Target Maturity Funds (TMFs) are a type of debt mutual fund that helps investors navigate interest rate risk. These passive debt funds have a maturity date. The portfolio of the target maturity fund comprises the bonds that are part of the underlying bond index. Also, these bonds have a similar maturity as the fund’s stated maturity.
Below are the Best Target Maturity Funds in india:
1 . BHARAT Bond FOF - April 2031 Direct (G)
BHARAT Bond FOF - April 2031 Direct (G)
is a Debt fund
that has delivered a 1 Year return of 10.2% and a 3 Years return of 8.8%
. The fund has an expense ratio of 0.1% and an AUM of ₹
4829 crores as of 2025-05-12.
It was Launched on 2020-07-23. The minimum lump sum investment is ₹5000.
2 . Kotak Nifty SDL Apr 2027 Top 12 Equal Weight Index Fund Direct (G)
Kotak Nifty SDL Apr 2027 Top 12 Equal Weight Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 9.2% and a 3 Years return of 8.0%
. The fund has an expense ratio of 0.2% and an AUM of ₹
7768 crores as of 2025-05-12.
It was Launched on 2022-02-11. The minimum lump sum investment is ₹5000.
3 . BHARAT Bond ETF FOF - April 2032 Direct (G)
BHARAT Bond ETF FOF - April 2032 Direct (G)
is a Debt fund
that has delivered a 1 Year return of 11.4% and a 3 Years return of 9.2%
. The fund has an expense ratio of 0.1% and an AUM of ₹
4544 crores as of 2025-05-12.
It was Launched on 2021-12-15. The minimum lump sum investment is ₹5000.
4 . Aditya Birla Sun Life Nifty SDL Plus PSU Bond Sep 2026 60:40 Index Fund Direct (G)
5 . Bandhan CRISIL IBX Gilt April 2028 Index Fund Direct (G)
Bandhan CRISIL IBX Gilt April 2028 Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 9.6% and a 3 Years return of 8.2%
. The fund has an expense ratio of 0.2% and an AUM of ₹
4658 crores as of 2025-05-12.
It was Launched on 2021-03-23. The minimum lump sum investment is ₹5000.
6 . BHARAT Bond FOF - April 2030 Direct (G)
BHARAT Bond FOF - April 2030 Direct (G)
is a Debt fund
that has delivered a 1 Year return of 10.4% , a 3 Years return of 8.8% and a 5 Years return of 7.2%
. The fund has an expense ratio of 0.1% and an AUM of ₹
9768 crores as of 2025-05-12.
It was Launched on 2019-12-30. The minimum lump sum investment is ₹5000.
7 . Bandhan CRISIL IBX Gilt June 2027 Index Fund Direct (G)
Bandhan CRISIL IBX Gilt June 2027 Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 9.1% and a 3 Years return of 7.9%
. The fund has an expense ratio of 0.2% and an AUM of ₹
6847 crores as of 2025-05-12.
It was Launched on 2021-03-23. The minimum lump sum investment is ₹5000.
8 . ICICI Prudential Nifty PSU Bond Plus SDL Sep 2027 40:60 Index Fund Direct (G)
ICICI Prudential Nifty PSU Bond Plus SDL Sep 2027 40:60 Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 9.2% and a 3 Years return of 7.9%
. The fund has an expense ratio of 0.2% and an AUM of ₹
8883 crores as of 2025-05-12.
It was Launched on 2021-09-28. The minimum lump sum investment is ₹5000.
9 . Axis CRISIL IBX SDL May 2027 Index Fund Direct (G)
Axis CRISIL IBX SDL May 2027 Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 9.3% and a 3 Years return of 8.1%
. The fund has an expense ratio of 0.2% and an AUM of ₹
2243 crores as of 2025-05-12.
It was Launched on 2022-02-23. The minimum lump sum investment is ₹5000.
10 . Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund Direct (G)
Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund Direct (G)
is a Debt fund
that has delivered a 1 Year return of 11.4% and a 3 Years return of 9.3%
. The fund has an expense ratio of 0.2% and an AUM of ₹
3006 crores as of 2025-05-12.
It was Launched on 2022-02-11. The minimum lump sum investment is ₹5000.
Which is the Best Target Maturity Fund (TMF)?
Target maturity funds offer returns closer to the YTM if the investments are held till maturity. In addition, the fund generates accrual returns. Thus, the changing interest rates do not impact the fund’s total returns on maturity. The best target maturity fund largely depends on the investor’s goal and investment horizon. Target maturity MFs are available from 1 year to 15 years. Thus suitable for short, medium and long-term goals.
For example, a target maturity MF of September 2026 holds bonds that mature close to September 2026. The fund’s returns are close to the YTM when held to maturity. Thus, the best target maturity fund will be the one that aligns with your investment horizon and offers a higher net YTM.
