Corporate Bond Funds

Best Corporate Bond Funds in India

Corporate bond funds are a type of debt fund that allocates at least 80% of their assets to bonds issued by companies with the highest credit ratings. These bonds function as loans from investors to corporations, where the companies commit to paying periodic interest and returning the principal upon maturity. Companies utilise these funds to cover short-term expenses such as working capital, insurance premium payments, etc.

Below we will explore the best corporate bond funds in India in detail to help you make well-informed investment decisions.

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All Debt FundsCorporate BondGiltMoney MarketLiquidLow DurationMedium to Long DurationMedium DurationBanking & PSULong DurationUltra Short DurationShort DurationGilt with 10 year Constant DurationFloaterCredit RiskOvernightDynamic BondFMP

Benefits of Investing in the Best Corporate Bond Funds in India

Here are the pros of investing in the best corporate bond funds in India:

  • Bond funds are a type of debt fund wherein the associated risk is significantly lower than equity investments. These bonds lend money to companies with high credit ratings, ensuring security and financial stability.
  • Bond funds help you diversify your investment portfolio with low-risk components. This optimises the overall risk of your portfolio.
  • Thanks to corporate bond interest rates, these funds provide regular interest payments, offering a steady income to support your financial needs.

Things to Remember While Investing in the Best Corporate Bond Funds in India

Here are the things to remember while you invest in corporate bond funds in India:

  • The value of a bond mutual fund is inversely related to the interest rates. If the interest rate falls, the value of the bond will rise.
  • Interest payments on bond mutual funds are subject to income tax where there are capital gains.
  • All bond mutual funds are associated with credit risk. As a result, investors need to invest with awareness about the funds.

An Overview of the Best Corporate Bond Funds

Here is a snapshot of the best corporate bond funds in India in 2025:

1. HDFC Corporate Bond Fund

HDFC Corporate Bond Fund (Direct Growth) invests in AA+ and above rated corporate bonds. The minimum amount of investment in this fund is ₹100 in the case of SIP. You can invest in this fund and measure its performance with the benchmark Nifty Corporate Bond Index A-II.

  • Asset Under Management: ₹32,190.90 crore approximately
  • Expense Ratio: 0.36%
  • Investment Details: At least 80% in corporate bonds

2. ICICI Prudential Corporate Bond Fund

ICICI Prudential Corporate Bond Fund -Direct Growth invests 96.52% in debt, wherein 21.05% and 75.42% are in government securities and low-risk securities respectively. Investors can compare its performance with the CRISIL Corporate Bond A-II Index, a benchmark that reflects corporate bonds offering stable returns.

  • Asset Under Management: ₹29,545.49 crore approximately
  • Expense Ratio: 0.35%
  • Investment Details: Debt (96.52%), Other (3.48%)

3. Aditya Birla Sun Life Corporate Bond Fund

Aditya Birla Sun Life Corporate Bond Fund (Direct Growth) has a minimum investment amount of ₹100 for both SIP and lump sum. It invests in AA+ rated bonds in India, reducing credit risks. If you are a conservative investor seeking a secure option for your short-term needs (3 months to 2 years), this scheme is ideal for you.

  • Asset Under Management: ₹25,293.29 crore approximately
  • Expense Ratio: 0.51%
  • Investment Details: 80% to 100% in corporate bonds

4. SBI Corporate Bond Fund

SBI Corporate Bond Fund (Direct Growth) invests 96.88% in debt instruments, wherein 11.97% is in government securities while 84.91% is in low-risk securities. This fund is managed by experienced fund managers like Ardhendu Bhattacharya, Rajeev Radhakrishnan and Pradeep Kesavan.

  • Asset Under Management: ₹20,671.63 crore approximately
  • Expense Ratio: 0.34%
  • Investment Details: Debt (96.88%), Others (3.12%)

5. Kotak Corporate Bond Fund

The minimum investment amount in Kotak Corporate Bond Fund (Direct Growth) is ₹100. Investors can further increase the amount in multiples of ₹100. This fund is managed by industry experts like Manu Sharma and Deepak Agrawal.

  • Asset Under Management: ₹14,448 crore approximately
  • Expense Ratio: 0.34%
  • Investment Details: Debentures and Bonds (68.8%), Government Securities (26.6%), Alternative Investment Fund (0.26%), Net Current Assets (2.25%)

Key Takeaway

Investing in some of the best corporate bond funds in India can help you diversify your investment portfolio. It reduces the risk of losses associated with equity-oriented portfolios. However, ensure you choose funds that invest in high credit-rated companies to avoid default risks while earning stable returns through regular interest income.

Frequently Asked Questions

1. Are the best corporate bond funds in India high-risk?

The risk level of corporate bond funds varies based on the credit rating of the company. A high credit rating of the issuer ensures lower risk for investors in India.

2. What are the taxability norms for the best corporate bond funds in India?

Corporate bond funds are subject to taxation. Based on the holding period, long-term or short-term capital gains tax applies to corporate bond funds, similar to debt funds.

3. How to invest in corporate bond funds in India?

To invest in corporate bond funds in India, you can use platforms that list curated bond investments with clear ratings, yields and tenures. Alternatively, you can consult a financial advisor to help choose suitable funds based on your goals.

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