Top Corporate Bond Mutual Funds for Investment in February 2025

A corporate bond fund is a fund that invests in corporate bonds. Corporate bonds pay interest, which helps the fund generate income for investors.

If an investor is seeking relatively secure debt funds to invest in for over three years, then they can invest in corporate bond funds.

These schemes invest a minimum of 80% of their funds in high-rated company bonds, hence they are safer than other debt funds such as credit risk funds. They are also more stable than gilt funds and long-term debt funds, which are highly affected by changes in interest rates.

Investors need to keep two things in mind—safety and interest rates. Safety was a major issue for debt fund investors after some companies defaulted on their debt repayment and their credit rating fell around three years ago. Things took a turn for the worse when Franklin Templeton Mutual Fund closed down six of its debt schemes, making conservative investors nervous. Although things are better now, it’s still important to be cautious when investing in debt funds.

The second factor affecting interest rate changes is important right now. Central banks are being very careful because inflation is still high. They are warning investors that rate cuts might take longer than expected. In India, the RBI has kept interest rates unchanged and is still unsure about when to reduce them.

Top Corporate Bond Funds for Investment in February 2025

• ICICI Prudential Corporate Bond Fund
• Aditya Birla Sun Life Corporate Bond Fund
• HDFC Corporate Bond Fund
• Sundaram Corporate Bond Fund

Corporate bond funds do carry some risk. While AAA-rated bonds are considered very safe, it is important to check whether your fund manager is making risky moves to boost returns.