Are there any debt index funds in India?

Published: May 10, 2023 at 6:00 am

A subscriber to our YouTube channel writes, “Do we have any debt fund like benchmark Nifty 50 Index fund for 7-10 years period. I just want to follow only one fund. Of course, the major chunk is EPF, PPF, and ESOP. This is to build slowly in debt space for a future 25% allocation”.

“I simplified my equity portfolio to Nifty 50 with ICICI Pru N50 Index Fund for retirement with 25-30% allocation for the past 3-4 years to avoid FM risk, ER & easy maintenance—super simple & no headache. I’m 49, already close to my FIRE. But still working in the corporate world to keep me busy for 4-5 years.”

Learning that you have simplified your equity portfolio with index funds is fantastic. There are two types of debt-based passive funds in India. (1) Target Maturity Funds, which would buy and hold an index portfolio and hold it until maturity, thereby reducing interest rate risk at the time of withdrawal. The credit risk in funds is also relatively low as they typically invest in gilts and state development loans. For more information, refer to FAQ: Target Maturity Debt Mutual Funds.

(2) There are also open-ended passive debts. Most of them are ETFs, and to our knowledge, there is only one open-ended index fund – the recently launched Edelweiss Short Duration Index Fund. This is their list as of 17h Feb 2023.

List of debt index funds in India (open-ended)

  1. Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund
  2. ICICI Pru Nifty 10 yr Benchmark G-Sec ETF
  3. ICICI Pru Nifty 5 yr Benchmark G-SEC ETF
  4. ICICI Pru S&P BSE Liquid Rate ETF
  5. Kotak Nifty 1D Rate Liquid ETF
  6. LIC MF Nifty 8-13 yr G-Sec ETF
  7. Motilal Oswal Nifty 5 Year Benchmark G-Sec ETF
  8. Nippon India ETF Nifty 1D Rate Liquid BeES
  9. Nippon India ETF Nifty 5 yr Benchmark G-Sec
  10. Nippon India ETF Nifty 8-13 yr G-Sec Long Term Gilt
  11. SBI Nifty 10 yr Benchmark G-Sec ETF

We are not sure why you want to invest in a passive debt fund for only 7-10 years. If this is part of your retirement portfolio, the investment can continue even after retirement.

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If you are planning for a goal other than retirement that is 7-10 years away and want a passive debt fund option, you can consider a target maturity fund that matures a little before your goal deadline.

If you are looking for a passive debt fund for retirement that you can hold on to during the withdrawal stage, then Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund may be considered. Read our fund review and appreciate the pros and cons before investing.

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