Synopsis– Debt mutual funds in India have gained traction for offering safer returns than equities, with several outperforming benchmarks based on 5-year SIP XIRR returns. This article shows the top 5 debt funds based on 5 year SIP XIRR returns that offer great importance with regard to diversification and balancing of an investment portfolio.
Debt mutual funds have become quite popular in India, where investors are looking for alternatives to access safe returns with comparatively reduced risk to equities. These funds have outperformed their benchmark index based on SIP XIRR returns over a 5-year period and are of credit risk, dynamic bonds, medium terms, and arbitrage funds. Each of these top five mutual funds has a different expense ratio, different fund size, and investment strategies, which allow investors various options to fit with their investment goal.
1. Bank of India Credit Risk Fund – Direct Growth
- 5-Year SIP XIRR: 22.01%
- AUM: ₹105.6 Crores as on 31-07-2025
- Expense Ratio: 1.1%
- NAV: ₹12.58 as on 18-08-2025
- Minimum Lump Sum: ₹5,000
- Minimum SIP: ₹1,000
- This fund invests in low rated securities but has a potential for higher returns due to elevated interest rates, this fund currently has the highest 5-year SIP returns in debt, but the risk is relatively high.
2. Baroda BNP Paribas Dynamic Bond Fund – Direct Growth
- 5-Year SIP XIRR: 18.40%
- AUM: ₹228 Crores as on 31-07-2025
- Expense Ratio: 0.7%
- NAV: ₹50.60 as on 04-08-2025
- Minimum Lump Sum: ₹5,000
- Minimum SIP: ₹500
- This dynamic bond fund offers stability and regular returns due to its flexible duration strategy which makes it a good option among conservative investors.
3. DSP Credit Risk Fund – Direct Growth
- 5-Year SIP XIRR: 15.18%
- AUM: ₹208.36 Crores as on 31-07-2025
- Expense Ratio: 0.4%
- NAV: ₹54.59 as on 18-08-2025
- Minimum Lump Sum: ₹100
- Minimum SIP: ₹100
- DSP is a low cost credit risk fund that has a lower expense ratio and smaller minimum investment which makes it very affordable and also has good yield.
4. Aditya Birla Sun Life Medium Term Fund – Direct Growth
- 5-Year SIP XIRR: 12.81%
- AUM: ₹2,744 Crores as on 31-07-2025
- Expense Ratio: 0.83%
- NAV: ₹43.80 as on 18-08-2025
- Minimum Lump Sum: ₹1,000
- Minimum SIP: ₹1,000
- The medium term debt fund that focuses on quality papers providing stability to investors who seek a medium risk, fixed income opportunity.
Also read: Top Performing Infrastructure Mutual Funds in India 2025 – Do You Have Them in Your Portfolio?
5. HDFC Income Plus Arbitrage Active FOF – Direct Growth
- 5-Year SIP XIRR: 12.70%
- AUM: ₹1,384 Crores as on 31-07-2025
- Expense Ratio: 0.07%
- NAV: ₹43.14 as on 18-08-2025
- Minimum Lump Sum: ₹100
- Minimum SIP: ₹100
- This hybrid fund, with the least expense ratio on the list, has both arbitrage and exposure to debt, which is a low-cost option well suited to risk-averse investors.
Comparison Table of Top 5 Debt Funds
| Fund Name | 5-Year SIP XIRR | AUM (₹ Cr) | Expense Ratio | NAV (₹) | Min. Lump Sum (₹) | Min. SIP(₹) |
| Bank of India Credit Risk Fund Dir Gr | 22.01% | 105.6 | 1.1% | 12.58 | 5,000 | 1,000 |
| Baroda BNP Paribas Dynamic Bond Fund Dir Gr | 18.40% | 228 | 0.7% | 50.60 | 5,000 | 500 |
| DSP Credit Risk Fund Dir Gr | 15.18% | 208.36 | 0.4% | 54.59 | 100 | 100 |
| ABSL Medium Term Fund Dir Gr | 12.81% | 2,744 | 0.83% | 43.80 | 1,000 | 1,000 |
| HDFC Income Plus Arbitrage Active FOF Dir Gr | 12.70% | 1,384 | 0.07% | 43.14 | 100 | 100 |
Final Thoughts
Mutual funds which are of debt type can serve an valuable purpose in developing a balanced portfolio as these funds are quite stable and with regular returns. Investors have the choice of higher-yield and risker credit risk funds, or safe and low-cost medium-term funds and arbitrage funds. Finally, the appropriate choice will always be that which balances the risk appetite with investment goals.
Written by Prajwal Hegde
The post 5 Top-Performing Debt Mutual Funds in India with Up to 22% Returns Over Last 5 Years appeared first on Trade Brains.