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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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INR 1.65 Lakh CrABCL
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What is a Corporate Bond Fund?
A Corporate Bond Fund is a debt mutual fund which invests a primary part of its portfolio in the highest-rated corporate bonds. With highest rated securities these funds minimise credit risk.
Advantages of Corporate Bond Funds
Good returns
These funds have the potential to generate attractive returns on your investment which helps in growing your corpus with added stability.
Liquidity
High-rated bonds are traded in volume making the fund easily liquid. So, if you need quick funds, you can redeem your investments without losing out on potential returns
Low credit risk
Since the fund invests in high-rated bonds, the credit risk is minimal. Bonds carrying a high credit rating have proven track record of repayment and do not tend to default.
Maturity Choices
Allow investors to choose funds investing in corporate bonds with varying maturity periods: short-term (under 5 years), medium-term (5-12 years), and long-term (over 12 years).
Explore Corporate Bond Funds
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Corporate Bond Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
START SIPONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
INVEST LUMPSUMTotal Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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Understanding Corporate Bond Funds
Table of Contents
What are Corporate Bond Funds?
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A type of open-ended debt mutual fund, a Corporate Bond Fund invests at least 80% of its portfolio in corporate bonds rated AAA or above by reputed credit rating agencies. These funds offer stable and attractive returns with limited credit risks.
What are the features of Corporate Bond Funds?
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Offers stable returns on investment with minimal credit risk
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Flexibility to own differing duration securities minimises credit risk
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There’s no capping on the maximum investment amount
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You can get better returns compared to fixed deposits
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The funds aim to grow the portfolio through interest earned and also through the rise in the price of the underlying securities
Things to keep in mind when investing in Corporate Bond Funds
Check the expense ratio of such schemes. A high ratio eats into the fund’s returns and should be avoided
Compare Corporate Bond Funds on their returns. A fund with the highest return is better
Check the portfolio for the credit rating of the underlying securities
What are the types of risks that Corporate Bond Funds face?
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Credit risk
Risk of default on the debt instrument
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Interest rate risk
Risk of rising interest rates, which reduces the value of debt instruments
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Inflation risk
Risk of inflation reducing the returns from the debt fund
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Liquidity risk
Risk of not being able to trade in debt instruments
What is the tax implication of Corporate Bond Funds?
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Returns earned are taxed at your income tax slab rates
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
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FAQs On Corporate Bond Funds
Corporate Bond Funds are debt funds that invest a minimum of 80% of their portfolio in companies with the highest credit ratings.
The bond price of a Corporate Bond Fund is the present value of the bond’s future cash flows.
Corporate Bond Funds invest in bonds of companies with the highest of credit ratings up to at least 80% of their holdings.
Corporate Bond Funds are taxed like any other debt fund. Upon redemption of a fund with holding period of less than 36 months (short term capital gain), you would be taxed at the prevailing tax slab rates. In the case of long term capital gains, i.e. redemption of funds with holding period of 36+ months, the tax rate applicable is 20%.
Yes, you can redeem your Corporate Bond Fund investment at any time.
Corporate Bond Funds have delivered an average of around 7% returns.
While interest rate risk is quite real for Corporate Bond Funds, credit risk is quite low because they invest heavily in highly rated companies with a reputation for returning lendings.
YTM or yield-to-maturity, in terms of debt mutual funds, is expressed as an annual return. It is basically the return predicted from a bond if held until maturity.
Yes, you can invest in Corporate Bond Funds through SIP
Corporate bonds are a type of debt instrument that earn fixed income for investors. Investors buy bonds from a corporate entity for a predetermined period, during which the issuer promises to provide interest upon the investment. Corporate Bond Funds are mutual funds that invest majorly in corporate bonds.
Yes, Corporate Bond Funds have an expense ratio and an exit load, with the rates depending upon the fund house.
The par value of a Corporate Bond Fund is the face value of the fund. It is the fixed amount the issuer promises to pay you at a future date during the time of borrowing from you, and is different from the market value.
The generally suggested investment duration for Corporate Bond Funds is 1 to 4 years for optimum possible returns.
The advantages of corporate bonds include lower risk due to investments in top-rated corporates, better return potential than government debt investments, less volatility in price, relative safety compared to equity, and regular cash payments.
The major things to consider before investing in Corporate Bond Funds are creditworthiness of issuers, historic risk-return ratios, interest rate risks, and liquidity scenario among other factors.
Types of Debt Funds
Funds Based On Duration
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Give your savings the growth they deserve. Invest in Equity Funds and unlock the potential of long-term growth
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Mutual funds that invest in other mutual funds both in India and globally
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Passively-managed mutual funds tracking a particular index
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Invest in funds listed and traded on the stock exchange