Best Mutual Fund For Short Term

The below table shows the Best Mutual Fund For the Short Term based on AUM, NAV, and minimum SIP.

Content:

• Short Term Mutual Funds Meaning
• Best Mutual Fund For Short Term
• Short Term Mutual Funds In India
• Best Mutual Funds For Short Term in India
• Best Short Term Mutual Funds
• Who Should Invest In Short Term Mutual Funds In India?
• How To Invest in the Best Mutual Fund For Short Term?
• Performance Metrics Of Short Term Mutual Funds In India
• Benefits of Investing in Short Term Mutual Funds In India
• Challenges Of Investing In Short Term Mutual Funds In India
• Introduction to Best Mutual Fund For Short Term
• Best Mutual Fund For Short Term – FAQ

Short Term Mutual Funds Meaning

Short-term mutual funds are investment funds that primarily invest in assets with a short maturity period, typically less than three years. They aim to offer investors higher liquidity with lower risks compared to long-term investments, making them suitable for short-term financial goals.

These funds generally invest in government securities, corporate bonds, and money market instruments. The objective is to preserve capital while providing reasonable returns. Investors prefer these funds for parking surplus cash that might be needed in the near future.

Short-term mutual funds are ideal for investors who seek minimal risk exposure. They are less affected by interest rate fluctuations, which helps in maintaining a stable portfolio. The fund’s performance might offer lower returns compared to long-term funds, but they provide safety and quick access to money.

Best Mutual Fund For Short Term

The table below shows the Best Mutual Fund For the Short Term based on the lowest to highest expense ratio.

Short Term Mutual Funds In India

The table below shows Short Term Mutual Funds In India based on the Highest 3Y CAGR. 

Best Mutual Funds For Short Term in India

The table below shows the Best Mutual Funds For the Short Term in India based on exit load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.

Best Short Term Mutual Funds

The table below shows the Best Short Term Mutual Funds based on Absolute 1 Year Return and AMC.

Who Should Invest In Short Term Mutual Funds In India?

In India, individuals who require funds within a short timeframe or are seeking low-risk investment avenues should consider short-term mutual funds. These funds are ideal for investors looking to achieve financial goals quickly without significant risk exposure.

Short-term mutual funds are particularly suitable for new investors who wish to start with less volatile investment options. They allow investors to get accustomed to the market dynamics with relatively safe exposure, making it an excellent choice for building investment confidence.

Moreover, these funds are a strategic option for seasoned investors who need to park surplus cash temporarily. They provide a way to earn returns on idle money that may be required soon for upcoming expenses or investment opportunities.

How To Invest in the Best Mutual Fund For Short Term?

To invest in the best mutual fund for the short term, start by defining your financial goals and risk tolerance. Research and compare funds focusing on short-term investments, looking at their performance, fees, and portfolio composition to find one that aligns with your objectives.

Next, consider consulting with a financial advisor to gain professional insights into the most suitable short-term mutual funds. They can provide personalized advice based on your financial situation and help you understand the nuances of each fund’s strategy and risk level.

Finally, once you’ve chosen a fund, you can invest through a brokerage account or directly through the mutual fund company. Ensure you complete all necessary KYC (Know Your Customer) processes, and monitor your investment regularly to adjust strategies as market conditions change.

Performance Metrics Of Short Term Mutual Funds In India

Performance metrics of short-term mutual funds in India include yield, expense ratio, and volatility. Investors also scrutinize the fund’s Sharpe ratio to assess risk-adjusted returns and liquidity measures to determine how quickly investments can be converted into cash without affecting the fund’s price.

Yield is particularly important for short-term funds as it indicates the potential income generated from the fund’s assets. A higher yield can suggest a more profitable fund, but it’s crucial to consider the associated risks and the quality of underlying assets to ensure stability.

Expense ratios also play a significant role in determining a fund’s net performance. Lower expense ratios are preferable in short-term funds because they minimize the reduction in earnings from fees. Additionally, lower volatility in these funds suggests less risk, which is essential for investors prioritizing capital preservation over a short duration.

Benefits of Investing in Short Term Mutual Funds In India

The main benefits of investing in short-term mutual funds in India include higher liquidity and lower risk. These funds offer quick access to funds and are ideal for managing short-term financial goals with reduced market exposure, providing a safer option for investors looking to park funds temporarily.

• Quick Liquidity Leader: Short-term mutual funds in India offer high liquidity, allowing investors to quickly and easily access their funds. This makes them ideal for managing emergency funds or upcoming financial needs without the hassle of long withdrawal processes.
• Safety First: These funds typically invest in low-risk securities, providing a safer investment avenue compared to equities. This lower-risk profile is particularly appealing to conservative investors or those nearing a financial goal who prioritize capital preservation.
• Efficient Income Engine: Although they’re designed for short-term holdings, these funds can still offer competitive yields, especially compared to traditional savings accounts. This aspect is crucial for investors who wish to earn a return on their cash reserves without committing to long-term investments.
• Tax Tactic Advantage: Many short-term mutual funds offer tax-efficient returns compared to other short-term investment options like fixed deposits, especially if held for more than three years, due to indexation benefits.
• Flexible Financial Fitting: Short-term mutual funds provide various investment options, including systematic investment plans (SIPs) and lump sum investments, making it easy for individuals to invest based on their unique financial situations and goals.

