The below table shows a list of the Best Mutual Funds for the Short Term based on AUM, NAV, and minimum SIP.
| Name | AUM (Cr) | NAV (Rs) | Minimum SIP (Rs) |
| ICICI Pru Short Term Fund | 19,746.04 | 61.76 | 1,000 |
| Kotak Bond Short Term Fund | 16,078.88 | 54.08 | 100 |
| HDFC Short Term Debt Fund | 14,622.22 | 31.16 | 100 |
| SBI Short Term Debt Fund | 13,192.63 | 32.13 | 1,000 |
| Axis Short Duration Fund | 9,341.54 | 31.68 | 1,000 |
| Bandhan Bond Fund – Short Term Plan | 9,328.91 | 57.58 | 100 |
| Aditya Birla SL Short Term Fund | 8,759.95 | 48.46 | 1,000 |
| Nippon India Short Term Fund | 7,121.83 | 53.93 | 100 |
| HSBC Short Duration Fund | 3,783.16 | 26.43 | 500 |
| Tata ST Bond Fund | 2,836.35 | 49.98 | 150 |
Introduction To Top Mutual Funds for Short Term
ICICI Pru Short Term Fund
ICICI Pru Short Term Fund, managed by ICICI Prudential Asset Management Company, focuses on generating reasonable returns while maintaining liquidity. This fund primarily invests in short-term debt and money market instruments, making it suitable for moderate-risk investors seeking stable income.
AUM: ₹19,746.04 Crore
NAV: ₹61.76
Minimum SIP: ₹1,000
Exit Load: 0%
Expense Ratio: 0.45%
1-Y Return: 8.71%
5-Y CAGR: 7.06%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹5,000.00
Kotak Bond Short Term Fund
Kotak Bond Short Term Fund, managed by Kotak Mahindra Asset Management Company, aims to provide attractive returns through investments in short-term debt securities. The fund offers moderate risk exposure and is ideal for investors looking for short-term investment options with steady income.
AUM: ₹16,078.88 Crore
NAV: ₹54.08
Minimum SIP: ₹100
Exit Load: 0%
Expense Ratio: 0.37%
1-Y Return: 8.91%
5-Y CAGR: 6.28%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹100
HDFC Short Term Debt Fund
HDFC Short Term Debt Fund, managed by HDFC Asset Management Company, focuses on generating income by investing in short-term fixed-income instruments. With a moderate risk profile, this fund is suitable for investors seeking to enhance their income while preserving capital.
AUM: ₹14,622.22 Crore
NAV: ₹31.16
Minimum SIP: ₹100
Exit Load: 0%
Expense Ratio: 0.40%
1-Y Return: 8.86%
5-Y CAGR: 6.46%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹100
SBI Short Term Debt Fund
SBI Short Term Debt Fund, managed by SBI Funds Management, aims to provide reasonable returns by investing in a diversified portfolio of short-term debt instruments. This fund is designed for moderate-risk investors who prioritize income generation and liquidity.
AUM: ₹13,192.63 Crore
NAV: ₹32.13
Minimum SIP: ₹1,000
Exit Load: 0%
Expense Ratio: 0.35%
1-Y Return: 8.43%
5-Y CAGR: 6.20%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹5,000.00
Axis Short Duration Fund
Axis Short Duration Fund, managed by Axis Asset Management Company, seeks to deliver attractive returns by investing in short-duration debt and money market instruments. It caters to moderate-risk investors looking for a stable income with a focus on capital preservation.
AUM: ₹9,341.54 Crore
NAV: ₹31.68
Minimum SIP: ₹1,000
Exit Load: 0%
Expense Ratio: 0.36%
1-Y Return: 8.84%
5-Y CAGR: 6.51%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹5,000.00
Bandhan Bond Fund – Short Term Plan
Bandhan Bond Fund – Short Term Plan, managed by Bandhan AMC, aims to generate reasonable returns through investments in short-term debt securities. With a moderate risk profile, this fund is suitable for investors seeking income stability and liquidity.
AUM: ₹9,328.91 Crore
NAV: ₹57.58
Minimum SIP: ₹100
Exit Load: 0%
Expense Ratio: 0.33%
1-Y Return: 8.93%
5-Y CAGR: 6.10%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹1,000.00
Aditya Birla SL Short Term Fund
Aditya Birla SL Short Term Fund, managed by Aditya Birla Sun Life AMC, focuses on providing investors with steady income through short-term debt investments. This fund is designed for moderate-risk investors looking for capital preservation and regular returns.
AUM: ₹8,759.95 Crore
NAV: ₹48.46
Minimum SIP: ₹1,000
Exit Load: 0%
Expense Ratio: 0.38%
1-Y Return: 8.94%
5-Y CAGR: 6.78%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹1,000.00
Nippon India Short Term Fund
Nippon India Short Term Fund, managed by Nippon Life India Asset Management, seeks to provide income by investing primarily in short-term debt and money market instruments. The fund caters to moderate-risk investors aiming for liquidity and stable returns.
