Debt fund YTM by category: what the portfolios yield

The number

The median liquid fund held a portfolio yielding 6.14% on 31 August 2026. After its Direct-plan expense ratio of 0.14%, about 6.01% remains. That is the closest thing a debt fund has to a quoted rate, and it comes from the monthly portfolios every fund house must publish.

Here is the same figure for every debt category, with the cost that comes off it and what the category actually returned over the last year.

Yields, costs and returns by category

Medians across each category's schemes. YTM and average maturity are from the 31 August 2026 portfolio disclosures; expense ratios (TER) are the latest Direct-plan figures; one-year returns are Direct-plan Growth NAVs to 1 October 2026.

"YTM less TER" is the median of each fund's own difference, so it need not equal one column minus the other. Of the 324 portfolios with a yield, 178 stated it; for the other 146 we weighted the yields printed against each holding.

What the table says

Yield rises with maturity, then mostly stops. Moving from overnight money to one-year paper adds about two points of yield. Beyond three years, corporate bond, dynamic bond and long-duration funds all sit between 7.3% and 7.7%. Lending for twenty-five years instead of three is earning very little extra.

Government paper yields less than company paper. Gilt funds hold only central and state government bonds and yield a median 6.92%, below short-duration and corporate bond funds with a fraction of the maturity. That gap is the price of credit risk.

The highest yields carry the highest costs. Credit risk and medium duration funds top the yield column, at 8.31% and 8.13%. They also charge the most, 0.80% and 0.71%, which takes away more than half of their yield advantage over a corporate bond fund.

Why last year's returns look so different

Long-duration funds held bonds yielding 7.65% and returned 1.26%. Gilt funds returned 2.45%. Meanwhile liquid funds, yielding far less, returned 6.47%.

The gap is price. When market yields rise, existing bonds fall in value, and the longer a bond has left to run, the further it falls. NSE's index of the benchmark 10-year government bond shows it: its clean price fell 4.52% in the year to 18 September 2026, and with interest added the index returned only 2.13%. A fund's one-year return is the yield it earned plus or minus that price change. For short-maturity funds the price change is small, so return and yield stay close. For long ones it can swamp the yield.

So a high YTM is not a forecast. If yields fall from here, long-duration funds gain on price; if they rise again, those funds lose. Our explainer on bond yields and bond fund prices walks through the arithmetic.

Funds within a category differ

The medians hide wide ranges. Credit risk yields ran from 6.78% to 8.76%. Gilt funds ran from 5.17% to 7.69%, depending on whether a fund held long bonds or short treasury bills. Liquid funds were the tightest, 5.76% to 6.43%. Look at each fund's own yield and maturity on its fund page, reached from the debt fund screener.

What this does not show

• Credit quality. A higher yield on company bonds is payment for the chance of not being paid. YTM says nothing about how likely that is.
• Tax. Debt fund gains bought after 1 April 2023 are taxed at your slab rate. Our guide to how debt and hybrid funds are taxed covers it.
• The future. Portfolios change every month, and so does the yield.

This is a reading of the disclosed portfolios, not a recommendation of any fund.