Best Short Term Mutual Funds - Consider the best performing Short Term mutual funds to invest in 2024 with Scripbox.com. Find the list of best short term mutual funds in India on the basis of Returns, Latest Nav, Ratings, Performance etc
Learn how Scripbox Recommends funds| Fund Name | 3Y Returns | Expense Ratio |
|---|---|---|
 | 6.6% | 0.36% |
 | 6.5% | 0.40% |
| 6.5% | 0.37% |
 | 6.3% | 0.35% |
 | 6.5% | 0.36% |
 | 7.1% | 0.45% |
| 6.7% | 0.39% |
| 6.4% | 0.37% |
| 6.4% | 0.31% |
 | 6.5% | 0.38% |
 | 5.6% | 0.52% |
Note : *NA implies that Fund is relatively new. Not enough data available
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Below are the best short term mutual funds in india:
Aditya Birla Sun Life Savings Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.0%, a 3 Years return of 6.6% and a 5 Years return of 6.3%. The fund has an expense ratio of 0.4% and an AUM of ₹15098 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 098.49% to debt and 1.51% to other assets.
HDFC Short Term Debt Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.7%, a 3 Years return of 6.5% and a 5 Years return of 7.1%. The fund has an expense ratio of 0.4% and an AUM of ₹14972 crores as of 2024-11-29. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.55% to debt and 3.45% to other assets.
HDFC Ultra Short Term Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.7%, a 3 Years return of 6.5% and a 5 Years return of 6.0%. The fund has an expense ratio of 0.4% and an AUM of ₹14802 crores as of 2024-11-29. It was Launched on 2018-09-25. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 0101.54% to debt and -1.54% to other assets.
SBI Short Term Debt Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.4%, a 3 Years return of 6.3% and a 5 Years return of 6.5%. The fund has an expense ratio of 0.3% and an AUM of ₹13303 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 094.68% to debt and 5.32% to other assets.
Kotak Savings Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.7%, a 3 Years return of 6.5% and a 5 Years return of 5.9%. The fund has an expense ratio of 0.4% and an AUM of ₹12502 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 097.88% to debt and 2.12% to other assets.
ICICI Prudential Short Term Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.6%, a 3 Years return of 7.1% and a 5 Years return of 7.6%. The fund has an expense ratio of 0.5% and an AUM of ₹19922 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.62% to debt and 3.38% to other assets.
ICICI Prudential Ultra Short Term Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.8%, a 3 Years return of 6.7% and a 5 Years return of 6.4%. The fund has an expense ratio of 0.4% and an AUM of ₹14206 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 094.04% to debt and 5.96% to other assets.
Kotak Bond Short-term Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.7%, a 3 Years return of 6.4% and a 5 Years return of 6.8%. The fund has an expense ratio of 0.4% and an AUM of ₹16895 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.44% to debt and 3.57% to other assets.
SBI Magnum Ultra Short Duration Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.7%, a 3 Years return of 6.4% and a 5 Years return of 5.8%. The fund has an expense ratio of 0.3% and an AUM of ₹11858 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 099.10% to debt and 0.90% to other assets.
Nippon India Short-term Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.7%, a 3 Years return of 6.5% and a 5 Years return of 7.0%. The fund has an expense ratio of 0.4% and an AUM of ₹7586 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 095.99% to debt and 4.00% to other assets.
The best short term mutual funds are debt schemes that invest in securities with maturity duration of 1-3 years. Short term mutual funds invest in low risk, high-quality securities. They best suit investors who prefer little to moderate risk with moderate returns. Short term mutual funds are an alternative to a savings bank account and fixed deposits as they give slightly better returns than these and have high liquidity. Within short term mutual funds, investors with horizon less than 91 days can opt for the liquid fund, ultra short term bond funds for the horizon of 3-6 months, low duration funds for the horizon of 6-12 months, and short duration funds for 1-3 years.
Investing in short term mutual funds comes with certain benefits.
The investment horizon for a short term mutual fund varies between one to three years. Short term mutual funds offer good returns and higher than a traditional savings account. They invest in debt instruments, such as bonds with high yields.
Fund managers recommend short term mutual funds to conservative investors with short term investment duration. Best short term mutual funds have given returns ranging between 7%-8% in the past.
Mutual fund investments are subject to market risks. Therefore there isn’t any guarantee concerning returns. Therefore choosing the right option for the investment horizon is the key. For investment for up to 3 years, debt mutual funds such as short term mutual funds are a better option.
The taxation of short term mutual funds varies based on the category. Growth option and Dividend option are the two categories. Returns from investing in the growth option of short term mutual funds are added to the income of the investor. They are taxed as per the applicable slab rate.
Debt funds make financial goal planning easier. For financial goals with horizon less than three years, instead of tending to fixed deposits or just keeping the money in the savings bank, short term debt funds can be a good alternative. Within the maturity period, these funds generate good returns when compared to bank deposits and fixed deposits. For investors with longer financial goals, that are almost about to mature, can also look at investing in debt funds. For example, a person invested in equity for ten years to purchase a house. As the investor is nearing the goal, the investment can be shifted from equity to debt to protect capital.
Debt funds, unlike equity funds, are not affected by movements in the capital market. Short term mutual funds invest in securities that have a predetermined rate of return and maturity. Their return is more or less predictable. The risk in the investment is low to nil as the funds invest in high-quality securities.
Debt funds invest in multiple high-quality securities like government securities, treasury bills, corporate bonds, and money market instruments. They balance the portfolio by investing in securities that are independent of capital market movements.
