How are Corporate Bond Mutual Funds Taxed?

Corporate Bond Funds are taxed like other debt funds. Long-term capital gains (after three years) are taxed at 20% with indexation benefits, while short-term gains are taxed as per your income slab.

What is the Lock-in Period of Corporate Bond Mutual Funds?

Corporate Bond Mutual Funds generally do not have a lock-in period. Investors can redeem their investments at any time, subject to exit load, if applicable.

What is the Risk Rating of Corporate Bond Mutual Funds?

These funds carry very low credit risk due to their mandate of investing in high-quality, AAA-rated bonds. However, they are sensitive to changes in interest rates.

What is the difference between corporate bond funds and individual corporate bonds?

Corporate bond funds pool money to invest in multiple corporate bonds, offering diversification, while individual bonds involve investing in a single company’s debt instrument.

How do corporate bond funds compare to equity funds in terms of risk and return?

Corporate bond funds generally carry lower risk and offer more stable returns, while equity funds have higher return potential but come with greater volatility.

Can I lose money in a corporate bond fund?

Yes, although risk is lower, losses can occur due to interest rate changes, credit defaults, or market volatility.

Are Corporate Bonds Profitable?

Corporate bonds can be profitable through regular interest payments and moderate capital gains, especially when invested in high-rated securities.

What is the investment tenure of a corporate bond?

Tenure varies but typically ranges from 1 to 10 years, depending on the issuing company and bond structure.

Corporate Bond Mutual Funds

Corporate Bond Mutual Funds invest mainly in highly rated corporate bonds in India, aiming to offer stable returns with relatively low credit risk. These funds are often considered by investors looking for comparatively predictable income and capital preservation. A Corporate Bond Fund can be a useful option for meeting medium- to long-term financial goals, especially when seeking a balance between risk and return.

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List of Corporate Bond Mutual Funds

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Search Result - 21 Mutual Funds

Fund Name	Fund Size (Cr.)	3Y Returns	5Y Returns	Invest Now
Franklin India Corporate Bond Fund-Direct Growth Debt Corporate Bond Fund	1,379	8.01%	6.72%	Invest
Baroda BNP Paribas Corporate Bond Fund-Dir Growth Debt Corporate Bond Fund	275	7.75%	6.25%	Invest
AXIS Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	7,768	7.65%	6.75%	Invest
Nippon India Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	9,051	7.53%	6.77%	Invest
ICICI Pru Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	29,688	7.39%	6.73%	Invest
DSP Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	2,816	7.37%	6.04%	Invest
Kotak Corporate Bond Fund-DirGrowth Debt Corporate Bond Fund	15,095	7.35%	6.44%	Invest
HSBC Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	6,058	7.34%	6.06%	Invest
Bandhan Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	13,626	7.30%	6.10%	Invest
UTI-Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	4,718	7.28%	6.30%	Invest

Fund Name	1Y Returns	Rating	Fund Size (Cr.)
Franklin India Corporate Bond Fund-Direct Growth Debt Corporate Bond Fund	6.25% Fund Size (Cr.) - 1,379 Invest
Baroda BNP Paribas Corporate Bond Fund-Dir Growth Debt Corporate Bond Fund	6.12% Fund Size (Cr.) - 275 Invest
AXIS Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.67% Fund Size (Cr.) - 7,768 Invest
Nippon India Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.43% Fund Size (Cr.) - 9,051 Invest
ICICI Pru Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.92% Fund Size (Cr.) - 29,688 Invest
DSP Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	6.13% Fund Size (Cr.) - 2,816 Invest
Kotak Corporate Bond Fund-DirGrowth Debt Corporate Bond Fund	5.26% Fund Size (Cr.) - 15,095 Invest
HSBC Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.43% Fund Size (Cr.) - 6,058 Invest
Bandhan Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.85% Fund Size (Cr.) - 13,626 Invest
UTI-Corporate Bond Fund - Direct Growth Debt Corporate Bond Fund	5.38% Fund Size (Cr.) - 4,718 Invest

What are Corporate Bond Mutual Funds?

A Corporate Bond Fund is a type of debt mutual fund that invests at least 80% of its assets in high-rated bonds issued by companies. These bonds carry credit ratings, with AAA being the highest, indicating strong repayment capacity. They offer higher returns compared to traditional fixed deposits while keeping credit risk relatively low.

By investing in financially sound businesses, these funds aim to provide steady income and preserve capital, making them suitable for investors with a low to moderate risk appetite.

How do Corporate Bond Mutual Funds Work?

A Corporate Bond Mutual Fund primarily invests in high-rated debt instruments issued by companies with strong creditworthiness, typically those rated AA+ and above. These funds are designed to deliver stable returns by lending to financially sound businesses that have a lower likelihood of default.

The Net Asset Value (NAV) of the fund fluctuates based on the market value of the bonds it holds, thereby reflecting the fund’s overall performance. Returns from corporate bond funds are generated through a combination of interest income and potential capital gains. Due to their focus on high-quality issuers, these funds generally carry lower credit risk compared to other types of debt mutual funds.

