The league table of almost every prominent debt fund category is a peculiar sight these days. In each one of them, the top two-three funds, on the basis of last one-year returns, are ahead of others by an exceptionally wide margin. This is true for a wide variety of funds right from ultra-short duration and low duration to medium duration and credit risk funds. That's pretty unusual because in fixed-income funds, you don't generally expect a very large spread between the top and the bottom performers. And ironically, almost every single one of these top performers looked like a sinking ship about one to two years back. So, what has happened in the last one year that these sinking ships have suddenly found wings to fly? And are they worth your hard-earned money? Let's find out. What exactly happened? The origins of this unusual trend date back to the year 2018, when the IL&FS became the first victim (or perpetrator, rather?) of the turmoil that unfolded in the Indian debt markets. Thereafter, a series of borrowers defaulted on their debt obligations. The credit ratings of their bonds plummeted and funds holding them had to write them off, causing losses to their investors. But over the past year, some of these borrowers have been able to pay back their dues partially. In some other cases, the AMCs have been able to sell off
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