Best Debt ETFs in December 2024 – 1Y CAGR Basis – BHARAT Bond ETF, Nippon India ETF Nifty 1D and More

Investors often seek stable and low-risk instruments to park their money, and Debt Exchange-Traded Funds (ETFs) have emerged as an excellent option for those looking to diversify their portfolio with predictable returns. With a mix of debt securities like government bonds, corporate bonds, and other fixed-income instruments, Debt ETFs are a smart way to combine stability with market accessibility.

Debt ETFs focus on debt instruments, such as government securities, treasury bills, and corporate bonds. Unlike traditional mutual funds, Debt ETFs are traded on stock exchanges, offering investors flexibility and liquidity. We’ll examine the performance of the best debt ETFs to help you make an informed investment decision.

Best Debt ETFs in December 2024 – 5Y CAGR Basis

Note: The best debt ETFs list provided here is as of December 9, 2024. The ETFs are sorted based on the 1-year return.

Overview of the Best Debt ETFs

1. BHARAT Bond ETF-April 2030-Growth

With a market cap of ₹6,636.67 crore, the BHARAT Bond ETF-April 2030-Growth is a trusted choice for conservative investors. Offering a 1-year return of 9.92% and a 6-month return of 5.16%, this ETF has proven its ability to generate stable returns. It is just 2.51% away from its 52-week high, showcasing its strong performance in the market. 

Moreover, with a zero expense ratio, this ETF provides cost-effective exposure to AAA-rated public sector bonds, making it an ideal choice for those looking for predictable long-term growth.

2. BHARAT Bond ETF-April 2032

For investors seeking slightly longer-term exposure, the BHARAT Bond ETF-April 2032 offers a 1-year return of 9.89% and a 6-month return of 5.37%. With a market cap of ₹6,496.91 crore, it’s a robust option for those prioritising stability. 

As of December 9, 2024, the ETF is trading 9.71% below its 52-week high. This ETF has room for further growth. Like its 2030 counterpart, it also has a zero expense ratio, ensuring maximum returns for investors.

3. Nippon India ETF Nifty 1D Rate Liquid BeES

The Nippon India ETF Nifty 1D Rate Liquid BeES, with a market cap of ₹2,580.84 crore, is an excellent choice for short-term investments or parking idle funds. This ETF tracks overnight money market rates, offering near-zero volatility.  

The expense ratio of 0.69% is slightly higher than others but is justified by its liquidity-focused strategy. It’s currently 3% away from its 52-week high, reflecting its stability.

4. Nippon India ETF Nifty SDL Apr 2026 Top 20 Equal Weight

With a market cap of ₹183.71 crore, the Nippon India ETF Nifty SDL Apr 2026 offers exposure to state development loans (SDLs), making it an interesting option for investors seeking diversification. It has delivered a 1-year return of 8% and a 6-month return of 3.71%, indicating steady performance. 

As of December 9, 2024, the ETF is trading just 2.14% below its 52-week high and has a competitive expense ratio of 0.20%, ensuring cost efficiency. This ETF suits investors with a medium-term horizon looking for stable returns.

5. LIC MF Nifty 8-13 Yr G-Sec ETF

The LIC MF Nifty 8-13 Yr G-Sec ETF focuses on long-duration government securities, offering safe and predictable returns. With a market cap of ₹96.08 crore, it has provided an impressive 1-year return of 10.61% and a 6-month return of 5.06%, making it a top-performing ETF in this category. 

As of December 9, 2024, it is 4.40% away from its 52-week high, showcasing its potential for growth. With a low expense ratio of 0.16%, this ETF is an excellent choice for risk-averse investors seeking long-term fixed-income returns.

How to Choose the Right Debt ETF?

Debt ETFs have gained popularity in India for several reasons:

1. Diversification: A mix of government and corporate debt reduces risk.
2. Ease of Investment: Traded on exchanges like stocks, making them accessible.
3. Low Costs: Passive management leads to lower expense ratios than actively managed debt funds.
4. Tax Efficiency: Long-term investors benefit from indexation, reducing taxable income.
5. Transparent Operations: Daily disclosure of portfolio holdings ensures transparency.

Things to Consider Before Investing in Debt ETFs

While Debt ETFs offer stability and predictable returns, here are some factors to keep in mind:

1. Interest Rate Risk: Changes in interest rates can impact the returns on Debt ETFs, especially those holding long-duration bonds.
2. Credit Risk: While government-backed ETFs have no credit risk, corporate bond ETFs might be affected if a company defaults.
3. Expense Ratio: Although lower than mutual funds, comparing expense ratios across ETFs is essential.
4. Liquidity: Ensure the ETF has sufficient trading volumes to avoid issues while buying or selling.
5. Investment Horizon: Align your choice of Debt ETF with your financial goals and the time you plan to stay invested.

The Final Word

Debt ETFs are a fantastic way to diversify your investment portfolio while ensuring stability and predictable returns. In December 2024, options like BHARAT Bond ETF, Nippon India ETF Nifty 1D, and others have shown impressive 1-Year CAGR, making them excellent picks for conservative investors.

By considering factors like interest rate sensitivity, credit risk, and investment horizon, you can make an informed choice that aligns with your financial goals. Remember, while Debt ETFs are low-risk, they are not entirely risk-free, so a balanced approach is always wise.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.