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5 Best Short Duration (Short Term) Debt Funds To Invest In 2025
Generally, people believe that Mutual Fund investments are for long-term investors. Well, that's not true! There is a category of funds called Short Duration Funds or Short Term Debt fund that allow investors to invest for short-term along with keeping their money accessible. Though there are various Short Duration Funds available in the Market, investors are suggested to look for best Short Duration (Short Term) Debt Funds.
The best Short Duration (Short Term) Debt Funds are funds that allow investors to invest for a short term, typically for three years, to earn good returns with less market risk. These funds are highly suitable investors with a low-risk appetite who seek quick returns and a steady flow of Income without being affected by the daily changes in the bond markets.
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Best Short Duration Funds or Short Term Debt Funds FY 25 - 26
To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity. Below is the key information for ICICI Prudential Short Term Fund Returns up to 1 year are on (Erstwhile HDFC Short Term Opportunities Fund) To generate regular income through investments in Debt/Money Market Instruments and Government Securities with maturities not exceeding 36 months. Research Highlights for HDFC Short Term Debt Fund Below is the key information for HDFC Short Term Debt Fund Returns up to 1 year are on To generate stable returns with a low risk strategy while maintaining liquidity through a portfolio comprising of debt and money market instruments. However, there can be no assurance that the investment objective of the scheme will be achieved. Research Highlights for Axis Short Term Fund Below is the key information for Axis Short Term Fund Returns up to 1 year are on The primary investment objective of the scheme is to generate stable returns for investors with a short term investment horizon by investing in fixed income
securitites of a short term maturity. Research Highlights for Nippon India Short Term Fund Below is the key information for Nippon India Short Term Fund Returns up to 1 year are on To generate steady and reasonable income with low risk and high level of liquidity from a portfolio of money market securities and high quality debt. Research Highlights for UTI Short Term Income Fund Below is the key information for UTI Short Term Income Fund Returns up to 1 year are on Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity ICICI Prudential Short Term Fund Growth ₹60.7622
↓ 0.00 ₹21,491 2 4.8 8.6 7.9 7.8 7.18% 1Y 11M 23D 3Y 5M 12D HDFC Short Term Debt Fund Growth ₹32.3419
↑ 0.00 ₹17,402 2 4.7 8.8 7.8 8.3 6.88% 2Y 6M 11D 3Y 9M 11D Axis Short Term Fund Growth ₹31.2508
↑ 0.01 ₹11,467 2 5 9 7.6 8 6.8% 2Y 2M 19D 2Y 8M 12D Nippon India Short Term Fund Growth ₹53.3816
↑ 0.02 ₹8,330 2 4.9 9 7.6 8 7.03% 2Y 8M 8D 3Y 4M 28D UTI Short Term Income Fund Growth ₹32.0234
↑ 0.00 ₹3,281 1.9 4.5 8.5 7.6 7.9 6.76% 2Y 7M 6D 3Y 3M 11D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 8 Aug 25 Research Highlights & Commentary of 5 Funds showcased
Commentary ICICI Prudential Short Term Fund HDFC Short Term Debt Fund Axis Short Term Fund Nippon India Short Term Fund UTI Short Term Income Fund Point 1 Highest AUM (₹21,491 Cr). Upper mid AUM (₹17,402 Cr). Lower mid AUM (₹11,467 Cr). Bottom quartile AUM (₹8,330 Cr). Bottom quartile AUM (₹3,281 Cr). Point 2 Oldest track record among peers (23 yrs). Established history (15+ yrs). Established history (15+ yrs). Established history (22+ yrs). Established history (17+ yrs). Point 3 Top rated. Rating: 3★ (bottom quartile). Rating: 3★ (bottom quartile). Rating: 4★ (upper mid). Rating: 4★ (lower mid). Point 4 Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderate. Point 5 1Y return: 8.59% (bottom quartile). 1Y return: 8.78% (lower mid). 1Y return: 9.04% (top quartile). 1Y return: 9.01% (upper mid). 1Y return: 8.53% (bottom quartile). Point 6 1M return: 0.40% (upper mid). 1M return: 0.35% (bottom quartile). 1M return: 0.38% (lower mid). 1M return: 0.41% (top quartile). 1M return: 0.32% (bottom quartile). Point 7 Sharpe: 2.27 (upper mid). Sharpe: 2.20 (lower mid). Sharpe: 2.32 (top quartile). Sharpe: 2.14 (bottom quartile). Sharpe: 1.89 (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): 7.18% (top quartile). Yield to maturity (debt): 6.88% (lower mid). Yield to maturity (debt): 6.80% (bottom quartile). Yield to maturity (debt): 7.03% (upper mid). Yield to maturity (debt): 6.76% (bottom quartile). Point 10 Modified duration: 1.98 yrs (top quartile). Modified duration: 2.53 yrs (lower mid). Modified duration: 2.22 yrs (upper mid). Modified duration: 2.69 yrs (bottom quartile). Modified duration: 2.60 yrs (bottom quartile). ICICI Prudential Short Term Fund
HDFC Short Term Debt Fund
Axis Short Term Fund
Nippon India Short Term Fund
UTI Short Term Income Fund
Assets >= 100 Crore & Sorted on 3 Year CAGR Return.
