Credit Risk Mutual Funds

All debt funds come with the risk that the issuer of debt securities will default in the repayment of principal or interest. The risk is magnified for investors who invest in low-rated securities. However, risk and return have an inverse relationship- the higher the risk, the higher the return. So while conservative investors look for risk-free options, some seasoned investors are willing to increase their risk appetite for higher returns. View More

Credit risk funds provide an avenue for such investors. These special category debt funds invest 65% of their corpus in low-rated securities (AA rated or below). The aim is to generate 2-3% extra returns by taking higher credit risk.

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Credit Risk Mutual Funds List

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Who Should Invest in Credit Risk Funds?

Credit Risk Funds are short-term investments that can generate the highest returns among debt funds. The typical tenure of these funds is 3 to 5 years. However, these funds carry significant risk and are only suitable for investors with a high-risk appetite. Risk-averse investors looking for regular income best avoid this fund. View More

Having said that, even risk-tolerant investors should be prudent while investing in Credit Risk Funds. Here are a few factors one should consider to increase their credit risk fund returns.

  • Be aware of the risk level associated with the credit risk mutual fund.
  • Look for funds with larger AUM (Asset under Management). A larger corpus allows for more diversification and spread of the credit risk.
  • Check the total expense ratio (TER) before investing in credit risk funds. A lower TER gives a higher return to the investor.
  • Look for funds that do not have a highly concentrated portfolio. Ensure that a single business group is not dominating the portfolio. Diversification across various businesses and securities helps reduce the credit risk.
  • The fate of credit risk funds largely depends on the estimate of portfolio managers. Choose managers who have good experience in handling such portfolios.
  • Properly plan your investment in high-risk funds. Most investors refrain from investing more than 20% of their portfolio in credit risk securities. A measured call is necessary while investing in high-risk securities.

The above considerations will help you select the best credit risk funds to add to your portfolio.

Popular Credit Risk Mutual Funds

  • Min SIP Investment Amt
  • ₹ -
  • AUM (Cr.)
  • ₹ 114
  • 3Y Return
  • 37.59%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 192
  • 3Y Return
  • 16.72%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 964
  • 3Y Return
  • 11.05%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 140
  • 3Y Return
  • 9.41%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 2,259
  • 3Y Return
  • 7.84%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 6,187
  • 3Y Return
  • 7.80%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 989
  • 3Y Return
  • 7.75%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 176
  • 3Y Return
  • 7.71%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 381
  • 3Y Return
  • 7.45%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 582
  • 3Y Return
  • 7.24%

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