Top Performing Ultra Short Duration Funds in 5 Years

The below table shows a list Of the Best ultra short-duration funds Based on AUM, NAV, and minimum SIP.

Introduction to Top Performing Ultra Short Duration Funds in 5 Years

HDFC Ultra Short Term Fund

HDFC Ultra Short Term Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from HDFC Mutual Fund. This fund has been in existence for 5 years and 11 months, having been launched on 18/09/2018.

HDFC Ultra Short Term Fund as a short-term debt instrument, manages assets valued at ₹15129.33 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.02%. This fund has no exit load and an expense ratio of 0.37%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 95.97%, and Other – 4.03%.

ICICI Pru Ultra Short Term Fund Fund

ICICI Prudential Ultra Short Term Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from ICICI Prudential Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

ICICI Pru Ultra Short Term Fund Fund as a short-term debt instrument, manages assets valued at ₹14967.80 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.46%. This fund has no exit load and an expense ratio of 0.39%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 93.02%, and Other – 6.98%.

Aditya Birla SL Savings Fund

Aditya Birla Sun Life Savings Direct-Growth is an Ultra Short Duration mutual fund scheme from Aditya Birla Sun Life Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

Aditya Birla SL Savings Fund as a short-term debt instrument, manages assets valued at ₹14453.67 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.24%. This fund has no exit load and an expense ratio of 0.34%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 96.25%, and Other – 3.75%.

Kotak Savings Fund

Kotak Savings Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

Kotak Savings Fund as a short-term debt instrument, manages assets valued at ₹12980.43 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.93%. This fund has no exit load and an expense ratio of 0.36%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 101.89%, and Other – (-)1.89%.

SBI Magnum Ultra Short Duration Fund

SBI Magnum Ultra Short Duration Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

SBI Magnum Ultra Short Duration Fund as a short-term debt instrument, manages assets valued at ₹12828.42 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.78%. This fund has no exit load and an expense ratio of 0.31%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 95.94%, and Other – 4.06%.

Nippon India Ultra Short Duration Fund

Nippon India Ultra Short Duration Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from Nippon India Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

Nippon India Ultra Short Duration Fund as a short-term debt instrument, manages assets valued at ₹7291.01 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.08%. This fund has no exit load and an expense ratio of 0.38%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 97.51%, and Other – 2.49%.

Axis Ultra Short Term Fund

Axis Ultra Short Term Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from Axis Mutual Fund. This fund has been in existence for 6 years, having been launched on 27/08/2018.

Axis Ultra Short Term Fund as a short-term debt instrument, manages assets valued at ₹5949.05 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 6.12%. This fund has no exit load and an expense ratio of 0.36%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 98.55%, and Other – 1.45%.

Bandhan Ultra Short Term Fund

Bandhan Ultra Short Term Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from Bandhan Mutual Fund. This fund has been in existence for 6 years and 2 months, having been launched on 06/07/2018.

Bandhan Ultra Short Term Fund as a short-term debt instrument, manages assets valued at ₹3686.68 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.68%. This fund has no exit load and an expense ratio of 0.27%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 85.53%, and Other – 14.47%.

DSP Ultra Short Fund

DSP Ultra Short Fund Direct Plan-Growth is an Ultra Short Duration mutual fund scheme from DSP Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

DSP Ultra Short Fund as a short-term debt instrument, manages assets valued at ₹2845.84 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.74%. This fund has no exit load and an expense ratio of 0.30%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 98.98%, and Other – 1.02%.

Tata Ultra Short Term Fund

Tata Ultra Short Term Fund Direct-Growth is an Ultra Short Duration mutual fund scheme from Tata Mutual Fund. This fund has been in existence for 5 years and 8 months, having been launched on 11/01/2019.

Tata Ultra Short Term Fund as a short-term debt instrument, manages assets valued at ₹2531.09 crore. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.87%. This fund has no exit load and an expense ratio of 0.37%. According to SEBI, it falls under the Moderate Risk category. The fund’s asset allocation comprises: No Equity, Debt – 99.24%, and Other – 0.76%.

