Best Corporate Bond Funds to Invest

Why Corporate Bond Funds Are Back in Focus in 2026: With interest rate movements stabilising and investors seeking predictable returns, corporate bond funds are gaining renewed attention in 2026. These funds primarily invest in high-rated corporate debt instruments, aiming to offer steady income with relatively lower risk compared to equity funds. For conservative and moderate investors, they remain a popular fixed-income choice.

ICICI Prudential Corporate Bond Fund Leads the Pack: ICICI Prudential Corporate Bond Fund stands among the top performers with a 5-year annualised SIP return of 7.08%. Backed by a sizable asset base of Rs. 33,250 crore, the fund has maintained consistency while managing one of the largest corpuses in this category. Its scale reflects strong investor confidence.

Nippon India and Kotak Deliver Competitive Returns: Nippon India Corporate Bond Fund has generated 7.02% annualised returns over five years, managing assets worth Rs. 8,888 crore. Close behind is Kotak Corporate Bond Fund with a 6.84% return and a fund size of Rs. 17,265 crore. Both funds combine stable performance with established fund management expertise.

Aditya Birla Sun Life and Axis Maintain Steady Growth: Aditya Birla Sun Life Corporate Bond Fund has posted 6.82% returns with assets of Rs. 28,253 crore, while Axis Corporate Bond Fund delivered 6.77% returns managing Rs. 8,565 crore. These funds continue to attract investors looking for balanced risk and consistent income generation.

HDFC and SBI — Large Fund Houses, Stable Returns: HDFC Corporate Bond Fund, one of the largest in the category with Rs. 33,442 crore in assets, has delivered 6.70% annualised returns over five years. SBI Corporate Bond Fund follows with Rs. 22,534 crore in assets and 6.61% returns. Their strong institutional backing and diversified portfolios make them dependable options.

Mid-Sized Funds Offering Competitive Performance: Funds such as HSBC Corporate Bond Fund (6.71% returns, Rs. 6,203 crore AUM), UTI Corporate Bond Fund (6.67%, Rs. 5,429 crore), and Invesco India Corporate Bond Fund (6.52%, Rs. 6,198 crore) offer competitive returns while maintaining moderate asset sizes. These funds appeal to investors seeking diversification beyond the largest AMCs.

Smaller Funds with Consistent Track Records: Baroda BNP Paribas Corporate Bond Fund (6.75%, Rs. 422 crore), Sundaram Corporate Bond Fund (6.50%, Rs. 758 crore), DSP Corporate Bond Fund (6.49%, Rs. 3,392 crore), Bandhan Corporate Bond Fund (6.41%, Rs. 14,580 crore), and Union Corporate Bond Fund (6.36%, Rs. 596 crore) demonstrate that smaller funds can also provide steady long-term returns. While their asset bases vary, performance remains broadly aligned with category averages. The above information is based on ET Money data and is meant for educational purposes only. 

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