Debt Fund Outperforms FDs: DSP Credit Risk Fund Delivers 26.72% in 2-Year

The DSP Credit Risk Fund is an open-ended debt scheme designed to predominantly invest in AA and below-rated corporate bonds, excluding AA+ rated bonds. It offers relatively high interest rate risk and credit risk, making it a unique option within the debt fund category. The primary investment objective is to generate returns commensurate with the associated risks from a portfolio of money market and debt securities.

The NAV of DSP Credit Risk Fund stands at ₹45.70 as of January 8, 2025. 

Key Features of the DSP Credit Risk Fund

• Category: Credit Risk Fund
• Benchmark: CRISIL Credit Risk Debt B-II Index
• Investment Profile: 97.63% in debt instruments, of which 21.7% is in government securities and 75.93% in low-risk securities.
• Fund Size: ₹188.4882 crore (as of September 30, 2024).
• Expense Ratio: 0.4% for the direct plan (as of December 2024).
• Exit Load: 1% for units exceeding 10% redeemed within 12 months.
• Minimum Investment: ₹100, with the same threshold for additional investments and SIPs.

Performance Snapshot

Over a 2-year period ending January 8, 2025, the DSP Credit Risk Fund delivered an impressive absolute return of 26.72%, translating into an annualised return of 12.51%. During the same period, the State Bank of India (SBI) offered an interest rate of 7% on 2-year term deposits or fixed deposits for regular customers.

To put this into perspective:

• An investment of ₹1,00,000 in the DSP Credit Risk Fund two years ago would have grown to ₹1,26,720 as of January 8, 2025.
• Meanwhile, the same amount invested in a fixed deposit with SBI would have grown to approximately ₹1,14,490.

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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. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.