3 Best Corporate Bond Funds for 2024

Corporate Bond Funds, a sub-category of debt mutual funds, are mandated to invest a minimum of 80% of their assets in the highest-rated corporate bond instruments. Corporate Bond Funds predominantly invest in AA+ and above-rated corporate debt securities.

There is no limit or restriction on the maturity profile of corporate bonds, but typically, they are in the range of 2 to 3 years.

The fund manager of a Corporate Bond Fund considers a host of macroeconomic factors, particularly interest rates and yields, for the portfolio duration.

That said, Corporate Bond Funds have moderate sensitivity to interest rate changes. An uncertain and rising interest rate scenario could make them vulnerable to fluctuations. But when interest rates are stable or falling, they stand to potentially benefit.

In times when we seem to be near the peak of the current interest rate upward cycle, Corporate Bond Funds are conceivably a sensible choice for your portfolio.