+91-22-48913909Best Mutual Funds for Short Term Investment
Nowadays, many investors are planning to diversify their Portfolio by adding Mutual Fund schemes that cater to short and long tenure.
But, where to invest? is the major confusion for most investors. Therefore, we have come up best mutual funds for short term investments. There are many Mutual Fund schemes that aim for short-term goals. But, before we move ahead, let’s understand about short-term plan and how can it benefit in a number of ways!
What Exactly is a Short Term Investing?
Short-term Investing usually refers to the investment that is made for a shorter duration, i.e., periods less than three years. You can strategically plan your short-term goals and fulfill by investing in the best short term Mutual Funds. Short-term goals like saving for a vacation, bike/car, a short course, gadget, electronic devices, purchase of ornaments, down-payments, as such can be easily targeted by these funds. Some investors simply invest to earn short-term gains, as some debt funds offer better returns than Bank FDs.
Ideally, debt funds (also known as bond funds) are the most suited for short-term investments, and equities for long-term investing. Most bond funds like Liquid Funds, ultra-short term funds, short-term funds, Dynamic Bond Funds are ideal for short-term investments. Long-term bond funds are avoided for short-term plans as they are sensitive to interest rate changes.
Below are the best short term Mutual Funds that you can consider investing your money for short term.
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Best Mutual Funds for Short Term Investment
Fund Selection Methodology used to find 5 funds
Liquid Funds
Liquid funds are a type of debt funds that invest your money in liquid assets for a short period of time, which typically ranges from a couple of days to a few weeks. These funds are highly liquid in nature, that means, one can quickly convert invested funds into cash. Liquid funds offer better returns than savings bank account. Where you typically earn an interest of about 4-6% p.a., liquid funds offer interest rates ranging from 7-8% p.a. Here are the Best Liquid Funds that you could invest to earn optimal returns in a shorter duration.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity BOI AXA Liquid Fund Growth ₹3,076.52
↑ 0.48 ₹1,513 1.5 3 6.7 7 7.4 5.95% 1M 10D 1M 10D Axis Liquid Fund Growth ₹2,973.35
↑ 0.46 ₹35,360 1.4 3 6.7 7 7.4 6% 1M 6D 1M 8D Indiabulls Liquid Fund Growth ₹2,582.46
↑ 0.40 ₹155 1.4 3 6.7 6.9 7.4 6.03% 1M 9D 1M 9D Edelweiss Liquid Fund Growth ₹3,415.16
↑ 0.52 ₹10,621 1.5 3 6.7 6.9 7.3 5.98% 2M 5D 2M 5D PGIM India Insta Cash Fund Growth ₹347.62
↑ 0.05 ₹573 1.4 3 6.7 7 7.3 5.95% 1M 2D 1M 2D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 23 Nov 25 Research Highlights & Commentary of 5 Funds showcased
Commentary BOI AXA Liquid Fund Axis Liquid Fund Indiabulls Liquid Fund Edelweiss Liquid Fund PGIM India Insta Cash Fund Point 1 Lower mid AUM (₹1,513 Cr). Highest AUM (₹35,360 Cr). Bottom quartile AUM (₹155 Cr). Upper mid AUM (₹10,621 Cr). Bottom quartile AUM (₹573 Cr). Point 2 Established history (17+ yrs). Established history (16+ yrs). Established history (14+ yrs). Oldest track record among peers (18 yrs). Established history (18+ yrs). Point 3 Rating: 3★ (bottom quartile). Rating: 4★ (lower mid). Top rated. Rating: 2★ (bottom quartile). Rating: 5★ (upper mid). Point 4 Risk profile: Low. Risk profile: Low. Risk profile: Low. Risk profile: Low. Risk profile: Low. Point 5 1Y return: 6.68% (top quartile). 1Y return: 6.68% (upper mid). 1Y return: 6.67% (lower mid). 1Y return: 6.65% (bottom quartile). 1Y return: 6.65% (bottom quartile). Point 6 1M return: 0.49% (upper mid). 