Challenges Of Investing In Short Term Mutual Funds In India

The main challenges of investing in short-term mutual funds in India include relatively lower returns due to conservative investment approaches and the impact of fees, which can significantly eat into earnings, especially for very short investment periods. Additionally, these funds may offer limited growth potential.

• Modest Returns Radar: Short-term mutual funds typically generate lower returns compared to long-term equity investments due to their conservative nature. This is crucial for investors seeking high growth, as the safe, low-yield instruments in these funds may not meet their investment growth expectations.
• Fee Frustration Factor: Even small fees can disproportionately diminish the overall returns from short-term mutual funds, especially since these funds are held for brief periods. High expense ratios relative to the short investment horizon can significantly impact net earnings.
• Growth Limitation Lament: The very nature of short-term mutual funds, focusing on capital preservation rather than growth, restricts the potential for substantial capital appreciation. This makes them less suitable for investors whose primary goal is wealth accumulation.
• Interest Rate Impact: Short-term mutual funds are sensitive to interest rate changes. A rise in rates can decrease the market value of the fund’s existing bond holdings, potentially leading to lower performance in the short run.
• Liquidity vs. Yield Trade-Off: While these funds offer high liquidity, the safer, more liquid investments typically yield lower returns. Investors might face a trade-off between having immediate access to their funds and achieving a higher yield.

Introduction to Best Mutual Fund For Short Term

ICICI Pru Short Term Fund

The ICICI Prudential Short Term Fund Direct Plan-Growth is a Short Duration mutual fund offering from ICICI Prudential Mutual Fund. It has been operational for 11 years and 4 months, having first been launched on January 1, 2013.

The ICICI Pru Short Term Fund is categorized as a Short Duration Fund and oversees assets totaling ₹16,875.68 crore. It has delivered a five-year Compound Annual Growth Rate (CAGR) of 7.89%. The fund charges an exit load of 7.89% and maintains an expense ratio of 0.45%. It is classified as a ‘Moderate’ risk according to SEBI standards. The actual allocation includes 57.61% in Corporate Debt, 39.86% in Government Securities, 1.97% in Cash & Equivalents, and 0.29% in Secured Debt. Additionally, there is a minor allocation of 0.28% in other assets.

HDFC Short Term Debt Fund

The HDFC Short Term Debt Fund Direct Plan-Growth, offered by HDFC Mutual Fund, is a Short Duration mutual fund scheme. This fund has been operational for 11 years and 4 months since its inception on January 1, 2013.

The HDFC Short Term Debt Fund falls within the Short Duration Fund category and manages assets worth ₹14,612.39 crore. This fund has achieved a Compound Annual Growth Rate (CAGR) of 7.43% over the last five years. It carries an exit load of 7.43% and an expense ratio of 0.37%. According to SEBI, it is rated as having a ‘Moderate’ risk level. The actual portfolio allocation includes 62.53% in Corporate Debt and 32.23% in Government Securities. Additionally, 3.14% is held in Cash & Equivalents, 1.10% in Secured Debt, and 0.72% in Certificates of Deposit. A further 0.28% is invested in other assets.

SBI Short Term Debt Fund

The SBI Short Term Debt Fund Direct-Growth is a Short-duration mutual fund offering from SBI Mutual Fund. This fund has been operational for 11 years and 4 months, having been established on January 1, 2013.

The SBI Short Term Debt Fund is a Short Duration Fund that manages ₹12,838.68 crore in assets. It has recorded a five-year Compound Annual Growth Rate (CAGR) of 7%. The fund has an exit load of 7% and an expense ratio of 0.35%. It is classified under the ‘Moderate’ risk category by SEBI. The actual asset allocation includes 69.71% in Corporate Debt, followed by 27.46% in Government Securities. Cash & Equivalents make up 2.56%, and a smaller portion, 0.26%, is allocated to other assets.

Axis Short Term Fund

The Axis Short Term Direct Fund-Growth, offered by Axis Mutual Fund, is a Short Duration mutual fund scheme that has been operational for 11 years and 4 months since its launch on January 1, 2013.

The Axis Short Term Fund, categorized as a Short Duration Fund, oversees an Asset Under Management (AUM) of ₹7,797.42 crore. It boasts a five-year Compound Annual Growth Rate (CAGR) of 7.29%. The fund imposes an exit load of 7.29% and maintains an expense ratio of 0.34%. It is rated as a ‘Moderate’ risk by SEBI. The actual allocation is primarily in Corporate Debt at 58.77%, followed by Government Securities at 23.23%. Floating-rate Debt accounts for 8.81%, and Certificates of Deposit are 4.81%. Cash & Equivalents make up 1.92%, and other assets collectively account for 2.46%.

