What we measured
For every Direct Growth debt and hybrid fund with about three years or more of history, we took the maximum drawdown over the trailing three years to 12 October 2026: the largest peak-to-trough fall in NAV. Then we took the median fund in each category.
It is a worst-case measure, not an average. A fund that ends the period higher can still have had a painful stretch in between.
Debt categories
| Category | Funds | Median worst fall | Deepest | Mildest |
|---|---|---|---|---|
| Long Term Fund | 7 | −5.12% | −5.99% | −3.34% |
| Gilt Fund | 23 | −3.59% | −6.49% | −2.24% |
| 10-year Constant Maturity Gilt | 5 | −3.05% | −3.11% | −2.96% |
| Dynamic Bond | 22 | −1.83% | −4.92% | −1.09% |
| Medium to Long Term | 12 | −1.73% | −2.16% | −1.34% |
| Medium Duration | 12 | −0.77% | −1.19% | −0.57% |
| Banking and PSU | 19 | −0.63% | −1.09% | −0.35% |
| Corporate Bond | 21 | −0.63% | −1.11% | −0.25% |
| Short Duration | 22 | −0.53% | −0.76% | −0.40% |
| Floating Rate | 12 | −0.47% | −1.26% | −0.21% |
| Credit Risk | 12 | −0.42% | −1.77% | −0.21% |
| Low Duration | 20 | −0.22% | −0.26% | −0.18% |
| Income | 29 | −0.16% | −2.29% | 0.00% |
| Money Market | 23 | −0.15% | −0.19% | −0.10% |
| Ultra Short Duration | 24 | −0.08% | −0.13% | −0.05% |
| Liquid | 42 | −0.01% | −0.49% | 0.00% |
| Overnight | 37 | 0.00% | 0.00% | 0.00% |
The ordering is duration. The longer the bonds a category holds, the deeper its worst fall: from nothing for overnight funds to about 5% for long-term funds. The deepest single fund is Union Gilt Fund at −6.49%, then HDFC Long Term (−5.99%), UTI Long Term (−5.68%) and LIC MF Gilt (−5.62%).
Credit risk is not the worst on this measure
Credit Risk funds show a median fall of just 0.42%, smaller than Corporate Bond funds. Drawdown shows price swings, not the risk of a default that has not happened. A fund can look steady until a holding fails. The measure also depends entirely on the last three years and says nothing about events outside them.
Hybrid categories
| Category | Funds | Median worst fall | Deepest | Mildest |
|---|---|---|---|---|
| Aggressive Hybrid | 28 | −13.11% | −20.00% | −9.89% |
| Multi Asset Allocation | 13 | −10.78% | −15.33% | −1.77% |
| Balanced Advantage | 30 | −9.26% | −26.53% | −5.49% |
| Equity Savings | 20 | −4.83% | −11.53% | −2.11% |
| Conservative Hybrid | 17 | −3.64% | −6.08% | −2.21% |
| Arbitrage | 26 | −0.44% | −0.82% | −0.30% |
Hybrids sit between debt and equity, and their drawdowns follow how much equity they hold. Aggressive hybrids fell 13.11% at the median, more than any debt category by a wide margin. The widest range is in Balanced Advantage: a mild −5.49% for the best fund and −26.53% for the worst, a gap of 21 points inside one category. Our balanced advantage funds in a falling market post looks at why.
Arbitrage funds, which hold hedged equity, behaved like short-duration debt: −0.44%.
What to take from it
- Match duration to the time you will hold. A gilt fund's 3–6% worst fall is acceptable over many years and unwelcome if you need the money in three months. Our guide on where to park short-term money uses the same reasoning.
- "Debt" is not one risk level. Overnight and long-term funds are both debt funds and differ by about five percentage points of drawdown.
- A category median hides the range. Always look at the fund, not the label. The debt fund returns by category shows what each category earned for those risks.
Source: our fund metrics, trailing-three-year maximum drawdown on Direct Growth NAVs as of 12 October 2026. Categories with fewer than four qualifying funds are omitted. Past drawdowns do not limit future ones.
Frequently asked questions
What is a maximum drawdown?
The largest fall from a peak NAV to a later low within the period. A −5% drawdown means that at the worst point, a holder who bought at the peak was down 5%.
Which debt category fell the most?
Long Term Fund, with a median worst fall of 5.12% over three years, ahead of Gilt Fund at 3.59% and 10-year Constant Maturity Gilt Fund at 3.05%. The single deepest was Union Gilt Fund at 6.49%.
Can a debt fund lose money?
Yes. Funds holding longer-dated bonds fall when yields rise. Over the last three years every category with duration shows a measurable fall at some point, while overnight funds show none.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
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