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!
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 fund 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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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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity IDBI Liquid Fund Growth ₹2,165.07
₹1,340 0.9 2 5 6.4 6.6 3.33% 2M 2D 2M 2D Mahindra Liquid Fund Growth ₹1,310.96
₹2,062 0.9 1.9 4.8 6.4 6.7 3.55% 1M 24D 1M 22D Tata Liquid Fund Growth ₹3,182.2
₹15,556 0.8 1.9 4.8 6.3 6.6 0% 1Y 5M 5D Aditya Birla Sun Life Liquid Fund Growth ₹324.911
₹32,611 0.8 1.9 4.7 6.4 6.7 3.39% 1M 17D 1M 17D Axis Liquid Fund Growth ₹2,242.08
₹24,817 0.8 1.9 4.7 6.4 6.6 3.36% 1M 13D 1M 14D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Oct 20
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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹415.509
₹14,532 1.4 4.2 7.5 7.7 8.5 4.51% 5M 26D 6M 18D ICICI Prudential Ultra Short Term Fund Growth ₹21.179
₹7,413 1.5 3.8 7.3 7.5 8.4 5.24% 5M 8D 6M SBI Magnum Ultra Short Duration Fund Growth ₹4,608.61
₹10,122 1.1 3.2 6.5 7.4 8 4% 5M 8D 5M 19D Kotak Savings Fund Growth ₹33.2558
₹11,072 1 3.3 6.4 7.1 7.8 4.1% 5M 16D 5M 26D UTI Ultra Short Term Fund Growth ₹3,206.02
₹1,569 1.1 2.8 5.7 5.2 3.3 5.36% 4M 4D 4M 6D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Oct 20
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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Savings Fund Growth ₹408.394
₹19,922 1.5 5.2 8.6 8 8.8 4.94% 11M 1D 1Y 9M 4D Kotak Low Duration Fund Growth ₹2,590.61
₹8,418 1.6 5 8.5 7.9 8.3 5% 1Y 1M 17D 1Y 3M HDFC Low Duration Fund Growth ₹44.184
₹16,796 1.7 4.8 8.1 7.4 8 5.36% 10M 6D 1Y 2M 26D Aditya Birla Sun Life Low Duration Fund Growth ₹507.926
₹13,927 1.5 4.6 8 7.7 8.2 5.03% 11M 1D 1Y 22D Tata Treasury Advantage Fund Growth ₹3,027.01
₹1,560 1.4 4.4 7.9 5.7 2.2 0% 10Y 11M 23D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Oct 20
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 (%) 2019 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Short Term Debt Fund Growth ₹24.1928
₹13,569 1.6 6.7 11.3 8.9 9.7 6.22% 2Y 9M 7D 3Y 8M 23D ICICI Prudential Short Term Fund Growth ₹45.0577
₹18,946 1.5 6.5 10.9 8.2 9.7 5.83% 2Y 9M 14D 3Y 11M 19D UTI Short Term Income Fund Growth ₹23.1469
₹2,064 1.3 6.1 10.8 3.7 -3.9 5.48% 2Y 6M 25D 2Y 11M 11D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹36.0101
₹5,546 2.5 7.6 10.6 8.3 8.5 5.78% 2Y 6M 14D 3Y 2M 23D BNP Paribas Short Term Fund Growth ₹24.1913
₹261 1.6 6 10.6 7.6 6.9 5.45% 2Y 6M 4D 2Y 10M 13D
*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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As the above Mutual Fund schemes fall under the debt category, the tax implication on debt funds is computed in the following way-
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.
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|
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