1. ICICI Prudential Short Term Fund
ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (08 Aug 25) ₹60.7622 ↓ 0.00 (0.00 %) Net Assets (Cr) ₹21,491 on 30 Jun 25 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.11 Sharpe Ratio 2.27 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-7 Days (0.25%),7 Days and above(NIL) Yield to Maturity 7.18% Effective Maturity 3 Years 5 Months 12 Days Modified Duration 1 Year 11 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 Jul 20 ₹10,000 31 Jul 21 ₹10,511 31 Jul 22 ₹10,878 31 Jul 23 ₹11,684 31 Jul 24 ₹12,575 31 Jul 25 ₹13,679 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 8 Aug 25 Duration Returns 1 Month 0.4% 3 Month 2% 6 Month 4.8% 1 Year 8.6% 3 Year 7.9% 5 Year 6.5% 10 Year 15 Year Since launch 7.9% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.8% 2023 7.4% 2022 4.7% 2021 3.9% 2020 10.6% 2019 9.7% 2018 5.8% 2017 5.9% 2016 11.1% 2015 8% Fund Manager information for ICICI Prudential Short Term Fund
Name Since Tenure Manish Banthia 19 Nov 09 15.71 Yr. Nikhil Kabra 29 Dec 20 4.59 Yr. Data below for ICICI Prudential Short Term Fund as on 30 Jun 25
Asset Allocation
Asset Class Value Cash 5.88% Debt 93.85% Other 0.27% Debt Sector Allocation
Sector Value Corporate 68.55% Government 26.61% Cash Equivalent 4.56% Credit Quality
Rating Value AA 20.19% AAA 79.81% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.81% Govt Stock 2033
Sovereign Bonds | -5% ₹1,157 Cr 111,312,240 LIC Housing Finance Ltd
Debentures | -3% ₹763 Cr 75,000
↑ 15,000 6.99% Govt Stock 2034
Sovereign Bonds | -3% ₹712 Cr 69,574,740 National Bank For Agriculture And Rural Development
Debentures | -3% ₹556 Cr 55,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹515 Cr 50,500 Vedanta Limited
Debentures | -2% ₹511 Cr 51,000 7.1% Govt Stock 2034
Sovereign Bonds | -2% ₹406 Cr 38,858,430
↓ -5,000,000 Small Industries Development Bank Of India
Debentures | -2% ₹374 Cr 37,000 Small Industries Development Bank Of India
Debentures | -2% ₹369 Cr 36,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹354 Cr 35,000 2. HDFC Short Term Debt Fund
HDFC Short Term Debt Fund
Growth Launch Date 25 Jun 10 NAV (08 Aug 25) ₹32.3419 ↑ 0.00 (0.00 %) Net Assets (Cr) ₹17,402 on 30 Jun 25 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.71 Sharpe Ratio 2.2 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 6.88% Effective Maturity 3 Years 9 Months 11 Days Modified Duration 2 Years 6 Months 11 Days Growth of 10,000 investment over the years.