1M return: 0.49% (bottom quartile). 1M return: 0.51% (top quartile). 1M return: 0.49% (lower mid). 1M return: 0.48% (bottom quartile). Point 7 Sharpe: 3.61 (top quartile). Sharpe: 3.13 (lower mid). Sharpe: 2.76 (bottom quartile). Sharpe: 3.25 (upper mid). Sharpe: 2.91 (bottom quartile). Point 8 Information ratio: 1.09 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: -1.01 (bottom quartile). Information ratio: 0.00 (lower mid). Information ratio: -0.36 (bottom quartile). Point 9 Yield to maturity (debt): 5.95% (bottom quartile). Yield to maturity (debt): 6.00% (upper mid). Yield to maturity (debt): 6.03% (top quartile). Yield to maturity (debt): 5.98% (lower mid). Yield to maturity (debt): 5.95% (bottom quartile). Point 10 Modified duration: 0.11 yrs (bottom quartile). Modified duration: 0.10 yrs (upper mid). Modified duration: 0.11 yrs (lower mid). Modified duration: 0.18 yrs (bottom quartile). Modified duration: 0.09 yrs (top quartile). BOI AXA Liquid Fund
Axis Liquid Fund
Indiabulls Liquid Fund
Edelweiss Liquid Fund
PGIM India Insta Cash Fund
Ultra Short Term Funds
Ultra Short Term fund invest in debt instruments having residual maturities of more than 91 days and typically less than 1 year. These funds are highly suitable for investors who are willing to marginally increase the risk of investment in order to earn good returns. Also, these funds generally offer higher returns compared to liquid funds. Investors can invest in these following Best Ultra Short term funds for up to a year and achieve short-term goals.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹34.9131
↑ 0.04 ₹297 1.3 5.9 13.7 8.8 0% 1Y 15D Aditya Birla Sun Life Savings Fund Growth ₹562.941
↑ 0.08 ₹22,389 1.6 3.3 7.6 7.5 7.9 6.81% 5M 19D 6M 22D ICICI Prudential Ultra Short Term Fund Growth ₹28.405
↑ 0.00 ₹17,841 1.5 3.2 7.2 7.2 7.5 6.64% 4M 24D 6M 11D SBI Magnum Ultra Short Duration Fund Growth ₹6,122.19
↑ 0.83 ₹14,505 1.5 3.1 7.1 7.2 7.4 6.39% 4M 20D 5M 26D Invesco India Ultra Short Term Fund Growth ₹2,761
↑ 0.36 ₹1,259 1.4 3.1 7 7 7.5 6.37% 4M 23D 5M 2D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 7 Aug 22 Research Highlights & Commentary of 5 Funds showcased
Commentary Franklin India Ultra Short Bond Fund - Super Institutional Plan Aditya Birla Sun Life Savings Fund ICICI Prudential Ultra Short Term Fund SBI Magnum Ultra Short Duration Fund Invesco India Ultra Short Term Fund Point 1 Bottom quartile AUM (₹297 Cr). Highest AUM (₹22,389 Cr). Upper mid AUM (₹17,841 Cr). Lower mid AUM (₹14,505 Cr). Bottom quartile AUM (₹1,259 Cr). Point 2 Established history (17+ yrs). Established history (22+ yrs). Established history (14+ yrs). Oldest track record among peers (26 yrs). Established history (14+ yrs). Point 3 Rating: 1★ (bottom quartile). Top rated. Rating: 3★ (upper mid). Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Low. Risk profile: Moderate. Point 5 1Y return: 13.69% (top quartile). 1Y return: 7.64% (upper mid). 1Y return: 7.24% (lower mid). 1Y return: 7.09% (bottom quartile). 1Y return: 6.99% (bottom quartile). Point 6 1M return: 0.59% (top quartile). 1M return: 0.57% (upper mid). 1M return: 0.54% (lower mid). 1M return: 0.53% (bottom quartile). 1M return: 0.50% (bottom quartile). Point 7 Sharpe: 2.57 (lower mid). Sharpe: 3.40 (top quartile). Sharpe: 2.79 (upper mid). Sharpe: 2.48 (bottom quartile). Sharpe: 2.37 (bottom quartile). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 0.00% (bottom quartile). Yield to maturity (debt): 6.81% (top quartile). Yield to maturity (debt): 6.64% (upper mid). Yield to maturity (debt): 6.39% (lower mid). Yield to maturity (debt): 6.37% (bottom quartile). Point 10 Modified duration: 0.00 yrs (top quartile). Modified duration: 0.47 yrs (bottom quartile). Modified duration: 0.40 yrs (bottom quartile). Modified duration: 0.39 yrs (upper mid). Modified duration: 0.40 yrs (lower mid). Franklin India Ultra Short Bond Fund - Super Institutional Plan