AUM: ₹7,121.83 Crore
NAV: ₹53.93
Minimum SIP: ₹100
Exit Load: 0%
Expense Ratio: 0.38%
1-Y Return: 8.89%
5-Y CAGR: 6.46%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹100
HSBC Short Duration Fund
HSBC Short Duration Fund, managed by HSBC Global Asset Management, focuses on delivering income through investments in short-duration debt instruments. This fund is ideal for moderate-risk investors who seek a balance between capital preservation and steady income generation.
AUM: ₹3,783.16 Crore
NAV: ₹26.43
Minimum SIP: ₹500
Exit Load: 0%
Expense Ratio: 0.27%
1-Y Return: 8.48%
5-Y CAGR: 5.86%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹5,000.00
Tata ST Bond Fund
Tata ST Bond Fund, managed by Tata Asset Management, aims to generate consistent returns by investing in short-term debt securities. With a moderate risk profile, this fund is suitable for investors looking for liquidity and regular income while preserving capital.
AUM: ₹2,836.35 Crore
NAV: ₹49.98
Minimum SIP: ₹150
Exit Load: 0%
Expense Ratio: 0.36%
1-Y Return: 8.64%
5-Y CAGR: 6.29%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹5,000.00
What is a Short Term Mutual Fund?
A Short Term Mutual Fund is an investment vehicle that primarily invests in fixed-income securities with shorter maturity periods, typically ranging from one to three years. These funds are designed to provide stable returns while minimizing interest rate risk for investors.
These funds invest in high-quality debt instruments like treasury bills, government bonds, and corporate securities, ensuring lower risk. They are suitable for investors seeking liquidity and a safer option than equity funds while still achieving modest capital appreciation.
Short Term Mutual Funds are ideal for investors with a low-risk appetite and a shorter investment horizon. They offer greater returns than traditional savings accounts and are tax-efficient, making them a popular choice for conservative investors.
Features of Best Mutual Funds for Short Term
The main features of the best mutual funds for short-term investments include liquidity, low-risk investments, consistent returns, and a shorter maturity period. These features make them ideal for conservative investors looking for modest growth with minimal volatility over a brief investment horizon.
- Liquidity: Short-term mutual funds offer high liquidity, allowing investors to withdraw funds easily when needed. This flexibility makes them suitable for emergency funds or short-term financial goals where quick access to cash is essential.
- Low-Risk Investments: These funds primarily invest in government securities and high-quality corporate bonds, reducing exposure to market volatility. This makes them a safer choice compared to equity funds, appealing to risk-averse investors.
- Consistent Returns: By focusing on stable debt instruments, short-term funds aim to deliver steady returns, even in fluctuating interest rate environments. This consistency helps investors achieve predictable income over a brief investment period.
- Short Maturity Period: With a typical maturity of one to three years, these funds align well with short-term financial goals, providing an attractive balance between return and investment period for those seeking quick, moderate gains.
Top Mutual Funds for Short Term Based on Expense Ratio
The table below shows the Top Mutual Fund for Short Term Based on the highest to lowest expense ratio.
| Name | Expense Ratio (%) | Minimum SIP (Rs) |
| ICICI Pru Short Term Fund | 0.45 | 1,000 |
| UTI Short Duration Fund | 0.41 | 500 |
| Canara Rob Short Duration Fund | 0.41 | 1,000 |
| HDFC Short Term Debt Fund | 0.4 | 100 |
| Aditya Birla SL Short Term Fund | 0.38 | 1,000 |
| Nippon India Short Term Fund | 0.38 | 100 |
| Kotak Bond Short Term Fund | 0.37 | 100 |
| Axis Short Duration Fund | 0.36 | 1,000 |
| Tata ST Bond Fund | 0.36 | 150 |
| SBI Short Term Debt Fund | 0.35 | 1,000 |
Short Term In Mutual Fund Based on 3Y CAGR
The table below shows the Top top-performing Mutual Fund for Short Term Based on the Highest 3Y CAGR.
| Name | CAGR 3Y (%) | Minimum SIP (Rs) |
| ICICI Pru Short Term Fund | 7.06 | 1,000 |
| Aditya Birla SL Short Term Fund | 6.78 | 1,000 |
| UTI Short Duration Fund | 6.55 | 500 |
| Axis Short Duration Fund | 6.51 | 1,000 |
| HDFC Short Term Debt Fund | 6.46 | 100 |
| Nippon India Short Term Fund | 6.46 | 100 |
| Tata ST Bond Fund | 6.29 | 150 |
| Kotak Bond Short Term Fund | 6.28 | 100 |
| Mirae Asset Short Duration Fund | 6.27 | 99 |
| SBI Short Term Debt Fund | 6.2 | 1,000 |
Top Performing Mutual Funds for Short Term Based on Exit Load
The table below shows the Best Mutual Fund for Short Term Based on Exit Load, i.e., the fee the AMC charges investors when they exit or redeem their fund units.
