Best Debt ETFs in India for December 2025: BHARAT Bond ETF, ICICI Pru Nifty G-Sec ETF and More

Debt ETFs have gained popularity among investors seeking stable returns and low-cost exposure to government securities. These funds track fixed-income indices and provide liquidity through exchange trading.

They also offer greater transparency compared to many traditional debt instruments. In addition, their structure can deliver improved tax efficiency for certain investors.

Top Debt ETFs by 1-Year Return

Note: Data as of November 27, 2025

ICICI Pru Nifty 5 Yr Benchmark G-Sec ETF tops the list with a 1-year return of 9.78%, followed closely by BHARAT Bond ETFs, which combine strong performance with ultra-low expense ratios.

Leading Debt ETFs by Market Capitalisation

Note: Data as of November 27, 2025

BHARAT Bond ETFs dominate in terms of market cap, reflecting strong investor confidence and preference for government-backed securities.

Why Consider Debt ETFs?

Debt ETFs are often considered for their low-cost structure, with expense ratios that can be as low as 0.01%, making them more cost-efficient than many actively managed debt funds. Lower expenses help investors retain a greater share of returns, particularly over longer holding periods.

These funds are traded on stock exchanges, which provides higher liquidity compared to traditional bonds or some debt instruments. Investors can buy or sell units during market hours at prevailing prices, offering operational flexibility.

Another important feature of debt ETFs is transparency, as their portfolios closely track the underlying bond index. This ensures clarity on holdings, maturity profiles, and credit quality, reducing uncertainty for investors.

Debt ETFs can also be more tax-efficient than fixed deposits for long-term investors, depending on the holding period and applicable tax rules. As a result, they are commonly used for stable income allocation, portfolio diversification, and efficient exposure to government or high-quality corporate debt.

Conclusion

For December 2025, the ICICI Pru Nifty 5 Yr Benchmark G-Sec ETF leads the category on 1-year returns. BHARAT Bond ETFs continue to dominate in terms of assets under management and cost efficiency.

These products appeal to investors seeking stability and predictable income. Portfolio decisions should factor in investment horizon and individual risk tolerance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.