Top Performing Low Duration Funds in 5 Years

The below table shows a list Of the Top Performing Low Duration Funds in 5 Years based on AUM, NAV, and minimum SIP.

Introduction to Top Performing Low Duration Funds in 5 Years

ICICI Prudential Savings Fund  

ICICI Prudential Savings Fund is a Low Duration mutual fund scheme from ICICI Prudential Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

ICICI Pru Savings Fund is categorized under Low Duration Fund with an AUM of ₹20,523.83 Crores, a 5-year CAGR of 6.62%, an exit load of 0% and an expense ratio of 0.42%. SEBI rates the risk as Moderately Low. The asset allocation includes Commercial Paper at 2.30%, Cash & Equivalents at 3.79%, Government Securities at 3.90%, Certificate of Deposit at 12.14% and Corporate Debt at 46.21%.

HDFC Low Duration Fund  

HDFC Low Duration Fund is a Low Duration mutual fund scheme from HDFC Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

HDFC Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹18,525.4 Crores, a 5-year CAGR of 6.7%, an exit load of 0% and an expense ratio of 0.45%. SEBI rates the risk as Moderately Low. The asset allocation includes Cash & Equivalents at 1.97%, Commercial Paper at 1.93%, Certificate of Deposit at 2.28%, Government Securities at 13.51% and Corporate Debt at 66.72%.

Aditya Birla Sun Life Low Duration Fund  

Aditya Birla Sun Life Low Duration Fund is a Low Duration mutual fund scheme from Aditya Birla Sun Life Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

Aditya Birla SL Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹10,832.55 Crores, a 5-year CAGR of 6.73%, an exit load of 0% and an expense ratio of 0.41%. SEBI rates the risk as Moderate. The asset allocation includes Cash & Equivalents at 3.21%, Floating-rate Debt at 3.65%, Government Securities at 5.71%, Certificate of Deposit at 10.53% and Corporate Debt at 56.32%.

Kotak Low Duration Fund  

Kotak Low Duration Fund is a Low Duration mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

Kotak Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹9,670.3 Crores, a 5-year CAGR of 6.72%, an exit load of 0% and an expense ratio of 0.42%. SEBI rates the risk as Moderately Low. The asset allocation includes Cash & Equivalents at 2.38%, Secured Debt at 2.49%, Government Securities at 8.00%, Certificate of Deposit at 12.06% and Corporate Debt at 54.93%.

Nippon India Low Duration Fund  

Nippon India Low Duration Fund is a Low Duration mutual fund scheme from Nippon India Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

Nippon India Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹6,214.8 Crores, a 5-year CAGR of 6.66%, an exit load of 0% and an expense ratio of 0.37%. SEBI rates the risk as Moderately Low. The asset allocation includes Secured Debt at 8.93%, Cash & Equivalents at 5.54%, Government Securities at 5.96%, Certificate of Deposit at 6.38% and Corporate Debt at 50.55%.

Axis Treasury Advantage Fund  

Axis Treasury Advantage Fund is a Low Duration mutual fund scheme from Axis Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

Axis Treasury Advantage Fund is categorized under Low Duration Fund with an AUM of ₹4,961.63 Crores, a 5-year CAGR of 6.36%, an exit load of 0% and an expense ratio of 0.32%. SEBI rates the risk as Moderately Low. The asset allocation includes Floating-rate Debt at 3.37%, Commercial Paper at 5.43%, Government Securities at 7.45%, Certificate of Deposit at 11.44% and Corporate Debt at 50.80%.

DSP Low Duration Fund  

DSP Low Duration Fund is a Low Duration mutual fund scheme from DSP Mutual Fund. This fund has existed for 9 years and 6 months, having been launched on February 27, 2015.  

DSP Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹4,855.18 Crores, a 5-year CAGR of 6.29%, an exit load of 0% and an expense ratio of 0.30%. SEBI rates the risk as Moderately Low. The asset allocation includes Cash & Equivalents at 0.24%, Commercial Paper at 3.05%, Government Securities at 10.04%, Certificate of Deposit at 12.99% and Corporate Debt at 51.59%.

UTI Low Duration Fund  

UTI Low Duration Fund is a Low Duration mutual fund scheme from UTI Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

UTI Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹2,849.09 Crores, a 5-year CAGR of 7.17%, an exit load of 0% and an expense ratio of 0.37%. SEBI rates the risk as Moderately Low. The asset allocation includes Cash & Equivalents at 3.83%, Government Securities at 5.09%, Commercial Paper at 9.35%, Certificate of Deposit at 14.93% and Corporate Debt at 39.15%.