| Name | AMC | Exit Load (%) |
| Aditya Birla SL Short Term Fund | Aditya Birla Sun Life AMC Limited | 0 |
| Axis Short Duration Fund | Axis Asset Management Company Ltd. | 0 |
| Bandhan Bond Fund – Short Term Plan | Bandhan AMC Limited | 0 |
| Canara Rob Short Duration Fund | Canara Robeco Asset Management Company Limited | 0 |
| DSP Short Term Fund | DSP Investment Managers Private Limited | 0 |
| HDFC Short Term Debt Fund | HDFC Asset Management Company Limited | 0 |
| HSBC Short Duration Fund | HSBC Global Asset Management (India) Private Limited | 0 |
| ICICI Pru Short Term Fund | ICICI Prudential Asset Management Company Limited | 0 |
| Invesco India Short Duration Fund | Invesco Asset Management Company Pvt Ltd. | 0 |
| Kotak Bond Short Term Fund | Kotak Mahindra Asset Management Company Limited | 0 |
Historical Performance of Mutual Funds for Short Term
The table below shows the top 10 Mutual Funds for Short Term investment in India based on a 5Y return.
| Name | CAGR 5Y (%) | Minimum SIP (Rs) |
| UTI Short Duration Fund | 8.07 | 500 |
| ICICI Pru Short Term Fund | 7.66 | 1,000 |
| Aditya Birla SL Short Term Fund | 7.34 | 1,000 |
| HDFC Short Term Debt Fund | 7.19 | 100 |
| Nippon India Short Term Fund | 7.12 | 100 |
| Axis Short Duration Fund | 7.08 | 1,000 |
| Kotak Bond Short Term Fund | 6.93 | 100 |
| Tata ST Bond Fund | 6.77 | 150 |
| SBI Short Term Debt Fund | 6.6 | 1,000 |
| Bandhan Bond Fund – Short Term Plan | 6.59 | 100 |
Factors To Consider When Investing In Mutual Funds for Short Term
The main factors to consider when investing in short-term mutual funds include fund performance, expense ratio, investment horizon, and risk profile. These factors help investors select funds that align with their financial goals and risk tolerance for optimal short-term returns.
- Fund Performance: Evaluate past performance to gauge consistency in returns. Although historical returns don’t guarantee future outcomes, they provide insight into the fund’s stability and performance during different market conditions, helping investors make informed choices.
- Expense Ratio: Check the expense ratio, which includes management and operational fees. A lower expense ratio is beneficial as it directly impacts net returns, making it essential to choose funds with lower fees for better profitability.
- Investment Horizon: Match the fund’s maturity period with your financial goals. Short-term funds with one-to-three-year horizons are ideal for investors seeking returns within a limited timeframe, ensuring alignment with specific financial objectives.
- Risk Profile: Assess the risk level based on the fund’s asset allocation. Short-term funds with higher-quality debt instruments offer lower risk, appealing to conservative investors who prioritize stability and capital preservation over high returns.
How To Invest In Mutual Funds for Short Term?
Listed below are the steps for investing in the best Mutual Fund for Short Term:
- Research and find out the top-performing funds in the market.
- Evaluate and assess your risk appetite and fix your financial goals.
- Shortlist the funds based on your fundamental and technical analysis.
- Find reliable stockbrokers like Alice Blue to open a demat account.
- Invest in the shortlisted funds and monitor them regularly.
Impact of Government Policies on Mutual Funds for Short Term
Government policies significantly impact short-term mutual funds, especially through changes in interest rates and tax regulations. When interest rates are adjusted, returns on debt instruments fluctuate, affecting the performance of short-term funds tied to bonds and treasury bills.
Tax policies also influence investor returns, as changes in tax rates or exemptions on short-term capital gains can either boost or reduce net earnings. Favorable tax incentives on debt funds encourage investments, while increased tax burdens may deter conservative investors.
How Mutual Funds for Short Term Perform in Economic Downturns?
During economic downturns, short-term mutual funds typically perform better than equity-focused funds due to their investments in stable, low-risk debt securities. As a result, they tend to provide relatively steady returns, attracting investors seeking safety over high yields.
However, performance may still be impacted by interest rate cuts or rising inflation, which can lower bond yields. Although safer, short-term funds may offer reduced returns in downturns, making them suitable for risk-averse investors prioritizing capital preservation over growth.
Advantages of Investing In Mutual Funds for Short Term?
The main advantages of investing in short-term mutual funds include liquidity, lower risk, stable returns, and quick access to funds. These benefits make short-term funds ideal for investors seeking safety, moderate growth, and easy access to capital within a limited timeframe.