Features of Corporate Bond Funds

1. High-Quality Investments: A Corporate Bond Fund mainly invests in AAA-rated corporate bonds, reflecting strong creditworthiness and low default risk.
2. Security: These funds prioritise safety by focusing on top-rated issuers, making them suitable for conservative investors seeking capital preservation.
3. Dynamic Maturity Management: Fund managers adjust portfolio maturity based on interest rate expectations to optimise returns.
4. Liquidity: Investments in actively traded bonds ensure that Corporate Bond Mutual Funds offer easy redemption with minimal market impact.
5. Stable Returns: Returns are earned through regular interest payments and occasional capital gains from bond price movements.

Who Should Invest in Corporate Bond Mutual Funds?

1. Conservative Investors: Those who prioritise safety and steady income over aggressive growth.
2. For Capital Preservation Goals: Ideal for investors seeking to protect their principal while earning from high-quality debt instruments.
3. Investors Who Want to Diversify: A good choice for adding balance to an equity-heavy portfolio.
4. For Medium to Long-Term Planning: Suitable for financial goals that require a mix of predictability and low volatility.
5. For Liquidity Needs: Those who want access to their funds without facing high exit costs or lock-ins.

How to Invest in Corporate Bond Funds

Here is a quick guide to help you invest in corporate bonds easily with the 5paisa app:

1. Go to the 5paisa website and select "Open Account".
2. Provide your mobile number and click on the "Open Demat Account" button.
3. Complete the KYC by submitting your personal information.
4. Upload the necessary documents for identity and address proof.
5. Verify your details digitally and begin investing in corporate bonds in India. With 5paisa, your investment process is smooth and hassle-free.

Benefits and Risks of Investing in Corporate Bond Mutual Funds

Benefits of Corporate Bond Funds

1. Steady Income: Corporate Bond Funds aim to deliver regular income by investing in interest-paying corporate debt instruments which makes them appealing for income-focused investors.
2. Diversified Exposure: Spreading investments across various issuers helps reduce the impact of a single company’s performance on the overall fund.
3. Expert Oversight: Professional fund managers select bonds based on ratings and market trends, aiming to balance safety and returns.
4. Better Returns Than FDs: While relatively safe, these funds often yield more than traditional fixed deposits over similar timeframes.

Risks of Corporate Bond Funds

Credit Risk: There is always the possibility that a company may delay or default on repayment, which in turn may affect returns.
Interest Rate Risk: An increase in interest rates may lower the market value of existing bonds held by the fund.
Reinvestment Risk: Future interest payments may be reinvested at lower rates, which could reduce overall income.
Limited Growth Potential: Since these are debt-oriented products, they offer modest capital appreciation, sometimes seen as a disadvantage of corporate bond funds compared to equity investments.

Factors to Consider While Investing in Corporate Bond Funds

1. Credit Quality: Choose funds that invest in highly rated (AA+ or above) bonds. These indicate stronger repayment capacity, reducing credit risk and enhancing portfolio safety.
2. Interest Rate Sensitivity: Bond values move with interest rate changes. If you're planning to buy corporate bonds online, check how sensitive the fund is to rate movements, especially in changing rate environments.
3. Investment Horizon: Align your time frame with the fund’s average maturity. Corporate Bond Mutual Funds are best suited for medium- to long-term investors seeking stability and regular income.
4. Expense Ratio: A lower expense ratio helps maximise your returns, especially for debt investments where margins can be modest. Always compare costs before choosing a fund.
5. Liquidity Needs: Ensure the fund allows easy exit when required. If liquidity is a priority, pick funds with minimal exit loads and high tradability for smooth corporate bonds investment.

Tax Rules For Corporate Bond Mutual Funds

Knowing how Corporate Bond Mutual Funds are taxed can help you plan your returns better after taxes. As per the latest tax rules, gains from Corporate Bond Mutual Funds are taxed as per the investor’s income slab. This is applicable for bonds purchased after March 31, 2023.

For investments made before March 31, 2023, long-term capital gains are taxed at 12.5% if the funds are held for more than 24 months.

Popular Corporate Bond Mutual Funds

Fund Name
Min Investment Amt
AUM (Cr)
3Y Returns

Corporate Bond Mutual Funds

List of Corporate Bond Mutual Funds

Category

Sub Category

Rating

What are Corporate Bond Mutual Funds?

How do Corporate Bond Mutual Funds Work?

Features of Corporate Bond Funds

Who Should Invest in Corporate Bond Mutual Funds?

