Here is my best suggestion along with key parameters which explains why these are best Direct Debt MFs as per my analysis which can potentially generate 6 to 9% CAGR and can be pledged for collateral with minimum haircut between 7.5% to 10%.
I have chosen these Debt Funds after doing enough research and analysing below important points.
1. Ratings from Agencies or Independent bodies such as CRISIL, Valueresearch, etc.
2. Fund Performance in last 3 to 5 yrs
3. AUM size. It should be High or at least Medium.
4. Risk Matrix: Understand Credit Risk and Interest Rate Risk
5. Fund Manager performance: Make sure FM is managing the fund for quite a good amount of time and not new.
6. Go for Direct Mutual Funds as their Expense Ratio is less and so better returns.
Here is a list of 5 Direct Debt Mutual Funds:
1) IDFC Banking & PSU Debt Fund - Direct – Growth; Average Rank: 4.3, Expense Ratio: 0.3, AUM: 18412 Cr; Haircut: 7.5%
2) Nippon India Banking & PSU Debt Fund - Direct – Growth; Average Rank: 4.3, Expense Ratio: 0.33, AUM: 6918 Cr; Haircut: 7.5%
3) Axis Banking & PSU Debt Fund - Direct - Growth; Average Rank: 4, Expense Ratio: 0.31, AUM: 16363 Cr; Haircut: 7.5%
4) IDFC Government Securities Fund - Investment Plan - Direct - Growth; Average Rank: 4.3, Expense Ratio: 0.61, AUM: 1621 Cr; Haircut: 10%
5) Nippon India Gilt Securities Fund - Direct - Growth; Average Rank: 4, Expense Ratio: 0.61, AUM: 1860 Cr; Haircut: 10%
None of the above funds have any Lockin period or Exit load.
From ETFs point of view, Bharat Bond is best ETF with almost no Expense Ratio, Lowest Haircut of 6% and Expected Return of 5.5 to 6.5%. Apart from this LIQUIDBEES is another useful ETF to maintain money in account as Cash Equivalent (rather than maintaining cash) and get around 4 to 4.5% returns.