Top Debt Mutual Funds (2026)
Returns as on the latest NAV, Direct plans · AUM as on 30-09-2026
A debt fund lends money to governments, banks and companies by buying their bonds and money market papers. It earns the interest, and its value moves when interest rates change: the longer its papers run, the more it moves.
- Total AUM
- ₹18,10,156 Cr
- As on 30-09-2026
- Funds
- 332
- From 43 fund houses
- Categories
- 15
- Set by SEBI
- Average 3Y return
- 6.9%
- A year, Direct plans
Debt Fund Categories
| OvernightOnly in debt and money market papers that mature the next business day. | 32 | 1,19,654 | +5.25% | +6.01% | +5.76% | +5.34% |
|---|---|---|---|---|---|---|
| LiquidOnly in debt and money market papers that mature within 91 days. | 42 | 6,45,910 | +6.23% | +6.66% | +6.18% | +5.85% |
| Ultra ShortDebt and money market papers, with a Macaulay duration of 3 to 6 months. | 27 | 1,20,957 | +6.00% | +6.82% | +6.27% | +6.43% |
| Low DurationDebt and money market papers, with a Macaulay duration of 6 to 12 months. SEBI now calls this category Ultra Short to Short Term, and most of its funds carry that name. | 25 | 1,07,375 | +5.79% | +7.22% | +6.58% | +6.73% |
| Money MarketMoney market papers that mature within 1 year. | 27 | 2,88,408 | +6.35% | +7.24% | +6.68% | +6.60% |
| Short DurationDebt and money market papers, with a Macaulay duration of 1 to 3 years. | 26 | 1,03,970 | +4.11% | +6.88% | +6.62% | +6.89% |
| Medium DurationDebt and money market papers, with a Macaulay duration of 3 to 4 years. | 13 | 25,023 | +4.72% | +7.66% | +6.88% | +6.78% |
| Medium to Long DurationDebt and money market papers, with a Macaulay duration of 4 to 7 years. | 13 | 9,807 | +2.86% | +6.52% | +5.71% | +6.19% |
| Long DurationDebt and money market papers, with a Macaulay duration of more than 7 years. | 11 | 10,944 | +0.63% | +5.83% | +5.21% | +6.46% |
| Dynamic BondDebt of any maturity: the fund manager changes the duration as interest rates move. | 22 | 29,367 | +3.05% | +6.70% | +5.98% | +6.68% |
| Corporate BondAt least 80% in corporate bonds rated AA+ or higher. | 21 | 1,69,291 | +4.00% | +7.02% | +6.20% | +6.98% |
| Credit RiskAt least 65% in corporate bonds rated below AA+, which pay more for the higher risk of default. | 13 | 22,116 | +7.84% | +9.41% | +9.83% | +6.82% |
| Banking & PSUAt least 80% in debt of banks, public sector undertakings and public financial institutions. | 20 | 72,672 | +4.04% | +6.88% | +6.22% | +6.95% |
| GiltAt least 80% in government securities. | 28 | 33,431 | +2.12% | +6.19% | +5.46% | +6.64% |
| FloaterAt least 65% in floating rate debt, whose interest moves with market rates. | 12 | 51,232 | +5.43% | +7.47% | +6.73% | +7.16% |
Each return is the simple average of the category's funds, Direct plans. 3, 5 and 10 year figures are a rate a year. Open a category to see all its funds.
