Credit Risk Mutual Funds in India
Updated June 2026 · 32 active funds · data from AMFI NAVs
Credit Risk funds are defined by SEBI as investing at least 65% of assets in bonds rated AA and below (i.e. below the highest credit tier). The strategy is explicit: take on credit risk to earn a higher yield, betting that the extra interest more than compensates for occasional defaults or downgrades. This makes them the most credit-sensitive debt category - returns can be attractive in benign conditions but can fall sharply if a holding defaults or is downgraded, and liquidity in lower-rated paper can dry up under stress. The role is a yield-seeking satellite allocation for investors who understand and accept default risk, not a core or safe-money holding. Duration is secondary; credit selection drives outcomes, so manager quality and portfolio diversification matter enormously. The default benchmark on FindMF is the NIFTY Credit Risk Bond Index; as this is a composite debt index outside our ingested NSE equity feed, alpha and beta may be unavailable, though returns and risk metrics are fully computed. We derive trailing returns and risk metrics for all 32 Credit Risk funds from AMFI-published daily NAVs using a disclosed methodology, so the realised volatility and drawdown of taking credit risk are visible.
Who it suits: Yield-seeking investors who understand and can stomach default and downgrade risk as a small satellite allocation.
88% of the 16 funds here with a computed alpha beat their benchmark over the measured window (positive alpha). Past performance is not indicative; this is analysis, not advice.
| # | Scheme | 1Y | 3Y | 5Y | Sharpe | Max DD | TER | AUM |
|---|---|---|---|---|---|---|---|---|
| 1 | DSP Credit Risk Fund DSP | +9.87% | +16.59% | +12.99% | 0.83 | -1.8% | 0.41% | ₹219 Cr |
| 2 | Aditya Birla Sun Life Credit Risk Fund Aditya Birla Sun Life | +12.50% | +12.86% | +10.69% | 1.16 | -0.8% | 0.79% | ₹1.2K Cr |
| 3 | HSBC Credit Risk Fund HSBC | +6.06% | +11.77% | - | 0.57 | -0.4% | 0.96% | ₹493 Cr |
| 4 | BANK OF INDIA Credit Risk Fund Bank of India | +17.21% | +9.98% | - | - | - | 1.15% | ₹106 Cr |
| 5 | Invesco India Credit Risk Fund Invesco | +7.49% | +9.54% | +8.28% | 0.36 | -1.0% | 0.28% | ₹159 Cr |
| 6 | Nippon India Credit Risk Fund Nippon India | +7.98% | +8.95% | +9.12% | 0.59 | -1.2% | 0.70% | ₹1.0K Cr |
| 7 | ICICI Prudential Credit Risk Fund ICICI Prudential | +7.86% | +8.91% | +7.84% | 0.59 | -0.8% | 0.73% | ₹5.9K Cr |
| 8 | Axis Credit Risk Fund Axis | +7.85% | +8.59% | +7.54% | 0.23 | -0.9% | 0.82% | ₹362 Cr |
| 9 | Nippon India Credit Risk Fund - Institutional Nippon India | +7.96% | +8.45% | +8.58% | 0.43 | -1.2% | - | - |
| 10 | Kotak Credit Risk Fund Kotak Mahindra | +7.20% | +8.38% | +6.63% | -0.32 | -3.1% | 0.81% | ₹704 Cr |
| 11 | Baroda BNP Paribas Credit Risk Fund Baroda BNP Paribas | +6.86% | +8.38% | +9.22% | 0.52 | -0.8% | 0.85% | ₹184 Cr |
| 12 | SBI CREDIT RISK FUND SBI | +7.19% | +8.26% | +7.53% | 0.20 | -0.7% | 0.91% | ₹2.2K Cr |
| 13 | HDFC Credit Risk Debt Fund HDFC | +6.72% | +8.00% | +7.08% | -0.05 | -1.5% | 1.02% | ₹6.9K Cr |
| 14 | UTI Credit Risk Fund UTI | +6.32% | +7.74% | +10.10% | 0.40 | -0.8% | 1.04% | ₹257 Cr |
| 15 | BANDHAN Credit Risk Fund Bandhan | +5.33% | +7.26% | +6.30% | -0.82 | -1.1% | 0.66% | ₹240 Cr |
| 16 | Franklin India Credit Risk Fund Franklin Templeton | +7.45% | - | - | -0.28 | -2.9% | - | - |
Ranked by trailing return (3Y where available, else 1Y) on funds with at least one year of history. Returns, Sharpe, drawdown and TER are computed independently from AMFI NAVs - see methodology. No paid placement.
Frequently asked questions
How are Credit Risk funds taxed?
As debt funds. For units purchased on or after 1 April 2023, the full gain is taxed at your slab rate regardless of holding period, with no indexation. Verify with a tax adviser.
What is the main risk in Credit Risk funds?
Credit risk, by design - at least 65% sits in AA-and-below bonds. A default or downgrade can cause a sharp NAV drop, and lower-rated paper can become hard to sell under stress. Diversification and manager quality are critical. FindMF's drawdown figures, from AMFI NAVs, show how hard funds have been hit historically.
What expense ratio is reasonable, and how do I compare funds?
Direct-plan ratios often run higher here (commonly around 0.70-1.50%) reflecting active credit work. But cost should be weighed against risk-adjusted return and downside - compare expense ratio, net returns, volatility and drawdown on FindMF, all from AMFI NAVs.
Does FindMF compute alpha and beta for these funds?
Usually not. The NIFTY Credit Risk Bond benchmark is a composite debt index outside our ingested NSE equity feed, so benchmark-relative metrics may be flagged unavailable. Returns, volatility and drawdown remain fully computed from AMFI NAVs.