Debt Mutual Fund Rankings: What Changed in October 2026?
We refreshed our debt mutual fund rankings, while keeping our framework constant. Despite hike in interest rates as well as rising bond yields, our top ranked funds stayed broadly stable.
1. Key Takeaways & Observations
Since our last rankings in July 2026, the 10-year government bond yields have risen by ~60bps after bottoming out in early July. This was potentially driven by rate hikes (or anticipation of the hikes) globally and the overall uncertainty surrounding the Iran-US war. We recommend MFD partners to avoid long-duration products and focus on steady risk-adjusted returns combined with capital preservation.
We continue to use the same scoring methodology as our previous iterations. However, we have refined the benchmark indices (that we use to compare relative returns) for certain categories. Since this change is applied throughout the respective categories – as such, there is no impact on the rankings.
We have summarized how our top ranked funds behaved and other observations below:
Increase in Overall Scores
The rising government bond rates meant we saw a slight dent in performance of debt funds, resulting in a marginal decrease in average composite score from 2.943 in July 2026 to 2.871 in October 2026. The decline was more prominent in categories where fund managers have freedom to play the interest rate cycles (with limited duration restrictions) like Banking & PSU, Corporate Bond, Dynamic Bond, etc. – since they are more impacted by change in interest rates.
However, the fund managers potentially anticipated this and the average ‘Modified Duration’ of the ranking universe reduced from 1.98 to 1.69, implying that portfolios are less impacted by interest rate changes than in July 2026.
Broadly Stable Top 3
For most categories, the Top 3 funds were broadly unchanged (although their order changed internally). Some exceptions were:
DSP Corporate Bond Fund – Moved up to 2nd position from 5th position, mainly due to better Sortino ratio and fund manager’s tenure crossing the 5-year milestone.
Tata and ICICI Prudential Ultra Short Term Fund – Moved to 2nd and 3rd position from 4th and 5th, replacing UTI and HSBC’s offering, which fell due to increase in TER.
Baroda BNP Overnight Fund – Moved up to 3rd position to 7th position mainly due to improvement in TER and narrow gap between the funds.
Bandhan Short Term Fund and Bandhan Ultra Short Term Fund – Moved up to 3rd position from 6th, due to relatively better performance than the intervening funds.
Kotak Banking & PSU Debt, Axis Liquid, HSBC Ultra Short term Fund – Moved up to 2-3rd positions from 4th or 5th.
Further, none of the top-5 positions in July 2026 have since dropped outside the top 10.
New Entrants:
The current review cycle introduces 5 new fund entrants across categories and 3 reductions (due to AUM dropping below threshold). This means more funds fell within our minimum operating history and AUM criteria.
Throughout this blog, we cover the key changes in our rankings since July 2026. We talk about our debt ranking framework in greater detail here: Our Debt Mutual Fund Ranking Framework
2. Universe Overview
3. Top 3 Funds by Category – October 2026 vs July 2026
The table below presents the top 3 ranked funds in select categories as of the October 2026 review.
4. New Fund Entrants
Five funds entered the ranking universe for the first time in the October 2026 cycle – as they fell within our AUM or minimum operational period criteria. Three funds fell out of the rankings due to its AUM dropping below our minimum threshold.
The new entrants that landed within Top 10 in our rankings are below:
If you want to see the detailed fund-level scores and category-by-category rankings, explore Creso's mutual fund ranking tool at creso.in, where the data is published alongside our methodology. If you are looking for a platform that brings rankings, client management, and portfolio reporting into one place, take a look at what Creso offers for MFDs.
FAQs
Q: How often does Creso update its mutual fund rankings?
A: Rankings are updated quarterly. The most recent cycle compared July 2026 and October 2026 data across 180 debt mutual funds in 13 categories.
Q: Should I switch my clients out of funds that fell sharply in the rankings this quarter?
A: Not automatically. A single-quarter rank movement is one data point. Look at multi-quarter trends and assess whether the decline reflects a systematic issue (fund manager change, strategy drift) or a market-cycle response before acting. There are also tax, risk profile and other considerations that need to be kept in mind.
Disclaimer
The debt mutual fund rankings are based on a proprietary, rule-based methodology using data sourced from Morningstar and our predefined quantitative parameters. The rankings are intended solely for educational and informational purposes and should not be construed as investment advice, a recommendation, or an opinion on the suitability of any mutual fund scheme.
Mutual fund investments are subject to market risks, including the possible loss of principal. Past performance and ranking outcomes do not guarantee future results. The methodology does not account for individual investor objectives, risk tolerance, financial situation, or tax considerations.
Rankings are derived from historical data and may change over time due to market conditions, portfolio changes, or methodology updates. Investors and distributors are advised to exercise independent judgment, conduct their own analysis, and consult appropriate financial or tax advisors before making any investment decisions.
The use of fund rankings should be only one of several inputs in the investment decision-making process and not the sole basis for selection.