The choice of instrument primarily depends on the investment objective of the investor. This objective is nothing but the goal an investor would like to accomplish through his investment. Depending on whether the goal is a short term or long term aspiration, the choice of investment instrument varies. Therefore, aligning the investment objective of the fund with the investor’s investment objective is very important.
It is the duration up to which an investor wishes to hold their investments. The investment horizon can be as short as one day or as long as more than five years. Each category of fund caters to different investment horizons. For example, equity funds are good for long term investments only, while debt funds for short term durations. As the name suggests, short term mutual funds are for a duration of up to three years. Therefore, for investments up to three years, the best choice of funds would be short term mutual funds.
Having a portfolio that is completely skewed towards one asset type is not the right investment strategy. Portfolio diversification is the key to earn good growth. Therefore, always break down goals based on the time horizon and diversify investments across different instruments that are best suited for the duration. For short term investments, short term mutual funds are a better option.
It is the amount charged by the fund house towards managing the fund. SEBI has capped the expense ratio for debt funds at 2.25%. Debt funds have lower expense ratios compared to equity funds. Lower expense ratio translates to higher returns as fees come down.
Too much of tax liability would eat into the returns from investment. The growth option of short term mutual funds is taxed as per the investor’s slab rate.
Choosing the best short term mutual funds to invest is not a tedious task, but it does require some research on specific parameters of the fund.
Investing is not just for setting aside money but also for returns. But returns are taxed. Look out for options to reduce the tax burden. When it comes to debt funds, investing for more than three years can reduce the tax burden to 20% with indexation benefit. This is beneficial for investors who fall under 30% slab rate. But for investors who fall under lower slab rates can choose to redeem before three years as the gains are taxed according to their slab rates.
However, as per the Finance Bill 2023, from April 1st 2023, capital gains arising from debt funds will be taxed as per the investor’s IT slab rate, irrespective of the holding period. Thus, debt funds will no longer have LTCG benefit.
All the parameters have to be considered together for choosing a fund that best suits their requirements. They cannot base their assumption on just one metric to determine the fund they want to invest.
Past performance of the fund may not guarantee future returns, but they form a basis of decision making. Funds that perform consistently over a period of time can be a good measure to check the performance of the fund. Performance against the benchmark can also be a useful parameter to check how the fund is performing. Monitoring the performance of the fund within the category is also important. A fund with consistent performance, with good alpha returns and ranking in the top funds of the category, is an excellent fund to pick.
Assets under management (AUM) of the fund is the value of assets of the fund. Funds with smaller AUM may be vulnerable to the risk of redemptions. But a fund with larger AUM can lead to holding more cash in case of lesser opportunities in the market. Investing in a fund with optimal AUM is essential. It is always better to compare a fund’s AUM with that of other funds in the category.
An experienced manager cannot guarantee good returns, but he can manage the fund better than a manager new to the field. It is better to choose a fund with an experienced manager than a relatively new fund manager. One can also check the past funds managed by the manager to know about his track record.
Investors have to identify their goals and attach a specific monetary value to it. They need to have a clear understanding as to how many months or years they want to achieve this goal and how much it will cost to do so.
Investors have to choose a fund where the macaulay duration of the fund matches the time for achieving the goal. For investors with financial goals to be realized within three years, short term mutual funds can be considered.
The portfolio of the fund plays a vital role in the performance of the fund. Choosing a fund with high-quality securities not only secures returns but also acts as a shield against risk. Choosing funds with AAA, AA, and similarly rated securities is better while investing in mutual funds.
The expense ratio of the fund is the fees charged by the AMC to manage the fund. It calculated as a percentage of the AUM. Since it affects returns, choosing a fund with a lower expense ratio is better.
Exit load of the fund is the penalty charged by the fund on redeeming the investment before a specific period. Check for funds with less to no exit loads.
The short term is considered as a period below five years. Debt funds are synonymous with short term investments. Debt funds can help earn stable, and low risk returns in the short term. Debt mutual funds best suit investors with short investment horizon, and seek stable returns. Within debt mutual funds, there are categories for different investment horizons. From overnight funds that let investors invest for a day to liquid funds that have a maturity up to 91 days, to ultra short term funds for 3-6 months and short duration funds for 1-3 years. Equity mutual funds best suits investors who want to invest for the long term.
The most popular short term investment schemes are savings bank account and bank fixed deposits. These schemes offer low but guaranteed returns and hence the popularity. We’ve always heard mutual funds are subject to market risk. However, debt mutual funds provide higher returns compared to these traditional schemes and are highly liquid. Based on how short the investment horizon is, an investor can choose among the various alternatives. For example, for the duration of one day to three months, Liquid Funds are good. For three months to one year, an investor can choose Ultra Short-duration Funds, and for one year to three years,short term debt funds are the best.
Yes, they are. Different mutual funds cater to different investment horizons. For the short term, the best funds available are debt mutual funds. Since equity mutual funds are volatile, they are not suitable for the short term, while in the long run, they can be an inflation beating investment. Debt mutual funds are the perfect alternative to traditional schemes like bank fixed deposit and savings bank account.
Debt mutual funds are the best option for short term investment. Debt mutual funds give stable returns, and the risk involved in investing in them is low to medium. They are considered as safe as they invest in securities of highly rated companies and government securities.
Yes, one can invest in mutual for six months. The fund that best suit this horizon are ultra short term funds and liquid funds.