What Are Ultra Short Duration Funds?

Ultra short duration funds are mutual funds that invest primarily in short-term debt instruments with maturities of up to one year. They aim to provide higher returns than savings accounts while maintaining relatively low risk.

These funds typically invest in instruments like commercial paper, certificates of deposit, and short-term government securities. The primary goal is to offer liquidity and safety with modest returns.

Due to their short duration, these funds are less sensitive to interest rate fluctuations compared to longer-term bonds. They are suitable for investors seeking a low-risk, short-term investment option with better yields than traditional savings vehicles.

Features Of Top Performing Ultra Short Duration Funds in 5 Years

The main features of top-performing ultra short-duration funds in five years include low interest rate sensitivity, high liquidity, strong credit quality, and competitive yields. These attributes ensure stability, minimal risk, and attractive returns relative to other short-term investments.

• Low Interest Rate Sensitivity: These funds are less affected by interest rate changes, maintaining stable returns even when rates fluctuate. This characteristic helps preserve capital and provides consistent performance in varying economic conditions.
• High Liquidity: Ultra short-duration funds offer easy access to cash with minimal penalties. Their short maturities ensure quick conversion to cash, making them ideal for investors needing flexibility and immediate liquidity.
• Strong Credit Quality: They invest in high-quality, low-risk securities, such as government or highly-rated corporate bonds. This focus on strong credit quality minimizes default risk and enhances overall fund safety.
• Competitive Yields: These funds provide returns that are generally higher than traditional savings accounts or money market funds, offering better income potential while maintaining a low risk profile. This balance is crucial for conservative investors.

Best Performing Ultra Short Duration Funds in 5 Years

The table below shows the Best-performing ultra short-duration funds Based on the highest to lowest expense ratio.

Top Performing Ultra Short Duration Funds in 5 Years In India

The table below shows the Best ultra short-duration funds Based on the Highest 3Y CAGR.

Top Performing Ultra Short Duration Funds in 5 Years List

The table below shows Best Performing ultra short-duration funds In India 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 Ultra Short Duration Funds in 5 Years

The main factors to consider when investing in top-performing ultra short-duration funds over five years include fund performance history, credit quality, interest rate environment, and fees. Evaluating these aspects ensures you select funds that align with your risk tolerance and financial objectives.

• Fund Performance History: Analyze the fund’s historical returns and consistency. A strong track record of stable performance indicates reliability and helps gauge how the fund might perform in various market conditions over the next five years.
• Credit Quality: Assess the credit ratings of the securities within the fund. High credit quality reduces the risk of default, ensuring that the fund remains relatively stable and secure, which is crucial for preserving capital in a low-risk investment.
• Interest Rate Environment: Consider current and projected interest rate trends. Ultra short-duration funds are sensitive to interest rate changes, so understanding these trends helps predict how the fund’s yield and performance might be affected over the investment period.
• Fees: Review the fund’s expense ratio and any additional fees. Lower fees generally translate to better net returns, so selecting funds with competitive expense structures can enhance the overall performance and efficiency of your investment over time.

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

To invest in top-performing ultra short-duration funds over five years, begin by selecting funds with a strong historical performance and low volatility. Utilize a reliable brokerage platform to compare various fund options based on returns, fees, and risk levels.

Once selected, diversify your investment across several ultra short-duration funds to spread risk. Use Alice Blue‘s tools to track performance and make informed adjustments. Regularly monitor interest rate trends and economic conditions that could affect your investments.

Maintain a disciplined approach by sticking to your investment strategy and avoiding reactionary changes based on short-term market shifts. Your brokerage platform can assist with periodic rebalancing to ensure your portfolio stays aligned with your long-term financial goals.

Advantages Of Investing In Top Performing Ultra Short Duration Funds in 5 Years

The main advantages of investing in top-performing ultra short-duration funds over five years include capital preservation, liquidity, lower risk compared to longer-duration bonds, and relatively higher returns than savings accounts. These benefits make them a stable choice for conservative investors.

