In 2026, due to changing market trends and interest rate fluctuations, investors are now focusing more on stable income and capital protection. In this scenario, Bond ETFs have emerged as a smart investment option. Compared to traditional bonds, they are more liquid and diversified. In this blog, you will learn about the best bonds to invest in, different risk levels, and strategies for building the right bond ETF portfolio.
What are Bond ETFs?
A bond ETF is an investment fund that invests in various government and corporate bonds. It is traded on a stock exchange like a regular stock. Its main objective is to provide investors with a stable income and to balance the risk in their portfolio.
10 Best Bond ETFs in 2026
- Bharat Bond ETF – April 2030 – Growth
- Aditya Birla SL CRISIL Liquid Overnight ETF
- Motilal Oswal Nifty 5 Year Benchmark G-Sec ETF
- LIC MF Nifty 8-13 yr G-Sec ETF
- DSP NIFTY 1D Rate Liquid ETF
- HDFC NIFTY 1D Rate Liquid ETF – Growth
- SBI NIFTY 1D Rate ETF
- Groww Nifty 1D Rate Liquid ETF
- ICICI Pru Nifty 5 yr Benchmark G-SEC ETF
- AXIS Nifty AAA Bond Plus SDL Apr 2026 50:50 ETF
Read Also: Best ETFs in India to Invest
Overview of the Best Bond ETFs in India
1. Bharat Bond ETF – April 2030 – Growth
The Bharat Bond ETF April 2030 is a target maturity bond ETF that primarily invests in bonds of high-quality public sector and government-backed companies. This fund is ideal for investors seeking stable returns over the medium to long term and prioritizing capital safety. Its portfolio strategy follows a “hold till maturity” approach, which significantly reduces the impact of interest rate volatility. This ETF is considered a reliable option for conservative investors and those planning for retirement.
| Category | Details |
|---|---|
| Current Price | ₹1562.07 |
| 1-Year Return | 8.36% |
| 3-Year Return | 26.6% |
| 5-Year Return | 37.47% |
| 52 Week Low | ₹1232.00 |
| 52 Week High | ₹1611.59 |
| Fund Size | ₹25,084.37 crore |
| Expense Ratio | 0.01% |
| Beta | 0.10 |
| Sharpe Ratio | 0.73 |
| Fund Manager | Dhawal Dalal |
2. Aditya Birla SL CRISIL Liquid Overnight ETF
The Aditya Birla SL CRISIL Liquid Overnight ETF is a fund designed for short-term investments. It is useful for investors who want to keep their money in a safe place for a short period. This ETF primarily invests in overnight money market instruments, resulting in very low risk. Its main focus is on liquidity and capital protection. It is considered a practical option for emergency funds or short-term needs where stability is paramount.
| Category | Details |
|---|---|
| Current Price | ₹ 1000.01 |
| 52 Week Low | ₹ 999.99 |
| 52 Week High | ₹ 1030.00 |
| Fund Size | ₹ 56.74 crore |
| Expense Ratio | 0.43% |
| Beta | 0.00 |
| Sharpe Ratio | 0.83 |
| Fund Manager | Sanjay Pawar |
3. Motilal Oswal Nifty 5 Year Benchmark G-Sec ETF
The Motilal Oswal Nifty 5 Year Benchmark G-Sec ETF invests in Government of India bonds with a 5-year maturity. This ETF tracks the Nifty 5 Year Benchmark G-Sec Index and constructs its portfolio accordingly. Due to the nature of government bonds, the credit risk is very low. The fund’s main objective is to provide stable returns and closely track the index performance.
| Category | Details |
|---|---|
| Current Price | ₹ 62.97 |
| 1-Year Return | 7.54% |
| 3-Year Return | 24.62% |
| 52 Week Low | ₹57.00 |
| 52 Week High | ₹65.80 |
| Fund Size | ₹103.29 crore |
| Expense Ratio | 0.24% |
| Beta | ₹65.80 |
| Sharpe Ratio | 0.59 |
| Fund Manager | Rakesh Shetty |
4. LIC MF Nifty 8–13 Yr G-Sec ETF
The LIC MF Nifty 8–13 Yr G-Sec ETF invests in long-term bonds issued by the Government of India, with maturities ranging from 8 to 13 years. This ETF tracks the Nifty 8–13 Year G-Sec Index and constructs its portfolio accordingly. The fund primarily holds sovereign bonds, resulting in very low credit risk. Its focus is on providing stable returns and long-duration exposure, making it sensitive to interest rate changes.