Top 25 Debt Funds by 3 Year Return
| Category | |||||||
|---|---|---|---|---|---|---|---|
| DSP Credit Risk Fund | Credit Risk | 326 | +10.33% | +13.69% | +13.34% | +8.62% | 0.42% |
| Aditya Birla Sun Life Credit Risk Fund | Credit Risk | 1,657 | +11.12% | +12.89% | +10.77% | +9.17% | 0.80% |
| HSBC Credit Risk Fund | Credit Risk | 441 | +5.68% | +11.54% | -- | -- | 0.84% |
| Aditya Birla Sun Life Medium Term Fund | Medium Duration | 3,370 | +7.48% | +10.39% | +12.54% | +8.95% | 0.83% |
| Bank of India Credit Risk Fund | Credit Risk | 74 | +16.97% | +10.00% | +27.83% | +2.38% | 0.61% |
| ICICI Prudential Credit Risk Fund | Credit Risk | 6,320 | +6.83% | +8.82% | +7.88% | +8.30% | 0.80% |
| Invesco India Credit Risk Fund | Credit Risk | 167 | +6.99% | +8.76% | +8.34% | +6.44% | 0.28% |
| Nippon India Credit Risk Fund | Credit Risk | 1,708 | +6.93% | +8.71% | +7.83% | +6.47% | 0.61% |
| Kotak Medium Term Fund | Medium Duration | 1,912 | +5.09% | +8.61% | +7.20% | +7.35% | 0.67% |
| Axis Credit Risk Fund | Credit Risk | 378 | +7.24% | +8.61% | +7.61% | +7.60% | 0.82% |
| Bandhan Gilt Fund | Gilt | 1,686 | +7.50% | +8.37% | +6.46% | +7.66% | 0.57% |
| Kotak Credit Risk Fund | Credit Risk | 769 | +5.95% | +8.31% | +6.63% | +7.24% | 0.81% |
| SBI Credit Risk Fund | Credit Risk | 2,182 | +7.14% | +8.30% | +7.62% | +7.69% | 0.90% |
| Axis Floating Interest Rates Fund | Floater | 149 | +6.06% | +8.24% | +7.11% | -- | 0.22% |
| Nippon India Medium Term Fund | Medium Duration | 146 | +4.94% | +8.23% | +6.75% | +3.51% | 0.50% |
| Axis Medium Term Fund | Medium Duration | 1,972 | +5.40% | +8.16% | +7.20% | +7.69% | 0.71% |
| ICICI Prudential Medium Term Fund | Medium Duration | 5,331 | +5.75% | +8.16% | +7.21% | +7.75% | 0.73% |
| Bandhan Dynamic Term Fund | Dynamic Bond | 1,910 | +6.90% | +8.03% | +6.22% | +7.27% | 0.79% |
| HDFC Credit Risk Fund | Credit Risk | 7,631 | +6.18% | +8.02% | +7.04% | +7.76% | 1.01% |
| Franklin India Floating Interest Rates Fund | Floater | 256 | +5.89% | +7.92% | +7.15% | +6.90% | 0.38% |
| Franklin India Corporate Bond Fund | Corporate Bond | 1,409 | +5.32% | +7.80% | +6.72% | +7.49% | 0.26% |
| 360 ONE Dynamic Term Fund | Dynamic Bond | 549 | +3.58% | +7.74% | +6.58% | +7.01% | 0.34% |
| HSBC Ultra Short to Short Term Fund | Low Duration | 847 | +5.86% | +7.71% | -- | -- | 0.40% |
| HDFC Medium Term Fund | Medium Duration | 3,499 | +5.43% | +7.71% | +6.68% | +7.36% | 0.70% |
| Kotak Dynamic Term Fund | Dynamic Bond | 2,219 | +4.69% | +7.68% | +6.44% | +7.53% | 0.61% |
Funds with a 3 year record, ranked by the 3 year return of their Direct plan. 3, 5 and 10 year figures are a rate a year. Expense ratio: Direct plan, from AMFI.
Which Debt Funds Are Gaining or Losing Investor Money?
