What the table shows
A debt fund's trailing one-year return is a snapshot. Its three-year CAGR smooths out more of the interest-rate cycle. Placing the two side by side shows which kinds of funds have been earning their long-run pace recently and which have fallen behind it.
All figures are medians of direct-plan growth schemes as of 2 November 2026. The 1-year figure is the return over twelve months; the 3-year figure is annualised.
| Category | 1Y | 3Y CAGR | 3Y minus 1Y | Volatility |
|---|---|---|---|---|
| Credit Risk | 7.01% | 8.71% | 1.70 | 1.57% |
| Liquid | 6.43% | 6.88% | 0.45 | 0.18% |
| Money Market | 6.34% | 7.24% | 0.90 | 0.44% |
| Ultra Short Duration | 6.31% | 7.13% | 0.82 | 0.39% |
| Low Duration | 5.80% | 7.21% | 1.41 | 0.51% |
| Floating Rate | 5.39% | 7.25% | 1.86 | 0.82% |
| Overnight | 5.25% | 6.00% | 0.75 | 0.13% |
| Medium Duration | 4.50% | 7.47% | 2.97 | 1.31% |
| Short Duration | 4.47% | 7.12% | 2.65 | 0.99% |
| Corporate Bond | 3.99% | 7.01% | 3.02 | 1.17% |
| Banking & PSU | 3.87% | 6.80% | 2.93 | 1.16% |
| Medium to Long Duration | 3.32% | 6.55% | 3.23 | 2.09% |
| Dynamic Bond | 3.17% | 6.57% | 3.40 | 2.30% |
| Gilt | 2.27% | 6.16% | 3.89 | 3.19% |
| Long Duration | 0.86% | 5.94% | 5.08 | 4.00% |
Three clusters
Cash-like funds (overnight, liquid, money market, ultra-short). One-year returns of 5.25% to 6.43% sit within one point of their three-year pace, and volatility is below half a percent. These funds have barely deviated from their long-run earnings rate.
Middle of the curve (low duration, floating rate, short, medium, corporate bond, banking & PSU). The gap is about 1.4 to 3.0 points. One-year returns of 3.87% to 5.80% are well below three-year returns of 6.80% to 7.47%, so the last year was a weaker one for them than the three-year average.
Long end (medium-to-long, dynamic bond, gilt, long duration). One-year returns of 0.86% to 3.32% against three-year returns of 5.94% to 6.57%. The gap widens steadily with duration, to 5.08 points for long-duration funds, whose volatility of 4.00% is more than twenty times that of liquid funds.
What stands out
- Medium Duration has the highest three-year return among the duration categories (7.47%) apart from credit risk, and still posted only 4.50% over one year.
- Credit risk funds lead both columns. Their median one-year return was 7.01% and three-year 8.71%. They also carry the credit risk their name implies: this category holds lower-rated paper, and its volatility of 1.57% is several times that of liquid funds. Higher return here is partly payment for that risk.
- Liquid beats several longer categories over one year. A 6.43% liquid-fund median is higher than the one-year median of every category from short duration downwards, on a volatility of 0.18%.
Why duration matters
A fund with longer-maturity bonds gains when yields fall and loses when they rise. Over a year in which yields rise or stay elevated, longer funds lag; over a long run, they collect higher yields. Neither the one-year nor the three-year number alone says which. If you are choosing between categories for a goal that is a few years away, the guide on matching a fund to a goal date is a better starting point than the ranking.
How to use this
Treat the table as a map of how different the categories are, not as a leaderboard. For a short-term parking need, the low-volatility rows are the relevant comparison. For the tax side of choosing between debt funds and deposits, see FD or debt fund: which leaves more after tax. For fund-level detail inside a category, use the screener.
Medians of direct-plan growth schemes with computed history, as of 2 November 2026. Returns are before tax. Past performance does not indicate future results.
Frequently asked questions
Why are some debt funds' 1-year returns far below their 3-year returns?
Longer-duration funds are more sensitive to interest-rate changes. When yields rise, their prices fall, which can pull a one-year return well below the three-year average.
Which category was steadiest?
Overnight and liquid funds. Their median volatility was 0.13% and 0.18% a year, the lowest of the 15 categories.
Are these returns after expenses?
Yes. They are computed from direct-plan NAVs, which are net of the fund's expense ratio, but before any tax you pay.
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.
Keep reading
Debt funds one year to 22 October 2026: shorter paid more
Across 11 debt fund categories, one-year returns fell as duration rose: credit risk averaged 7.8%, long-term funds -0.6%. As of 22 October 2026.
Target-maturity debt index funds: 1-year returns by maturity
71 target-maturity index funds returned a median 5.59% (2026 maturities) down to 1.77% (2036) in the year to 16 Oct 2026; three-year medians are 6.8–7.6%.
How far debt and hybrid funds fell: worst 3-year drawdowns
Over three years to October 2026, gilt funds fell 3.6% at the median at their worst, aggressive hybrids 13.1%, liquid funds almost nothing. All categories.