JM Low Duration Fund  

JM Low Duration Fund is a Low Duration mutual fund scheme from JM Financial Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

JM Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹240.06 Crores, a 5-year CAGR of 7.84%, an exit load of 0% and an expense ratio of 0.25%. SEBI rates the risk as Moderately Low. The asset allocation includes Cash & Equivalents at 0.25%, Commercial Paper at 3.43%, Government Securities at 4.00%, Certificate of Deposit at 11.13% and Corporate Debt at 63.58%.

Baroda BNP Paribas Low Duration Fund  

Baroda BNP Paribas Low Duration Fund is a Low Duration mutual fund scheme from Baroda BNP Paribas Mutual Fund. This fund has existed for 11 years and 8 months, having been launched on January 1, 2013.  

Baroda BNP Paribas Low Duration Fund is categorized under Low Duration Fund with an AUM of ₹207.12 Crores, a 5-year CAGR of 6.45%, an exit load of 0% and an expense ratio of 0.37%. SEBI rates the risk as Moderately Low. The asset allocation includes Government Securities at 0.25%, Cash & Equivalents at 4.76%, Corporate Debt at 8.38% and Certificate of Deposit at 41.35%.

What Are Low Duration Funds?

Low Duration Funds are a category of debt mutual funds that invest in fixed-income securities with a Macaulay duration between 6 and 12 months. These funds aim to provide relatively stable returns while maintaining lower interest rate risk compared to longer-duration funds and higher returns potential than liquid funds.

Duration Funds typically invest in a mix of money market instruments, corporate bonds and government securities. This diversified portfolio helps manage credit risk while aiming for returns higher than traditional savings accounts or short-term deposits.

These funds can be suitable for investors with a short to medium-term investment horizon, typically 3 to 12 months. They offer the potential for better returns than savings accounts or liquid funds while providing more stability than longer-duration debt funds.

Features Of Top Performing Low Duration Funds in 5 Years

The main features of top-performing Low Duration Funds in 5 years include moderate interest rate sensitivity, potential for higher returns than liquid funds, diversified portfolio and professional management. These funds aim to balance yield and stability for short to medium-term investors.

• Moderate duration: Low-duration funds maintain a Macaulay duration between 6 to 12 months, offering lower interest rate sensitivity compared to longer-duration funds while potentially providing better returns than liquid funds.

• Diversified portfolio: These funds invest in a mix of money market instruments, corporate bonds, and government securities. This diversification helps spread credit risk and potentially enhance returns.

• Professional management: Low-duration funds are managed by experienced fund managers who analyze credit quality, interest rate trends and market conditions to optimize the portfolio.

• Liquidity: These funds generally offer good liquidity, allowing investors to redeem their units on any business day and providing flexibility to manage investments according to needs.

Best Performing Low Duration Funds in 5 Years

The table below shows the Best-performing Low Duration Funds in 5 Years based on the lowest to highest expense ratio.

Top Performing Low Duration Funds in 5 Years In India

The table below shows the Top Performing Low Duration Funds in 5 Years In India Based on the Highest 3Y CAGR.

Top Performing Low Duration Funds in 5 Years List

The table below shows the Top Performing Low Duration Funds in the 5 Years List based on exit load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.

Factors To Consider When Investing In Top Performing Low Duration Funds in 5 Years

The main factors to consider when investing in top-performing Low Duration Funds in 5 years include credit quality, yield to maturity, expense ratio, fund manager’s expertise and your investment horizon. These factors can significantly impact the fund’s performance and suitability for your portfolio.

• Credit quality: Assess the fund’s portfolio composition and the credit ratings of its holdings. Higher credit quality generally implies lower risk but may offer slightly lower yields.

• Yield to maturity (YTM): Compare the YTM of different funds. A higher YTM indicates potential for better returns, but also consider the associated risks and the fund’s expense ratio.

• Expense ratio: Look for funds with lower expense ratios, as these costs directly impact your returns. However, also consider the fund’s performance and strategy alongside costs.

• Fund manager’s expertise: Evaluate the fund manager’s experience and track record in managing low-duration funds. Their ability to navigate credit and interest rate risks is crucial.

• Your investment horizon: Ensure your investment timeframe aligns with the fund’s duration. Low Duration Funds are typically suitable for 3-12 month investment horizons.

How To Invest In Top Performing Low Duration Funds in 5 Years?

To invest in top-performing Low Duration Funds in 5 years, start by researching and comparing different funds based on their performance, credit quality and expense ratios. Once you’ve selected a fund that aligns with your financial goals and risk tolerance, you can invest through Alice Blue.

Alice Blue is a user-friendly online investment platform that provides tools and resources to help you make informed investment decisions. You can choose to invest a lump sum amount or opt for a Systematic Investment Plan (SIP), which allows you to invest a fixed amount regularly.