• Capital Preservation: Ultra short-duration funds prioritize preserving your initial investment. Their short maturities and high-quality securities reduce the risk of loss, making them a secure option for safeguarding your capital while seeking modest returns.
• Liquidity: These funds provide easy access to your money with minimal restrictions or penalties. Their short investment horizons ensure that your funds are readily available, offering flexibility to meet cash flow needs or reallocate investments as needed.
• Lower Risk Compared to Longer-Duration Bonds: With shorter maturities, these funds are less sensitive to interest rate fluctuations than longer-duration bonds. This reduced sensitivity minimizes potential losses from rate hikes, making them a safer choice during periods of economic uncertainty.
• Relatively Higher Returns Than Savings Accounts: While offering lower risk, ultra short-duration funds typically provide better returns than traditional savings accounts or money market funds. This combination of safety and slightly higher yields enhances your potential income without significant risk.

Risks Of Investing In Top Performing Ultra Short Duration Funds in 5 Years

The main risks of investing in top-performing ultra short-duration funds over five years include limited yield potential, interest rate risk, credit risk, and reinvestment risk. Understanding these risks helps manage expectations and make informed decisions for balanced, secure investing.

• Limited Yield Potential: Ultra short-duration funds generally offer lower returns compared to longer-term investments. While they provide stability, their yields may not keep pace with inflation or offer significant growth, limiting the potential income and overall growth of your investment.
• Interest Rate Risk: Although less sensitive than longer-duration bonds, ultra short-duration funds are still affected by interest rate changes. Rising rates can lead to lower fund returns and reduced income, impacting the performance of your investment over time.
• Credit Risk: These funds invest in bonds and other securities that carry credit risk. If the issuers of these securities experience financial difficulties, the fund’s performance could suffer, potentially leading to losses or reduced income.
• Reinvestment Risk: The fund’s securities may mature or be called before expected, requiring reinvestment at potentially lower rates. This risk can affect your overall returns, especially in a low-interest-rate environment where reinvestment opportunities yield less favorable rates.

Importance of Ultra Short Duration Funds

Ultra short-duration funds are crucial for investors seeking low-risk, short-term investments with modest returns. They offer stability and liquidity, making them ideal for parking cash or maintaining a defensive position during market volatility without locking funds for extended periods.

These funds are essential for preserving capital while earning higher yields than traditional savings accounts or money market funds. They effectively balance risk and return, providing a safe haven for conservative investors looking to manage cash flow and achieve incremental growth in a low-interest-rate environment.

How Long to Stay Invested in Ultra Short Duration Funds?

Ultra short-duration funds are best suited for short to intermediate investment horizons, typically ranging from a few months to three years. Their low interest rate sensitivity makes them ideal for investors needing liquidity or looking to preserve capital over a brief period.

For longer-term goals beyond three years, consider transitioning to higher-yield investments. Ultra short-duration funds offer stability and modest returns in the short term, but may not keep pace with inflation or deliver substantial growth over extended periods. Reassess your investment strategy periodically to align with evolving financial objectives.

Tax Implications of Investing in Ultra Short Duration Funds

Investing in ultra short-duration funds can lead to interest income that is generally subject to ordinary income tax rates. This interest is taxed similarly to wages or salaries, which may impact your overall tax liability based on your income bracket.

Capital gains from selling these funds are typically minimal due to their short duration. However, if the fund’s net asset value appreciates significantly, gains might be subject to capital gains tax. Always consult a tax advisor to understand how these factors affect your specific tax situation.

Future of Ultra Short Duration Funds

The future of ultra short-duration funds will likely be shaped by evolving interest rate environments and economic conditions. As central banks adjust rates, these funds may offer varying levels of yield, adapting to shifts in monetary policy and market dynamics.

Investors seeking stability and liquidity will continue to find ultra short-duration funds attractive. Their role in providing capital preservation and modest returns will remain crucial, especially during periods of market uncertainty or when interest rates are volatile.

Top Performing Ultra Short 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.