Best Debt Funds To Invest In 2020

What the best debt mutual fund in the market is, depends on you more than the debt fund. Confused? Well, to pick the best debt mutual fund for oneself, one has to first understand what your financial goals are, what your risk profile is, what other funds you have in your portfolio, among other things.


To start with, you need to ensure you know what the difference between debt, equity or hybrid funds is. Because while all types of mutual funds are good investment tools, they may not be suited to your needs.

What is Debt Mutual Fund?

A Debt fund is a mutual fund that invests only in fixed income securities like bonds and treasury bills. These are considered safer than equity funds and are ideal for those who have a more conservative approach to investment.

Within the world of Debt Mutual Funds, you will find several investment options. Let’s take a look at them.

Types of Debt Mutual Funds

Gilt Funds

These funds invest in low-risk debt like government securities which lead to slightly better returns than your average savings account.

Monthly Income Plans (MIPs)

These are actively managed mutual funds that focus on generating immediate income, either on a monthly basis or quarterly basis. They use a mix of government bonds, municipal bonds, corporate bonds, and dividend stocks etc.

Short Term Plans (STPs)

As the name suggests these are short term, open-ended plans. They invest in assets that have a maturity of minimum 15 – 91 days or lesser. Once again, a low-risk low-return tool.

Liquid Funds

These funds invest in very short-term market instruments like treasury bills and government securities. One reason to love these is that they offer more returns than your savings bank account but offer similar liquidity in case you need to take the money out during an emergency.

Fixed Maturity Plans (FMPs)

These are close-ended, so you can only invest in them when a new fund offer comes out. Fixed maturity plans involve fixed time period post which you’re investment matures. They invest across debt-based instruments like well-rated securities and corporate bonds.

Who Should Invest in Debt Mutual Funds?

If you’re simply looking to move surplus funds from your savings account for higher gains, debt funds may be your cup of chai. These are also ideal for you if you’re after short term returns and are not fussed over low returns. The lower risk attracts many but you must then be patient and not second guess yourself when your colleagues talk about their equity fund returns.

Top 10 Best Debt Mutual Funds in India

Our team of world-class advisors from Wealth First helped us build this list based on their mutual fund selection process, undertaken using two parameters:

  • Qualitative Parameters:

    • AMC comfort Pedigree, Credibility, Compliance, Process and Ability to Retain Top Management & Talent
    • Fund Manager comfort Experience, Reputation, Performance and Continuity Record (We have had 170+ investment and marketing team interactions in the last 1 year)


  • Quantitative Parameters:

    • Scheme Aesthetics – Fund Size & Recent AUM Growth, Concentration Analysis, Clarity of positioning
    • Performance – Historical performances (SIP, Last 20-Quarters, 3-Year, and 5-Year Numbers), Risk-adjusted returns, Sharpe, Beta, and Other Statistical Ratios
    • Negative Criteria – Cash Calls, Outlier Performances, Recent Management Changes, etc.

Best Debt Mutual Funds 2020

Given below are our Top 3 Best Mutual Funds for 2019. However, we suggest you do not invest in any funds without consulting a Cube Wealth Coach. Simply email us and get free investment advice or download the Cube Wealth App.
Best Debt Mutual Funds of 2020
ICICI Prudential All Season Bond Fund
IDFC Banking and PSU Debt Fund
Axis Strategic Bond Fund

How To Evaluate Best Debt Mutual Funds?

You can look at the historical returns of a fund over different time frames and compare them with its competition. You can also look at the credentials and experience of the fund manager, whether they have been managing a particular fund from the start or if there has been a recent switch. Another thing to keep in mind is understanding the quality of the investment that has been made by the fund. It is best to consult a wealth advisor for this purpose.

How To Invest in Debt Funds?

You can easily invest in a debt fund by following the steps given below:

  1. Download the Cube Wealth App

  2. Select risk level as low

  3. Select the time frame as short

  4. Enter the amount you want to invest

  5. Browse recommended funds

  6. Tap Invest

For further assistance with documentation or if you have any questions, please EMAIL A CUBE WEALTH ADVISOR.

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