Aditya Birla SL Short Term Fund

The Aditya Birla Sun Life Short Term Direct Fund – Growth is a Short Duration mutual fund offering from Aditya Birla Sun Life Mutual Fund. It has been operational for 11 years and 4 months since its launch on January 1, 2013.

The Aditya Birla SL Short Term Fund is part of the Short Duration Fund category, managing assets totaling ₹7,274.5 crore. It has experienced a Compound Annual Growth Rate (CAGR) of 7.34% over the past five years. This fund carries an exit load of 7.34% and an expense ratio of 0.38%. It is classified under the ‘Moderate’ risk category by SEBI. The actual allocation consists of 49.14% in Corporate Debt and 32.68% in Government Securities. Floating-rate Debt accounts for 7.92%, while Cash & Equivalents and Certificate of Deposit represent 3.16% and 3.47%, respectively. There are three additional investment categories included.

UTI Short Duration Fund

The UTI Ultra Short Duration Fund Direct-Growth is an Ultra Short Duration mutual fund offered by UTI Mutual Fund. It has been operational for 11 years and 4 months since its inception on January 1, 2013.

The UTI Short Duration Fund, categorized under Short Duration Funds, holds assets of ₹2,689.14 crore. Over the last five years, it has achieved a Compound Annual Growth Rate (CAGR) of 7.72%. The fund has an exit load of 7.72% and an expense ratio of 0.37%. It falls into the ‘Moderate’ risk category according to SEBI guidelines. The actual portfolio includes 56.20% in Corporate Debt, followed by 15.92% in Treasury Bills, 12.65% in Certificates of Deposit, 10.33% in Government Securities, and 4.68% in Cash & Equivalents. Additionally, there is a minor allocation of 0.22% in other assets.

Canara Rob Short Duration Fund

The Canara Robeco Short Duration Fund Direct-Growth is a Short Duration mutual fund offering from Canara Robeco Mutual Fund. It has been operational for 11 years and 4 months since its launch on January 1, 2013.

The Canara Rob Short Duration Fund, which is a Short Duration Fund, manages an Asset Under Management (AUM) of ₹407.67 crore. It has posted a five-year Compound Annual Growth Rate (CAGR) of 6.71%. The fund has an exit load of 6.71% and an expense ratio of 0.43%. It is categorized as a ‘Moderate’ risk by SEBI. The actual allocation is predominantly in Corporate Debt at 62.71%, followed by Government Securities at 24.12%. Treasury Bills make up 6.23% of the portfolio, while Certificates of Deposit account for 5.99%. Cash & Equivalents represent 0.60%, and an additional 0.35% is held in other assets.

Mirae Asset Short Duration Fund

The Mirae Asset Short Duration Fund Direct-Growth is a Short Duration mutual fund offering from Mirae Asset Mutual Fund. This fund has been available for 6 years and 2 months since its inception on February 23, 2018.

The Mirae Asset Short Duration Fund, a part of the Short Duration Fund category, has assets under management amounting to ₹335.66 crore. This fund has achieved a five-year Compound Annual Growth Rate (CAGR) of 7.05%. It carries an exit load of 7.05% and an expense ratio of 0.33%. It is rated as having a ‘Moderate’ risk according to SEBI standards. The current allocation includes 69.20% in Corporate Debt, followed by 24.50% in Government Securities. Cash & Equivalents constitute 2.96%, while Commercial Paper accounts for 0.32%. Additionally, there is a minor allocation in other assets totaling 3.03%.

Sundaram Short Duration Fund

The Sundaram Short Duration Fund Direct-Growth is a Short Duration mutual fund offered by Sundaram Mutual Fund. It has been operational for 11 years and 4 months, with its inception on January 1, 2013.

The Sundaram Short Duration Fund falls under the Short Duration Fund category and manages ₹239.48 crore in assets. It has recorded a Compound Annual Growth Rate (CAGR) of 7.03% over the past five years. The fund has an exit load of 7.03% and an expense ratio of 0.29%. It is classified as a ‘Moderate’ risk by SEBI. The current allocation includes 40.39% in Corporate Debt, followed by Government Securities at 35.72%. Cash & Equivalents constitute 13.91%, with Certificate of Deposit and Treasury Bills making up 7.81% and 1.96% respectively. Additionally, there is a minor allocation in other assets totaling 0.22%.

Baroda BNP Paribas Short Duration Fund

The Baroda BNP Paribas Short Duration Direct Fund-Growth is a Short Duration mutual fund offered by Baroda BNP Paribas Mutual Fund. This fund has been operational for 11 years and 4 months, with its inception on January 1, 2013.

The Baroda BNP Paribas Short Duration Fund, categorized as a Short Duration Fund, oversees assets worth ₹219.29 crore. Over the last five years, it has generated a Compound Annual Growth Rate (CAGR) of 7.35%. The fund charges an exit load of 7.35% and has an expense ratio of 0.38%. It is rated as a ‘Moderate’ risk by SEBI. The current allocation includes 60.49% in Corporate Debt, followed by Government Securities at 32.44%. Cash & Equivalents constitute 0.29%, with other assets making up the remaining 6.78%.

Best Mutual Fund For Short Term – FAQ

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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.