| Category | Details |
|---|---|
| Current Price | ₹28.72 |
| 1-Year Return | 7.53% |
| 3-Year Return | 27.22% |
| 52 Week Low | ₹26.61 |
| 52 Week High | ₹30.00 |
| Fund Size | ₹2,287.34 crore |
| Expense Ratio | 0.17 |
| Beta | 0.73 |
| Sharpe Ratio | 0.61 |
| Fund Manager | Marzban Irani |
5. DSP NIFTY 1D Rate Liquid ETF
The DSP NIFTY 1D Rate Liquid ETF is a fund designed for short-term cash management. This ETF primarily invests in overnight money market instruments, such as Tri-Party Repo (TREPS), which keeps the risk significantly low. The fund aims to track the NIFTY 1D Rate Index and provide daily liquidity. This ETF is used for parking surplus cash and meeting short-term needs. Its value remains stable, and exiting the investment is easy.
| Category | Details |
|---|---|
| Current Price | ₹1000.01 |
| 52 Week Low | ₹980.55 |
| 52 Week High | ₹1002. |
| Fund Size | ₹346.09 crore |
| Expense Ratio | 0.30% |
| Beta | 0.86 |
| Sharpe Ratio | -3.60 |
| Fund Manager | Anil Ghelani |
6. HDFC NIFTY 1D Rate Liquid ETF – Growth
The HDFC NIFTY 1D Rate Liquid ETF is an ultra-short-term debt ETF that primarily invests in overnight money market instruments. Its portfolio is almost entirely invested in Tri-Party Repo (TREPS), which ensures the fund’s liquidity and significantly reduces risk. This ETF tracks the NIFTY 1D Rate Index and is used for short-term cash management. Its Net Asset Value (NAV) remains stable, making it a practical option for parking temporary surplus funds.
| Category | Details |
|---|---|
| Current Price | ₹1044.43 |
| 1-Year Return | 5.20% |
| 52 Week Low | ₹990.00 |
| 52 Week High | ₹1045.47 |
| Fund Size | ₹39.40 crore |
| Expense Ratio | 0.45% |
| Beta | 0.96 |
| Sharpe Ratio | 1.32 |
| Fund Manager | Swapnil Jangam |
7. SBI NIFTY 1D Rate ETF
The SBI NIFTY 1D Rate ETF is a short-term liquid ETF that invests most of its assets in overnight money market instruments. Its portfolio is almost entirely invested in Tri-Party Repo (TREPS), which ensures the fund’s liquidity and significantly reduces risk. This ETF tracks the NIFTY 1D Rate Index and is used for short-term cash management. The fund has a simple structure, and its main objective is to provide stable and predictable returns.
| Category | Details |
|---|---|
| Current Price | ₹1000.01 |
| 52 Week Low | ₹999.00 |
| 52 Week High | ₹1029.99 |
| Fund Size | ₹32.61 crore |
| Expense Ratio | 0.35% |
| Beta | 0.51 |
| Sharpe Ratio | -1.93 |
| Fund Manager | Tejas Soman |
8. Groww Nifty 1D Rate Liquid ETF
The Groww Nifty 1D Rate Liquid ETF is a short-term debt ETF that primarily invests in overnight money market instruments. The majority of its assets are invested with the Clearing Corporation of India Ltd., ensuring the fund’s liquidity and minimizing risk. This ETF tracks the Nifty 1D Rate Index and is used for daily cash management.
| Category | Details |
|---|---|
| Current Price | ₹107.47 |
| 52 Week Low | ₹100.00 |
| 52 Week High | ₹108.34 |
| Fund Size | ₹62.54 crore |
| Expense Ratio | 0.29% |
| Beta | 0.97 |
| Sharpe Ratio | -0.32 |
| Fund Manager | Kaustubh Sule |
9. ICICI Pru Nifty 5 Year Benchmark G-Sec ETF
The ICICI Pru Nifty 5 Year Benchmark G-Sec ETF invests in Government of India bonds with a 5-year maturity. This ETF tracks the Nifty 5 Year Benchmark G-Sec Index and constructs its portfolio based on the same structure. The majority of the fund’s assets are invested in sovereign bonds, resulting in very low credit risk. Its objective is to provide stable returns and closely track the performance of the government bond market.