For most investors, a SIP is recommended as it helps in rupee cost averaging and reduces the impact of market volatility on your investment over time. Remember to review and rebalance your investment periodically to ensure it remains aligned with your financial goals.

Advantages Of Investing In Top Performing Low Duration Funds in 5 Years

The main advantages of investing in top-performing Low Duration Funds in 5 years include the potential for higher returns than liquid funds, moderate interest rate sensitivity, portfolio diversification and professional management. These funds offer a balance between yield and stability.

• Higher return potential: Low Duration Funds aim to provide better returns than liquid funds or savings accounts while maintaining relatively lower risk compared to longer-duration funds.

• Moderate interest rate sensitivity: With a Macaulay duration of 6-12 months, these funds have lower sensitivity to interest rate changes compared to longer-duration funds, potentially offering more stable returns.

• Portfolio diversification: Low Duration Funds invest in a mix of money market instruments, corporate bonds, and government securities, helping to spread credit risk and potentially enhance returns.

• Professional management: These funds are managed by experienced professionals who analyze market conditions and credit risks to optimize the portfolio, potentially leading to better risk-adjusted returns.

Risks Of Investing In Top Performing Low Duration Funds in 5 Years

The main risks of investing in top-performing Low Duration Funds in 5 years include interest rate risk, credit risk, liquidity risk and reinvestment risk. While these funds generally have moderate risk profiles, investors should be aware of potential factors that can impact returns.

• Interest rate risk: Although lower than longer-duration funds, Low low-duration funds are still affected by interest rate changes. Rising rates can lead to a temporary decline in fund value.

• Credit risk: The fund’s investments in corporate bonds carry the risk of default or credit rating downgrades, which can impact returns. Careful credit analysis by fund managers is crucial.

• Liquidity risk: In times of market stress, some bonds in the portfolio might face reduced liquidity, potentially affecting the fund’s ability to meet large redemption requests.

• Reinvestment risk: As securities in the portfolio mature, there’s a risk that proceeds may be reinvested at lower rates if interest rates have fallen, impacting overall returns.

Importance of Low-Duration Funds

The main importance of Low Duration Funds lies in their ability to offer a balance between potential returns and stability, serve as a short-term investment tool, provide portfolio diversification and offer tax-efficient returns. These funds play a crucial role in many investors’ portfolios.

• Balancing returns and stability: Low Duration Funds aim to provide better returns than liquid funds while maintaining lower volatility compared to longer-duration funds. This makes them suitable for short to medium-term financial goals.

• Short-term investment tool: These funds can be effective tools for managing surplus cash for periods of 3-12 months, offering potentially higher returns than traditional savings accounts while maintaining good liquidity.

• Portfolio diversification: Including Low Duration Funds in an investment portfolio can help balance overall risk, especially when combined with equity investments or longer-duration debt funds.

• Tax efficiency: For holding periods over 3 years, gains from Low Duration Funds are treated as long-term capital gains and taxed at 20% with indexation benefits, potentially offering tax advantages over fixed deposits.

How Long to Stay Invested in Low Duration Funds?

The ideal investment horizon for Low Duration Funds typically ranges from 3 to 12 months. This timeframe aligns with the Macaulay duration of these funds and allows investors to potentially benefit from the fund’s strategy while managing interest rate risk effectively.

However, the exact duration can vary based on individual financial goals and market conditions. Some investors use these funds for slightly longer periods as part of their debt portfolio strategy. Regular review of your investment is important to ensure it aligns with your financial objectives.

Tax Implications of Investing in Low-Duration Funds

Low Duration Funds are taxed as debt mutual funds in India. For holding periods up to 3 years, gains are considered short-term capital gains and taxed at the investor’s income tax slab rate. For holding periods over 3 years, gains are treated as long-term capital gains.

Long-term capital gains from Low Duration Funds are taxed at 20% with indexation benefits. Indexation adjusts the purchase price for inflation, potentially reducing the tax liability. This tax treatment can make Low Duration Funds more tax-efficient for periods over 3 years compared to fixed deposits.

Future of Low Duration Funds

The future of Low Duration Funds in India looks promising, driven by factors such as increasing financialization of savings, growing awareness about debt mutual funds and the need for efficient short to medium-term investment options. As investors seek alternatives to traditional savings products, these funds are likely to gain more traction.

However, their performance will continue to be influenced by interest rate movements and credit market conditions. Innovations in fund management strategies and the introduction of new fixed-income products could further enhance the appeal of Low Duration Funds in the coming years.

Top Performing Low Duration Funds in 5 Years – FAQs   

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.