Understanding Corporate Bond Funds
Corporate bond funds invest in debt securities issued by companies. They offer a higher interest rate than government bonds and are ideal for investors aiming for higher returns with relatively higher risk. These funds offer a regular income to investors.
These funds can offer higher returns compared to bank FDs.
Investors pay loans to companies and, in return, get interest.
Ideal for investors with an investment horizon of 2-3 years.
Top schemes of Corporate Mutual Funds
| Fund Name | Returns | Actions | ||
|---|---|---|---|---|
| 1 Year | 3 Year | 5 Year | ||
Returns calculator
Total Invested : ₹ 6,00,000
Profit : ₹ 56,200,000
Current value : ₹ 1,16,20,000
Frequently Asked Questions
Which corporate bond fund is the best in India?
You should consider these factors before choosing a corporate bond fund.
Credit quality
Interest rate
Fund's track record
Expense ratio
Can I do SIP in a corporate bond fund?
Yes, you can do SIP in corporate bond funds.
What is the average return on corporate bond funds?
Here are the average returns on corporate bond funds:
1-year: 8.68
3-year: 6.56
5-year: 6.49
10-year: 7.09
Since inception: 7.11
Source: Advisorkhoj, as of 04 April 2025
What is the SBI corporate bond fund?
The SBI Corporate Bond Fund is an open-ended debt scheme offered by SBI Mutual Fund, focusing primarily on investments in high-quality corporate bonds.
What is the disadvantage of a bond fund?
While the corporate bond funds can provide better returns than FD, they are not entirely risk-free:
Credit risk
Interest rate risk
Market volatility
What is the maturity of a corporate bond fund?
Corporate bond funds invest in a diversified portfolio of corporate bonds with varying maturities. Unlike individual bonds, these funds do not have a fixed maturity date; instead, they maintain an average maturity based on their holdings. This average maturity can vary significantly depending on the fund's investment strategy and objectives.
The average maturity of a corporate bond fund category is around 4.74 years (source: Advisorkhoj).
Is it safe to buy corporate bond funds?
Corporate bond funds can be a suitable investment for those seeking higher yields than traditional savings instruments, but they are not without risks. These funds invest primarily in high-quality corporate bonds, typically rated AA+ or higher, which generally offer a balance between risk and return.
What are the benefits of investing in corporate bond funds?
If you invest in corporate bond funds, you will get the benefit of:
Steady income with interest repayment
Higher interest rates
Diversification
Professional management
Who should invest in a corporate bond fund?
Someone who is:
Investing with a 2-3 year horizon.
Seeking regular income.
Professional management and diversification.