- Liquidity: Short-term mutual funds offer high liquidity, allowing investors to redeem their investments easily. This feature makes them suitable for emergency needs or short-term goals where immediate access to cash is essential.
- Lower Risk: By investing in government securities and high-quality debt instruments, these funds carry lower risk than equities. This makes them attractive to conservative investors looking for a stable, lower-risk investment option.
- Stable Returns: Short-term funds provide relatively stable returns compared to equity funds, as they focus on debt instruments less impacted by market volatility. This stability is ideal for investors seeking predictable income.
- Quick Access to Funds: With a shorter investment horizon of one to three years, short-term funds enable investors to access their capital faster, making them suitable for short-term goals or temporary financial planning needs.
Risks of Investing In Mutual Funds for Short Term?
The main risks of investing in short-term mutual funds include interest rate fluctuations, credit risk, inflation risk, and limited growth potential. While generally safer than equity funds, these risks can affect returns, making it essential for investors to manage expectations.
- Interest Rate Risk: Short-term mutual funds can be impacted by changes in interest rates. Rising rates can reduce bond prices, potentially lowering the fund’s value and returns, which can affect investors relying on consistent income.
- Credit Risk: Some short-term funds invest in corporate bonds that carry credit risk. If a bond issuer defaults, the fund’s returns may suffer, posing a risk for investors even in relatively safer short-term funds.
- Inflation Risk: Short-term mutual funds may not keep up with inflation, eroding real returns over time. Investors looking to preserve purchasing power should consider this risk when choosing short-term funds for their portfolios.
- Limited Growth Potential: These funds focus on safety rather than high returns, limiting their growth potential. Investors seeking substantial gains may find short-term mutual funds less appealing due to their conservative investment strategy.
Mutual Fund GDP Contribution
Mutual funds contribute to GDP by channeling individual and institutional savings into capital markets, supporting corporate growth and economic development. By providing liquidity and financing, mutual funds enable businesses to expand, thus boosting production, employment, and economic output.
Additionally, mutual funds help improve financial inclusion and mobilize domestic savings, which strengthens capital formation. As investment in mutual funds grows, it increases market stability, encouraging further investments in various sectors and fostering overall economic progress through a well-supported capital market structure.
Who Should Invest in Mutual Funds for the Short Term?
Short-term mutual funds are ideal for conservative investors looking for low-risk options with moderate returns. They suit individuals needing liquidity for short-term financial goals, such as emergency funds, upcoming expenses, or temporary parking of funds for easy access.
These funds also benefit investors with a low-risk appetite who prefer stability over high growth, such as retirees or those close to major life events. Short-term mutual funds offer a safer alternative to equity investments while still providing better returns than traditional savings accounts.
Best Mutual Funds for Short Term – FAQs
A Short Term Mutual Fund is a debt-focused investment that primarily invests in fixed-income securities with maturities of one to three years. It offers stable, low-risk returns, making it suitable for conservative investors with a shorter investment horizon.
Top Mutual Fund for Short Term #1: ICICI Pru Short Term Fund
Top Mutual Fund for Short Term #2: Kotak Bond Short Term Fund
Top Mutual Fund for Short Term #3: HDFC Short Term Debt Fund
Top Mutual Fund for Short Term #4: SBI Short Term Debt Fund
Top Mutual Fund for Short Term #5: Axis Short Duration Fund
These funds are listed based on the Highest AUM.
The Best Mutual Fund for Short Term in India based on expense ratio include ICICI Pru Short Term Fund, UTI Short Duration Fund, Canara Rob Short Duration Fund, HDFC Short Term Debt Fund, and Aditya Birla SL Short Term Fund.
To choose a short-term mutual fund, assess factors like fund performance history, expense ratio, credit quality of underlying assets, and investment objectives. Consider your risk tolerance and investment horizon to ensure the fund aligns with your financial goals and liquidity needs.
Investing in mutual funds for the short term is generally safe, especially in short-term debt funds. However, risks like interest rate fluctuations and credit risk still exist. Investors should assess their risk tolerance and goals before investing to ensure alignment.
Mutual funds can be good for short-term investments, particularly short-term debt funds, as they offer lower risk and stable returns. They provide liquidity and capital preservation, making them suitable for investors with short-term financial goals and a conservative risk appetite.
To invest in mutual funds for the short term, research suitable short-term debt funds, assess their performance and expense ratios, and consider your financial goals. Open an account with a mutual fund company or brokerage like Alice Blue, and invest a lump sum or through SIPs.
The safest short-term investment options include high-yield savings accounts, certificates of deposit (CDs), and short-term government bonds or Treasury bills. These investments offer low risk and stability, ensuring capital preservation while providing modest returns for short-term financial goals.
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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.