Net investor money in September 2026
Highest Inflow
- UTI - Overnight Fund+₹3,329 Cr
- SBI Overnight Fund+₹2,053 Cr
- HSBC Liquid Fund+₹1,963 Cr
- Invesco India Liquid Fund+₹1,545 Cr
- ICICI Prudential Gilt Fund+₹1,246 Cr
Highest Outflow
- SBI Liquid Fund−₹15,151 Cr
- Axis Liquid Fund−₹10,181 Cr
- Aditya Birla Sun Life Liquid Fund−₹9,001 Cr
- ICICI Prudential Liquid Fund−₹7,756 Cr
- Kotak Liquid Fund−₹7,261 Cr
Our calculation from official figures. Each fund's AUM change from 31-08-2026 to 30-09-2026, less the part its NAV move explains. A dividend the fund paid out counts as money out.
How Debt Funds Are Sorted
SEBI sorts debt funds by how long their papers run, measured as Macaulay duration (overnight, liquid, ultra short to long duration), or by who they lend to (corporate bonds, credit risk, banks and public sector, government securities).
- OvernightOnly in debt and money market papers that mature the next business day.
- LiquidOnly in debt and money market papers that mature within 91 days.
- Ultra ShortDebt and money market papers, with a Macaulay duration of 3 to 6 months.
- Low DurationDebt and money market papers, with a Macaulay duration of 6 to 12 months. SEBI now calls this category Ultra Short to Short Term, and most of its funds carry that name.
- Money MarketMoney market papers that mature within 1 year.
- Short DurationDebt and money market papers, with a Macaulay duration of 1 to 3 years.
- Medium DurationDebt and money market papers, with a Macaulay duration of 3 to 4 years.
- Medium to Long DurationDebt and money market papers, with a Macaulay duration of 4 to 7 years.
- Long DurationDebt and money market papers, with a Macaulay duration of more than 7 years.
- Dynamic BondDebt of any maturity: the fund manager changes the duration as interest rates move.
- Corporate BondAt least 80% in corporate bonds rated AA+ or higher.
- Credit RiskAt least 65% in corporate bonds rated below AA+, which pay more for the higher risk of default.
- Banking & PSUAt least 80% in debt of banks, public sector undertakings and public financial institutions.
- GiltAt least 80% in government securities.
- FloaterAt least 65% in floating rate debt, whose interest moves with market rates.
How Debt Funds Are Taxed
| When you sell | Tax on the gain |
|---|---|
| Units bought on or after 01-04-2023 | Your slab rate, however long you hold them |
| Units bought before 01-04-2023, within 2 years | Your slab rate |
| Units bought before 01-04-2023, after 2 years | 12.5% of the gain |
IDCW (dividend) payouts are added to your income and taxed at your slab rate. Rules in force from 23-07-2024 (Finance Act 2024). This is general information, not tax advice.
Debt Mutual Funds: Frequently Asked Questions
Which are the top debt mutual funds?
By 3 year return: 1. DSP Credit Risk Fund (13.7% a year), 2. Aditya Birla Sun Life Credit Risk Fund (12.9% a year), 3. HSBC Credit Risk Fund (11.5% a year), 4. Aditya Birla Sun Life Medium Term Fund (10.4% a year), 5. Bank of India Credit Risk Fund (10.0% a year). Past returns do not promise future returns.
How many debt mutual funds are there?
332 debt funds are open for investment, from 43 fund houses, in 15 categories.
What is a debt fund?
A debt fund lends money to governments, banks and companies by buying their bonds and money market papers. It earns the interest, and its value moves when interest rates change: the longer its papers run, the more it moves.
Which debt fund category has the highest return?
Credit Risk: 9.4% a year on average over 3 years, across its funds' Direct plans.
Which is the largest debt fund category?
Liquid, with ₹6,45,910 Cr across 42 funds on 30-09-2026.
Which debt fund has the lowest expense ratio?
Aditya Birla Sun Life Overnight Fund, at 0.05% a year (Direct plan), as reported to AMFI.
How are debt funds taxed?
For units bought on or after 01-04-2023, the gain is added to your income and taxed at your slab rate, however long you hold them.
This page is information, not investment advice. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Past returns do not promise future returns. Figures come from AMFI, NSE, BSE and each fund house's own documents.