How to Invest in Corporate Bond Funds

Benefits and Risks of Investing in Corporate Bond Mutual Funds

Benefits of Corporate Bond Funds

Risks of Corporate Bond Funds

Factors to Consider While Investing in Corporate Bond Funds

Tax Rules For Corporate Bond Mutual Funds

Popular Corporate Bond Mutual Funds

Franklin India Corporate Bond Fund-Direct Growth

₹ 500

₹ 1,379

8.01%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 1,379

3Y Returns

8.01%

Baroda BNP Paribas Corporate Bond Fund-Dir Growth

₹ 500

₹ 275

7.75%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 275

3Y Returns

7.75%

AXIS Corporate Bond Fund - Direct Growth

₹ 100

₹ 7,768

7.65%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 7,768

3Y Returns

7.65%

Nippon India Corporate Bond Fund - Direct Growth

₹ 100

₹ 9,051

7.53%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 9,051

3Y Returns

7.53%

ICICI Pru Corporate Bond Fund - Direct Growth

₹ 100

₹ 29,688

7.39%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 29,688

3Y Returns

7.39%

DSP Corporate Bond Fund - Direct Growth

₹ 100

₹ 2,816

7.37%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 2,816

3Y Returns

7.37%

Kotak Corporate Bond Fund-DirGrowth

₹ 100

₹ 15,095

7.35%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 15,095

3Y Returns

7.35%

HSBC Corporate Bond Fund - Direct Growth

₹ 1000

₹ 6,058

7.34%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 6,058

3Y Returns

7.34%

Bandhan Corporate Bond Fund - Direct Growth

₹ 100

₹ 13,626

7.30%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 13,626

3Y Returns

7.30%

UTI-Corporate Bond Fund - Direct Growth

₹ 500

₹ 4,718

7.28%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 4,718

3Y Returns

7.28%

Other Calculators

Frequently Asked Questions

Open Free Demat Account

Corporate Bond Mutual Funds

List of Corporate Bond Mutual Funds

Category

Sub Category

Rating

What are Corporate Bond Mutual Funds?

How do Corporate Bond Mutual Funds Work?

Features of Corporate Bond Funds

Who Should Invest in Corporate Bond Mutual Funds?

How to Invest in Corporate Bond Funds

Benefits and Risks of Investing in Corporate Bond Mutual Funds

Benefits of Corporate Bond Funds

Risks of Corporate Bond Funds

Factors to Consider While Investing in Corporate Bond Funds

Tax Rules For Corporate Bond Mutual Funds

Popular Corporate Bond Mutual Funds

Franklin India Corporate Bond Fund-Direct Growth ₹ 500 ₹ 1,379 8.01% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 1,379 3Y Returns 8.01%

Baroda BNP Paribas Corporate Bond Fund-Dir Growth ₹ 500 ₹ 275 7.75% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 275 3Y Returns 7.75%

AXIS Corporate Bond Fund - Direct Growth ₹ 100 ₹ 7,768 7.65% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 7,768 3Y Returns 7.65%

Nippon India Corporate Bond Fund - Direct Growth ₹ 100 ₹ 9,051 7.53% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 9,051 3Y Returns 7.53%

ICICI Pru Corporate Bond Fund - Direct Growth ₹ 100 ₹ 29,688 7.39% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 29,688 3Y Returns 7.39%

DSP Corporate Bond Fund - Direct Growth ₹ 100 ₹ 2,816 7.37% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 2,816 3Y Returns 7.37%

Kotak Corporate Bond Fund-DirGrowth ₹ 100 ₹ 15,095 7.35% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 15,095 3Y Returns 7.35%

HSBC Corporate Bond Fund - Direct Growth ₹ 1000 ₹ 6,058 7.34% Min SIP Investment Amt ₹ 1000 AUM (Cr.) ₹ 6,058 3Y Returns 7.34%

Bandhan Corporate Bond Fund - Direct Growth ₹ 100 ₹ 13,626 7.30% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 13,626 3Y Returns 7.30%

UTI-Corporate Bond Fund - Direct Growth ₹ 500 ₹ 4,718 7.28% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 4,718 3Y Returns 7.28%

Other Calculators

Frequently Asked Questions

Open Free Demat Account

Franklin India Corporate Bond Fund-Direct Growth

₹ 500

₹ 1,379

8.01%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 1,379

3Y Returns

8.01%

Baroda BNP Paribas Corporate Bond Fund-Dir Growth

₹ 500

₹ 275

7.75%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 275

3Y Returns

7.75%

AXIS Corporate Bond Fund - Direct Growth

₹ 100

₹ 7,768

7.65%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 7,768

3Y Returns

7.65%

Nippon India Corporate Bond Fund - Direct Growth

₹ 100

₹ 9,051

7.53%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 9,051

3Y Returns

7.53%

ICICI Pru Corporate Bond Fund - Direct Growth

₹ 100

₹ 29,688

7.39%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 29,688

3Y Returns

7.39%

DSP Corporate Bond Fund - Direct Growth

₹ 100

₹ 2,816

7.37%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 2,816

3Y Returns

7.37%

Kotak Corporate Bond Fund-DirGrowth

₹ 100

₹ 15,095

7.35%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 15,095

3Y Returns

7.35%

HSBC Corporate Bond Fund - Direct Growth

₹ 1000

₹ 6,058

7.34%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 6,058

3Y Returns

7.34%

Bandhan Corporate Bond Fund - Direct Growth

₹ 100

₹ 13,626

7.30%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 13,626

3Y Returns

7.30%

UTI-Corporate Bond Fund - Direct Growth

₹ 500

₹ 4,718

7.28%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 4,718

3Y Returns

7.28%