Aditya Birla Sun Life Savings Fund
ICICI Prudential Ultra Short Term Fund
SBI Magnum Ultra Short Duration Fund
Invesco India Ultra Short Term Fund
Low Duration Funds
The scheme will invest in debt and money market securities with a Macaulay duration between six to 12 months. Low duration funds have a higher maturity duration than liquid and ultra short term funds. Risk-averse investors can invest in this scheme for a short period and earn better returns than that bank Savings Account. These funds generally offer steady and stable returns.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Sundaram Low Duration Fund Growth ₹28.8391
↑ 0.01 ₹550 1 10.2 11.8 5 4.19% 5M 18D 8M 1D ICICI Prudential Savings Fund Growth ₹559.12
↓ -0.01 ₹28,908 1.7 3.4 7.8 7.8 8 6.8% 10M 10D 1Y 7M 10D UTI Treasury Advantage Fund Growth ₹3,644.89
↑ 0.36 ₹2,814 1.6 3.3 7.7 7.5 7.7 6.8% 11M 1D 1Y 2M 5D Nippon India Low Duration Fund Growth ₹3,841.83
↑ 0.48 ₹11,186 1.6 3.2 7.5 7.2 7.4 6.84% 10M 21D 1Y 2M 15D Invesco India Treasury Advantage Fund Growth ₹3,881.08
↑ 0.41 ₹1,641 1.5 3.1 7.4 7.3 7.6 6.67% 11M 8D 1Y 12D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Dec 21 Research Highlights & Commentary of 5 Funds showcased
Commentary Sundaram Low Duration Fund ICICI Prudential Savings Fund UTI Treasury Advantage Fund Nippon India Low Duration Fund Invesco India Treasury Advantage Fund Point 1 Bottom quartile AUM (₹550 Cr). Highest AUM (₹28,908 Cr). Lower mid AUM (₹2,814 Cr). Upper mid AUM (₹11,186 Cr). Bottom quartile AUM (₹1,641 Cr). Point 2 Established history (18+ yrs). Oldest track record among peers (23 yrs). Established history (18+ yrs). Established history (18+ yrs). Established history (18+ yrs). Point 3 Rating: 2★ (bottom quartile). Top rated. Rating: 4★ (upper mid). Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Point 5 1Y return: 11.79% (top quartile). 1Y return: 7.82% (upper mid). 1Y return: 7.73% (lower mid). 1Y return: 7.47% (bottom quartile). 1Y return: 7.42% (bottom quartile). Point 6 1M return: 0.28% (bottom quartile). 1M return: 0.64% (top quartile). 1M return: 0.56% (upper mid). 1M return: 0.54% (lower mid). 1M return: 0.52% (bottom quartile). Point 7 Sharpe: 0.99 (bottom quartile). Sharpe: 2.67 (top quartile). Sharpe: 2.49 (upper mid). Sharpe: 2.18 (bottom quartile). Sharpe: 2.21 (lower mid). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 4.19% (bottom quartile). Yield to maturity (debt): 6.80% (upper mid). Yield to maturity (debt): 6.80% (lower mid). Yield to maturity (debt): 6.84% (top quartile). Yield to maturity (debt): 6.67% (bottom quartile). Point 10 Modified duration: 0.47 yrs (top quartile). Modified duration: 0.86 yrs (upper mid). Modified duration: 0.92 yrs (bottom quartile). Modified duration: 0.89 yrs (lower mid). Modified duration: 0.94 yrs (bottom quartile). Sundaram Low Duration Fund
ICICI Prudential Savings Fund
UTI Treasury Advantage Fund
Nippon India Low Duration Fund
Invesco India Treasury Advantage Fund
Short Term Funds or Short Duration Funds
Investors wanting to invest for up to 3 years can prefer investing in short-term funds. These funds invest in debt instruments & money market instruments that include the certificate of deposits, government papers (G-secs) and commercial papers (CPs). This scheme is suitable for investors who are looking for capital preservation, but also wish to invest for a longer period to earn good returns. Short term funds can benefit from the interest Accruals in the debt portfolio & from the tactical exposure to higher duration debt by the respective fund manager. Following are the best short term funds that investors can choose to invest.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Sundaram Short Term Debt Fund Growth ₹36.3802
