Introduction
Debt funds have always been a reliable choice for conservative investors who want to preserve their capital while earning a steady income. They remain a crucial component of a diversified investment portfolio, offering protection from the volatility that can be prevalent in the stock markets. These funds are ideal for investors prioritising stability yet preferring a more secure route to wealth generation.
Read on as we discuss the best debt funds for 2025 that offer a mix of fixed-income securities and, in some cases, equity exposure, making them well-suited to different risk appetites. Whether you are looking for tax-saving options, income generation, or long-term growth, there is a debt fund on this list to suit your needs. Take a closer look at some of the best debt funds in India worth considering for your portfolio.
1. ICICI Prudential Multiple Yield Fund - Series 6 Plan D
The ICICI Prudential Multiple Yield Fund - Series 6 Plan D is a solid choice for those looking for stable, predictable returns. This scheme primarily aims to generate income by investing in a diverse portfolio of fixed-income securities and debt instruments. The fund has a moderate risk profile, making it ideal for investors looking for consistent returns without exposing themselves to too much volatility.
As of January 17, 2025, the fund size is ₹45.58 crore, with a 1-year annualised return of 6.8% and a 3-year return of 8.4%. The minimum investment amount is ₹5,000, making it accessible to most retail investors. Whether you are new to debt funds or looking to diversify your portfolio, this fund offers a solid foundation.
2. ICICI Pru Multiple Yield-7-B(G)
Another strong contender from ICICI Prudential, the ICICI Pru Multiple Yield-7-B(G) fund seeks to generate income through investments in fixed-income securities while aiming for long-term capital appreciation by allocating a portion of its assets into equity and equity-related instruments. This makes it ideal for those who want a blend of safety and growth in their investment strategy.
As of January 17, 2025, the fund has an expense ratio of 2.46% and an AUM (assets under management) of ₹33.13 crore. The minimum investment required is ₹5,000, making it a viable option for various investors. The fund’s focus on fixed income and equity makes it versatile, especially for those comfortable with moderate risk.
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3. DHFL Pramerica Hybrid Debt Fund(G)
The DHFL Pramerica Hybrid Debt Fund(G) is a well-balanced hybrid debt fund that focuses on generating returns from both fixed-income securities and equity instruments. The fund aims to provide steady income while offering capital appreciation through equity investments.
As of January 17, 2025, the fund size is ₹18.17 crore, with a 5-year return of 8.4% and a 1-year return of 6.0%. The fund also has a low expense ratio of 0.71, making it a cost-effective option for long-term investors. If you are looking for a fund that balances risk and return effectively, the DHFL Pramerica Hybrid Debt Fund is worth considering for your 2025 portfolio.
4. UTI ULIP(G)
The UTI Unit Linked Insurance Plan (ULIP) is an open-ended scheme that offers insurance and investment benefits. The scheme channels a minimum of 60% of its investments into debt instruments, with the remaining assets allocated to equity instruments. This structure allows it to provide stable returns while benefiting from the growth potential of equities.
As of January 17, 2025, the scheme has an AUM of ₹5,433.67 crore and an expense ratio of 1.64. The minimum investment for UTI ULIP is ₹15,000, with a minimum additional investment of ₹1,000. This scheme also offers life and accident insurance coverage, making it a comprehensive investment option. With a 5-year return of 9.19% and a 1-year return of 9.57%, UTI ULIP is an attractive choice for those looking for tax-saving benefits and potential capital appreciation options.
5. PGIM India Hybrid FTF-12-Reg(G)
The PGIM India Hybrid FTF-12-Reg(G) is a hybrid fixed maturity plan that aims to generate income by investing in high-quality fixed-income securities while also targeting capital appreciation through investments in equity and equity-related instruments.
With an AUM of ₹2.06 crore and an expense ratio of 2.26%, this fund is designed for investors seeking income generation as well as long-term growth. The minimum investment amount is ₹5,000, making it a relatively accessible option. While the fund is focused on fixed income, its hybrid nature adds an element of equity exposure, providing a balance of risk and return.
Conclusion
The importance of securing stable returns through debt funds cannot be overstated. The funds we have highlighted offer a variety of features, from tax-saving benefits to the potential for income generation and capital appreciation. Before investing, always consider your financial goals, risk tolerance, and the time horizon of your investment.
By selecting the right debt fund, you can achieve a balance of safety and growth, ensuring that your investment journey is secure and rewarding. Always consult a financial advisor like Motilal Oswal to choose the best option based on your unique circumstances and needs.
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