| Category | Details |
|---|---|
| Current Price | ₹63.88 |
| 1-Year Return | 8.26% |
| 3-Year Return | 25.13% |
| 52 Week Low | ₹ 58.05 |
| 52 Week High | ₹ 66.70 |
| Fund Size | ₹58.02 crore |
| Expense Ratio | 0.20% |
| Beta | 0.09 |
| Sharpe Ratio | 0.65 |
| Fund Manager | Darshil Dedhia |
10. AXIS Nifty AAA Bond Plus SDL Apr 2026 50:50 ETF
The AXIS Nifty AAA Bond Plus SDL Apr 2026 50:50 ETF is designed for investors seeking steady returns with low risk. This fund invests half of its assets in bonds of strong AAA-rated companies and the other half in State Government loans. Its working principle is simple – buy the bonds and hold them until maturity. This minimizes the impact of market fluctuations. Due to its strong credit quality, this ETF is considered a safe and reliable investment option.
| Category | Details |
|---|---|
| Current Price | ₹13.15 |
| 1-Year Return | 6.85% |
| 3-Year Return | 23.31% |
| 52 Week Low | ₹12.00 |
| 52 Week High | ₹14.50 |
| Fund Size | ₹1,097.47 crore |
| Expense Ratio | 0.10% |
| Beta | 0.05 |
| Sharpe Ratio | 0.21 |
| Fund Manager | Aditya Pagaria |
How Bond ETFs Works
Step 1: Fund Manager Selects Bonds – The fund manager of a Bond ETF selects various government and corporate bonds. These bonds have different maturities and credit ratings to balance the risk.
Step 2: Investors Buy ETF Units – Investors buy units of the ETF on the stock exchange, just like shares. This gives them exposure to multiple bonds in a single investment.
Step 3: Bonds Generate Interest – The bonds within the ETF generate regular interest. This income is distributed to investors as dividends.
Step 4: Price Changes According to Market Rates – When interest rates fall, the price of the Bond ETF may increase. When rates rise, the value of the ETF may decrease.
Step 5: Investor Receives Total Return – In a Bond ETF, the investor receives a total return from two sources – regular interest income and capital gains or losses resulting from the ETF’s price movements.
Read Also: Small-Cap ETFs to Invest in India
Key Factors to Consider Before Choosing Bond ETFs
- Interest Rate Sensitivity: The price of a bond ETF depends on changes in interest rates. Short-term ETFs are less affected, while long-term ETFs react more significantly.
- Credit Risk: Government bond ETFs are generally considered safe. Corporate bond ETFs carry slightly more risk, but may also offer slightly better returns.
- Yield and Income: The ETF’s yield indicates the potential income an investor can receive. The frequency of income payments depends on the specific ETF.
- Expense Ratio: The expense ratio is the fund’s annual charge. A lower expense ratio is better for investors.
- Investment Goal: Choose an ETF that matches your investment goal, whether it’s safety or regular income.
Conclusion
Investing in bond ETFs in 2026 can be a simple and safe way to invest, especially when the market is volatile. Before investing, just make sure to check the fund’s duration, expense ratio, and risk level. Every ETF works differently, so it’s best to choose carefully. Making the right choice can help stabilize your portfolio.
| S.NO. | Check Out These Interesting Posts You Might Enjoy! |
|---|---|
| 1 | Best Debt ETFs to Invest in India |
| 2 | Top 10 Smart Beta ETFs in India |
| 3 | Best Liquid ETFs in India |
| 4 | Best Energy ETFs in India |
| 5 | Best Silver ETFs in India |
| 6 | List of Best Commodity ETFs in India |
Frequently Asked Questions (FAQs)
Are bond ETFs safe to invest in 2026?
Bond ETFs are generally considered safe, especially those holding government bonds. However, the risk is not entirely zero.
Which bond ETF is best for low-risk investors?
Government G-Sec ETFs fall into the low-risk category.
Do bond ETFs provide regular income?
Yes, most bond ETFs provide regular income from interest payments.
Can I invest in bond ETFs for short-term goals?
Yes, liquid and short-term bond ETFs are suitable for short-term goals.
Is it better to invest in bond ETFs or fixed deposits?
Bond ETFs offer flexibility and market-linked returns, while fixed deposits are more stable.