Kotak Nifty SDL Apr 2027 Top 12 Equal Weight Index Fund
BHARAT Bond ETF FOF – April 2032
Bandhan CRISIL IBX Gilt April 2028 Index Fund
Aditya Birla Sun Life Nifty SDL Plus PSU Bond Sep 2026 60:40 Index Fund
BHARAT Bond FOF – April 2031
BHARAT Bond FOF – April 2030
Bandhan CRISIL IBX Gilt June 2027 Index Fund
ICICI Prudential Nifty PSU Bond Plus SDL Sep 2027 40:60 Index Fund
Axis CRISIL IBX SDL May 2027 Index Fund
Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund
Why Should You Invest in Best Target Maturity Funds?
The current economic scenario indicates inflation risk, liquidity measures and no further rate cuts from RBI. In such scenarios, it is best to opt for investment options that help you generate more or less stable returns. Thus, investing a portion of your money in low-risk schemes that match your investment horizon will help in generating good portfolio growth.
Target maturity funds suit a variety of investment horizons. They are available for short, medium and as well as long-term goals. However, liquidating these investments before maturity may attract interest rate risk. Only when you hold these funds to maturity will you be able to enjoy returns closer to the YTM.
Are Target Maturity Funds a Good Investment?
Yes, target maturity funds are a good investment when the interest rate scenario in the country is unfavourable. These funds offer a reasonable predictability of returns. Moreover, TMFs mimic the underlying bond index and invest in bonds with similar maturity as the fund’s stated maturity. As a result, investing in these funds has a greater potential to generate higher growth than tax-free bonds. Historically, yields of tax-free bonds are in the range of 4.9% to 5%. While target maturity MFs are offering better returns at around 6.8% to 6.9%.
Furthermore, investors can benefit from indexation when investing for more than three years. Thus, the returns you generate from this scheme can be tax efficient.
Moreover, these funds have a relatively lower level of risk. However, this is not the only benefit of target maturity funds. They are suitable for investors not just looking for predictable returns but also for capital preservation.
Frequently Asked Questions
What is a target maturity fund?
Target maturity funds are debt funds that invest in bonds with a similar maturity. These are passive funds that mimic the underlying bond index. The portfolio comprises bonds with maturities that align with the fund’s stated maturity.
How do target maturity MFs work?
Target maturity MFs are passive debt funds that track the underlying bond index. TMFs have a homogenous portfolio, as the fund invests in bonds with a similar maturity. The bond is held until maturity, and all the interest payments during the holding tenure are reinvested into the fund. Therefore, target maturity MFs operate in accrual mode. Currently, these funds invest only in government securities, PSU bonds and State Development Loans (SDLs).
Who should invest in the best target maturity MFs?
TMFs are suitable for investors looking at predictable returns in the medium to long term. These are low-risk investment options that also protect the investor’s capital.
Are returns from best target maturity funds predictable?
Yes, the return from TMFs is more or less predictable since the fund holds bonds with a similar maturity. Moreover, the returns are predictable only when the investments are held up to maturity. Investors can expect returns close to the YTM of the fund. In the case of earlier withdrawals, the yield may be lower.
How are target maturity MFs taxed?
Target maturity MFs are more tax efficient than traditional investment options. These funds are taxable, like debt mutual funds. If the investment horizon is more than three years, the returns are taxable at 20% with an indexation benefit. For an investment horizon of less than three years, the returns are added to the investor’s taxable income and are taxable at the applicable slab rate.
How does Scripbox rate funds?
Proprietary system to rate mutual funds
We use a proprietary system to rate mutual funds and based on the outcome of the rating, we classify funds into 4 categories namely "Recommended", "Top Ranked", "Neutral" and "Not Recommended".
Scripbox algorithm recommends 2-4 funds for investment for an investment asset class such as large cap, diversified, liquid etc. When you invest for an objective, the algorithm suggests the appropriate asset class and funds.
Top Ranked
These funds are the top performers within a category of mutual funds considering a combination of criteria. The best amongst these funds are also labelled as Scripbox Recommended.
Neutral
Scripbox recommends other funds, which are more suitable for your investment objectives, within this asset and sub asset class.
Not Recommended
Scripbox algorithm classifies funds as "not recommended" when they perform poorly on a combination of criteria. These funds are usually the poorest performers within a category.
Things we consider to provide ratings for a mutual fund.
Outperformance Consistency
We look at the consistency of the outperformance that the fund has displayed. A fund with high consistency is preferred
Rolling Returns (1 Year Holding Period)
We consider average 1 year return that the fund has delivered over an extended period of time
Rolling Returns (3 Year Holding Period)
We consider average 3 year return that the fund has delivered over an extended period of time
Volatility of Outperformance
We consider how volatile the out-performance over the benchmark has been. A lower volatility is preferred
Downside Protection Measure
We look at how resilient the fund is to market down trends. A fund that has shown a higher resilience is preferred
Upside Participation Measure
We consider how well the fund has been able to participate in upmoves in the market. A fund that participates well is preferred
Fund Size
We look at the size of the fund with respect to other funds in the category. Larger funds are preferred.
How to invest in best mutual funds?
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