Credit quality buckets in debt mutual funds

Mon, 18 May 2026 00:00:00 +0000

Credit quality buckets categorise debt mutual fund holdings by credit rating, indicating the default risk of each instrument. Indian credit ratings are issued by SEBI-registered Credit Rating Agencies (CRAs): CRISIL, ICRA, CARE, India Ratings, Brickwork. Mutual funds disclose their portfolio composition by credit-quality bucket in monthly factsheets.

Credit rating scale

Standard credit-rating scale (long-term):

Rating	Interpretation	Default risk
AAA	Highest credit quality	Negligible
AA+ to AA-	High credit quality	Very low
A+ to A-	Adequate credit quality	Low
BBB+ to BBB-	Moderate credit quality	Moderate
BB+ and below	Below investment grade	High (junk)
D	Default	In default

Indian mutual funds primarily hold AAA and AA-rated instruments. AA- and below are typically held only by credit risk mutual funds .

Credit quality bucketisation in debt mutual funds

Tue, 12 May 2026 00:00:00 +0000

Credit quality bucketisation in a debt mutual fund refers to the percentage distribution of the portfolio across credit rating categories, from the highest quality (AAA-rated government securities and top-rated corporate bonds) down to below-investment-grade (BB and lower) instruments. It is a mandatory disclosure in Indian debt fund factsheets and is the primary tool for assessing default risk and potential for credit-driven NAV shocks.

Credit quality sits alongside Macaulay duration , modified duration , and yield to maturity (YTM) as the four key risk metrics for Indian debt funds.

Credit Quality on WebNotes

Credit quality buckets in debt mutual funds

Credit rating scale

Credit quality bucketisation in debt mutual funds