↑ 0.01 ₹362 0.8 11.4 12.8 5.3 4.52% 1Y 2M 13D 1Y 7M 3D Axis Short Term Fund Growth ₹31.7796
↓ -0.01 ₹12,346 1.7 2.9 8.6 7.7 8 6.88% 2Y 2M 19D 2Y 8M 26D Nippon India Short Term Fund Growth ₹54.2679
↓ -0.01 ₹9,297 1.8 2.7 8.5 7.7 8 7.04% 2Y 8M 1D 3Y 3M 29D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹48.8954
↓ -0.01 ₹10,963 1.8 2.8 8.3 7.6 7.9 7.21% 2Y 9M 25D 3Y 8M 1D SBI Short Term Debt Fund Growth ₹32.997
↓ 0.00 ₹17,442 1.7 2.7 8.3 7.5 7.7 6.98% 2Y 8M 5D 3Y 4M 28D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Dec 21 Research Highlights & Commentary of 5 Funds showcased
Commentary Sundaram Short Term Debt Fund Axis Short Term Fund Nippon India Short Term Fund Aditya Birla Sun Life Short Term Opportunities Fund SBI Short Term Debt Fund Point 1 Bottom quartile AUM (₹362 Cr). Upper mid AUM (₹12,346 Cr). Bottom quartile AUM (₹9,297 Cr). Lower mid AUM (₹10,963 Cr). Highest AUM (₹17,442 Cr). Point 2 Oldest track record among peers (23 yrs). Established history (15+ yrs). Established history (22+ yrs). Established history (22+ yrs). Established history (18+ yrs). Point 3 Rating: 2★ (bottom quartile). Rating: 3★ (lower mid). Top rated. Rating: 4★ (upper mid). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Point 5 1Y return: 12.83% (top quartile). 1Y return: 8.57% (upper mid). 1Y return: 8.46% (lower mid). 1Y return: 8.29% (bottom quartile). 1Y return: 8.27% (bottom quartile). Point 6 1M return: 0.20% (bottom quartile). 1M return: 0.46% (lower mid). 1M return: 0.47% (upper mid). 1M return: 0.56% (top quartile). 1M return: 0.46% (bottom quartile). Point 7 Sharpe: 0.98 (bottom quartile). Sharpe: 1.73 (top quartile). Sharpe: 1.45 (upper mid). Sharpe: 1.32 (bottom quartile). Sharpe: 1.42 (lower mid). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 4.52% (bottom quartile). Yield to maturity (debt): 6.88% (bottom quartile). Yield to maturity (debt): 7.04% (upper mid). Yield to maturity (debt): 7.21% (top quartile). Yield to maturity (debt): 6.98% (lower mid). Point 10 Modified duration: 1.20 yrs (top quartile). Modified duration: 2.22 yrs (upper mid). Modified duration: 2.67 yrs (lower mid). Modified duration: 2.82 yrs (bottom quartile). Modified duration: 2.68 yrs (bottom quartile). Sundaram Short Term Debt Fund
Axis Short Term Fund
Nippon India Short Term Fund
Aditya Birla Sun Life Short Term Opportunities Fund
SBI Short Term Debt Fund
*Above is list of best Short-term debt funds are having AUM/Net Assets above 100 Crore. Sorted on Last 1 Year Return.
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Taxation of Short Term Investment Plans
As the above Mutual Fund schemes fall under the debt category, the tax implication on debt funds is computed in the following way-
1. Short Term Capital Gains
If the holding period of a debt investment is less than 36 months, then it is classified as a short-term investment and these are taxed as per individual's tax slab.
2. Long Term Capital Gains
If the holding period of debt investment is more than 36 months, then it is classified as a long-term investment and is taxed at 20% with an indexation benefit.
| Capital Gains | Investment Holding Gains | Taxation |
|---|---|---|
| Short Term Capital Gains | Less than 36 months | As per individual's tax slab |
| Long Term Capital Gains | More than 36 months | 20% with indexation benefits |
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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