1LAC
- NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT SR 25E 7.53 BD 24MR28 FVRS1LAC
Fund Managers - Devang Shah
- Hardik Shah
Fund Type Open-ended
Types of Corporate Bond Fund
Corporate Bonds can be found as
- Type 1: Funds that only invest in debt securities issued by high-rated companies.
- Type 2: Funds that want to invest in businesses with a significantly lower credit rating.
Bottom Line
The corporate bond investor is worried about possible interest rates and the credit spread if the extra yield is risk-adequate. A Corporate Bond Fund is a category of debt mutual fund that invests at least 80% of its assets in the highest-rated corporate debt, specifically instruments rated AAA or AA+. The top-rated corporate bonds in India are ICICI Life Corporate Bond, Nippon India Corporate Bond, Kotak Corporate Bond, Aditya Birla Sun Life Corporate Bond, SBI Corporate Bond and many more.
FAQs
-
What are Corporate Bond Funds
A Corporate Bond Fund is a debt mutual fund mandated by SEBI to invest at least 80% of its assets in the highest-rated corporate bonds (typically AA+ and above). -
What are the top corporate bond fund are best in India?
Some of the top-rated corporate bond funds in India are:- ICICI Life Corporate Bond Fund
- Nippon India Corporate Bond
- SBI Corporate Bond Fund
- Kotak Corporate Bond Fund
- HDFC Corporate Bond Fund
- Axis Corporate Bond Fund
- Aditya Birla Sun Life Corporate Bond Fund and many more
-
Are there any disadvantages of Corporate Bond Funds?
While corporate bonds offer steady income, they carry specific risks that investors should carefully evaluate:- There is a possibility that the issuing company may face financial distress and fail to pay interest or return your principal.
- Bond prices move in the opposite direction from interest rates. If market rates rise, existing bonds with lower fixed rates become less attractive, and their market price falls.
- Unlike stocks, some corporate bonds are thinly traded. This means you might struggle to sell them quickly at a fair price if you need immediate cash.
- Some bonds are "callable," meaning the company can repay the principal early—usually when interest rates drop.
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