Among all the mutual fund categories debt funds or debt mutual funds saw a huge inflow in June. Talking about the debt mutual funds category Floater-Debt funds along with low-duration debt funds and best-performing banking and PSU funds have seen a strong inflow in the month of June as compared to small-cap, multi-cap, and ELSS funds. During the current environment where liquid and overnight funds are not performing much well, investing in floater funds can be a good bet especially for short-duration. Keeping these factors in mind here we have compiled 4 best performing floater funds based on the past returns and ratings.
HDFC Floater Rate Debt Fund Direct Plan Growth
This fund was launched in January 2013 by the fund house HDFC Mutual Fund. HDFC Floating Rate Debt Fund Direct Plan has a one-year growth rate of 6.30 percent. According to Value Research statistics, it has generated 8.36 percent average yearly returns since its inception. Axis Bank Ltd., Embassy Office Parks REIT, Canara Bank, Gujarat State, Muthoot Finance Ltd., and the Reserve Bank of India are the fund’s top holdings.
The fund’s expense ratio is 0.23 percent, and its debt sector allocation is allocated across financial, energy, sovereign, construction, and others. The fund presently has Rs 17,250 Cr in assets under management (AUM), and the latest NAV as of July 8, 2021 is Rs 38.91. The fund not only has outstanding stability in terms of generating returns but also has provided good returns in the past, according to the historical performance. SIPs in this fund can be started with a minimum contribution of Rs 1000 and there is no exit load.
ICICI Prudential Floating Interest Fund Direct Plan Growth
This Floater mutual fund scheme was launched in January 2013, by the fund house ICICI Prudential Mutual Fund. ICICI Prudential Floating Interest Fund Direct Plan -Growth returns over the last year are 6.96 percent, according to Value Research data. Since its inception, it has generated an average yearly return of 8.82 percent. State Bank of India, Gujarat State, Motherson Sumi Systems Ltd., SRF Ltd., Rajasthan State, Embassy Office Parks REIT, and Motherson Sumi Systems Ltd. are the fund’s top holdings.
The expense ratio of the fund is 0.60 percent, and its debt sector allocation is balanced between sovereign, construction, and others. The fund’s current AUM is Rs 12,113 Cr and the latest NAV as of 8 July 2021 is Rs 350.61. The fund does not have an exit load and one can start SIP with Rs 500.
Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth
Aditya Birla Sun Life Mutual Fund introduced this Floater mutual fund plan in January 2013. Aditya Birla Sun Life Floating Rate Direct Fund’s 1-year growth results are 5.04 percent. According to Value Research statistics, it has produced 8.56 percent average yearly returns since its inception. The fund has a 0.23 percent expense ratio, and its top holdings include Axis Bank Ltd., Aditya Birla Finance Ltd., Haryana State, National Bank For Agriculture & Rural Development, Sikka Ports and Terminals Ltd., Indian Oil Corporation Ltd., and Nabha Power Ltd.
The debt sector allocation of the fund is categorized into financial, energy, sovereign, and others. The fund’s current AUM is Rs 14,324 Cr, and the latest NAV is Rs 274.88 as of July 8, 2021. There is no exit load on the fund, and one may begin SIP with as little as Rs 1000.
Nippon India Floating Rate Fund Direct Growth
The fund house Nippon India Mutual Fund introduced this Floater mutual fund product in January 2013. The 1-year returns for Nippon India Floating Rate Fund Direct-Growth are 5.82 percent. According to Value Research, it has achieved 8.59 percent average yearly returns since its inception. The fund’s major holdings are GOI, Rural Electrification Corporation Ltd., Madhya Pradesh State, Tata Capital Housing Finance Ltd., State Bank of India, LIC Housing Finance Ltd., Reliance Industries Ltd., Axis Bank Ltd., HDFC Ltd, and National Bank For Agriculture & Rural Development.
The fund has an expense ratio of 0.24%. The fund’s debt sector allocation is segmented into engineering, financial, energy, sovereign, and others. As of July 8, 2021, the fund’s current AUM is Rs 15,676 Cr, and the latest NAV is Rs 36.60. The fund has no exit load, and one may start a SIP with as low as Rs 100.
Best Performing Floater Funds In 2021
Here are the best performing floater funds in 2021 based on past returns and ratings.
|Funds||1-Year Returns||3-Year Returns||5- Year Returns||Rating|
|HDFC Floater Rate Debt Fund Direct Plan Growth||6.30%||8.05%||7.80%||4 star by Morningstar|
|ICICI Prudential Floating Interest Fund Direct Plan Growth||6.96%||8.52%||8.31%||5 star by Morningstar|
|Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth||5.04%||7.89%||7.85%||5 star by Morningstar|
|Nippon India Floating Rate Fund Direct Growth||5.82%||9.01%||8.10%||5 star by Morningstar|
Should you invest?
Starting from March 2021 till now, floater debt funds have done really well, the reason behind this is floater rate funds invest in AAA-rated instruments and they have given average returns of 7 to 8 percent in the last 1 to 3 years. Floater funds are diversified with fixed-coupon bonds and derivative instruments, which means that in the current environment, these funds can provide high returns in the short term, as this category has gained popularity in recent months.
Because the funds primarily invest in floating-rate securities, the return on floater funds would rise if there is a surge in interest rates. As interest rates are projected to steadily rise in the coming months, investors may invest in floater funds for short to medium term. Investors seeking consistent returns can consider investing in ultra-short term or liquid funds of this category, but keeping default or credit risk in consideration.
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