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Investors put their money in mutual funds according to their goals and risk appetite. There are many investors who invest in debt mutual funds. If you fall in this category, this article is for you. In this post, we have discussed top debt mutual funds.
However, before we see the best debt mutual fund for 2022, we should know what a debt mutual fund is.
Debt Mutual Fund
These mutual funds invest their capital in various debt funds like bank FD, government bonds, debentures, etc. As a result, the return on these funds is very low. However, the risk is also very poor in debt mutual funds. Debt Mutual Funds are also called Liquid Funds.
Best Debt Mutual Funds in 2022
There are various factors related to any mutual fund like growth rate, minimum investment, expense ratio, and asset in which the fund invested. Hence, below we listed 10 debt mutual funds.
| Fund Name | Growth % in last 5 Years | Expense Ratio | AUM (in crore) | Min. Lumpsum/ SIP |
| IDBI Liquid Fund Growth Option | 5.52% | 0.13% | 662 | 5000/500 |
| Edelweiss Liquid Fund Growth | 5.49% | 0.13% | 1429 | 5000/500 |
| PGIM India Liquid Fund Plan Growth | 5.46% | 0.13% | 696 | 5000/1000 |
| Nippon India Liquid Fund Growth Plan | 5.46% | 0.18% | 29,236 | 100/100 |
| Baroda BNP Paribas Liquid Fund Growth Option | 5.45% | 0.16% | 1803 | 5000/500 |
| Axis Liquid Fund Direct Plan Growth | 5.43% | 0.13% | 22,327 | 500/0 |
| LIC MF Liquid Fund Growth Option | 5.43% | 0.11% | 6053 | 5000/1000 |
| Mirae Asset Cash Management Growth Plan | 5.42% | 0.17% | 4046 | 5000/1000 |
| UTI – Liquid Cash Plan – Direct Growth Option | 5.41% | 0.14% | 30017 | 500/0 |
| ICICI Prudential Liquid Fund Growth | 5.41% | 0.20% | 44308 | 99/99 |
While preparing the above list, we only consider those debt/liquid mutual funds which have 100% exposure to AAA-rated debt funds and that have expense ratios not more than 0.20%. The reasons behind these are as below –
Debt mutual fund investors are tended to take a low risk. Hence, the liquid mutual funds which are invested in AAA-rated bonds are considered very safe. On the other hand, as the percentage of return is very low in this type of fund, a higher expense ratio minimizes your return further.
However, You can choose any of the above-mentioned debt mutual funds and start a SIP or deposit a lumpsum amount and let the money grow.
Best Liquid Mutual Fund to Invest in 2022
From the above list, you can easily pick the best debt mutual fund for yourself. However, let us help you with this task.
Looking at the above list, you can see the returns provided by the different fund houses are almost the same. In these circumstances, the main things to look out for are expense ratio and minimum amount of investment.
IDBI Liquid Fund Growth Option has delivered an average annual return of 6.86% since its inception. Along with this the expense ratio is very low. Hence, if you have a healthy amount to invest, you can go with this fund.
On the other hand, Nippon India Liquid Fund Growth Plan has delivered an average annual return of 6.87% since its inception. The minimum investment amount is very low in this case, only Rs. 100. However, the expense ratio is quite high. Hence, if you have less amount to invest, you can go with this fund.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. So, do not take the Mutual Funds mentioned in this post as a recommendation in any way. The Mutual Fund mentioned in this post are for educational purposes only. The author of this post or anyone associated with this blog will not be held responsible in any way if anybody suffers a loss by investing in Mutual Fund after reading this article.