Credit Risk Mutual Funds

Credit Risk Mutual Funds

Credit Risk Mutual Funds are one of the types of debt funds that invest in low credit quality debt securities. Now it is clear that these debt fund investment schemes come with higher risks as they invest in low quality instruments, but still investors choosing this type of investment scheme, why? Well, the answer is though it has risk it offers higher returns, in expectance of higher returns investors are ready to face the risks associated with these investment schemes. As the fund manager of these funds analyses the securities and chooses the security that helps in boosting the ratings which will have the positive impact on the NAV in such way one could gain fruitfully over the investment schemes.

What are the features to be considered?

Plan Investment Portfolio:

Before investing in any investment scheme plan or create your own Investment portfolio, so you could be able to face the consequences be it on the positive side or the negative side.

Selection of the Credit Risk Funds:

Always choose the credit risk funds that has large corpus, this will help the fund manager to diversify easily across different instruments to reduce the risks

Expense Ratio:

Remember the expense ratio plays a major role on the returns, so choose the low expense ratio investment scheme to gain more returns.

Fund Manager:

Research about the fund manager as he/she plays the major role of the investment scheme. Look for the one who has good experience in similar areas.


Credit Risk funds are subjected to be taxed based on the holding period, like the short-term capital gain tax and long-term capital gain tax.

List of Top Credit Risk Mutual Funds in India:

  • ICICI Prudential Credit Risk Fund gives 9.38% returns for 3 years holding period.
  • HDFC Credit Risk Debt Fund offers 8.89% returns for 3 years of period.
  • Kotak Credit Risk Fund offers 8.21% returns for 3 years period.
  • IDFC Credit Risk Fund offers 8.12% returns for 3 years maturity period.
  • SBI Credit Risk Funds gives 8.06% returns for a holding period of 3 years.

Bottom Line:

Credit Risk Mutual funds are suitable for those who can tackle higher risk averse and looking for higher returns. But the investors should always keep in mind that before choosing any investment scheme be it a lower risk averse or higher risk averse an investor should always plan according to their investment portfolio.