Date Value 31 Jul 20 ₹10,000 31 Jul 21 ₹10,530 31 Jul 22 ₹10,824 31 Jul 23 ₹11,560 31 Jul 24 ₹12,457 31 Jul 25 ₹13,573 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 8 Aug 25 Duration Returns 1 Month 0.3% 3 Month 2% 6 Month 4.7% 1 Year 8.8% 3 Year 7.8% 5 Year 6.3% 10 Year 15 Year Since launch 8.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 8.3% 2023 7.1% 2022 3.5% 2021 3.9% 2020 11% 2019 9.7% 2018 7% 2017 6.5% 2016 9.3% 2015 8.7% Fund Manager information for HDFC Short Term Debt Fund
Name Since Tenure Anil Bamboli 25 Jun 10 15.11 Yr. Dhruv Muchhal 22 Jun 23 2.11 Yr. Data below for HDFC Short Term Debt Fund as on 30 Jun 25
Asset Allocation
Asset Class Value Cash 10.51% Debt 89.22% Other 0.27% Debt Sector Allocation
Sector Value Corporate 62.75% Government 29.88% Cash Equivalent 7.1% Credit Quality
Rating Value AA 12.32% AAA 87.68% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -5% ₹866 Cr 82,500,000 Aditya Birla Renewables Limited
Debentures | -2% ₹445 Cr 43,500 7.11% Govt Stock 2028
Sovereign Bonds | -2% ₹420 Cr 41,500,000 Jubilant Beverages Limited
Debentures | -2% ₹395 Cr 38,500 7.26% Govt Stock 2032
Sovereign Bonds | -2% ₹364 Cr 34,500,000 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹334 Cr 32,500 National Bank For Agriculture And Rural Development
Debentures | -1% ₹257 Cr 25,000 Bajaj Housing Finance Limited
Debentures | -1% ₹256 Cr 25,000 Pipeline Infrastructure Limited
Debentures | -1% ₹254 Cr 24,500 Power Finance Corporation Limited
Debentures | -1% ₹249 Cr 25,000 3. Axis Short Term Fund
Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (08 Aug 25) ₹31.2508 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹11,467 on 30 Jun 25 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.92 Sharpe Ratio 2.32 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.8% Effective Maturity 2 Years 8 Months 12 Days Modified Duration 2 Years 2 Months 19 Days Growth of 10,000 investment over the years.
Date Value 31 Jul 20 ₹10,000 31 Jul 21 ₹10,461 31 Jul 22 ₹10,774 31 Jul 23 ₹11,465 31 Jul 24 ₹12,305 31 Jul 25 ₹13,437 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 8 Aug 25 Duration Returns 1 Month 0.4% 3 Month 2% 6 Month 5% 1 Year 9% 3 Year 7.6% 5 Year 6.1% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2024 8% 2023 6.8% 2022 3.7% 2021 3.5% 2020 10.1% 2019 9.8% 2018 6.3% 2017 5.9% 2016 9.6% 2015 8.1% Fund Manager information for Axis Short Term Fund
Name Since Tenure Devang Shah 5 Nov 12 12.74 Yr. Aditya Pagaria 3 Jul 23 2.08 Yr. Data below for Axis Short Term Fund as on 30 Jun 25
Asset Allocation
Asset Class Value Cash 12.22% Debt 87.51% Other 0.27% Debt Sector Allocation
Sector Value Corporate 71.34% Government 20.81% Cash Equivalent 7.59% Credit Quality
Rating Value AA 13.82% AAA 86.18% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹521 Cr 51,000
↑ 10,000 6.79% Govt Stock 2034
Sovereign Bonds | -3% ₹387 Cr 37,626,700
↑ 25,000,000 Power Finance Corporation Limited
Debentures | -3% ₹299 Cr 30,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹265 Cr 26,000 Rec Limited
Debentures | -2% ₹264 Cr 25,854 Indigrid Infrastructure Trust
Debentures | -2% ₹193 Cr 19,000 India (Republic of) 6.28%
Sovereign Bonds | -2% ₹187 Cr 18,737,200
↑ 18,737,200 Rec Limited
Debentures | -2% ₹179 Cr 17,500 Tata Capital Limited
Debentures | -2% ₹178 Cr 1,750
↑ 750 Small Industries Development Bank Of India
Debentures | -2% ₹177 Cr 17,500
↑ 12,500 4. Nippon India Short Term Fund
Nippon India Short Term Fund
Growth Launch Date 18 Dec 02 NAV (08 Aug 25) ₹53.3816 ↑ 0.02 (0.04 %) Net Assets (Cr) ₹8,330 on 30 Jun 25 Category Debt - Short term Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.96 Sharpe Ratio 2.14 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.03% Effective Maturity 3 Years 4 Months 28 Days Modified Duration 2 Years 8 Months 8 Days Growth of 10,000 investment over the years.
Date Value 31 Jul 20 ₹10,000 31 Jul 21 ₹10,563 31 Jul 22 ₹10,846 31 Jul 23 ₹11,534 31 Jul 24 ₹12,384 31 Jul 25 ₹13,518 Returns for Nippon India Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 8 Aug 25 Duration Returns 1 Month 0.4% 3 Month 2% 6 Month 4.9% 1 Year 9% 3 Year 7.6% 5 Year 6.2% 10 Year 15 Year Since launch 7.7% Historical performance (Yearly) on absolute basis
Year Returns 2024 8% 2023 6.8% 2022 3.2% 2021 4.4% 2020 9.5% 2019 9.4% 2018 5.5% 2017 5.7% 2016 9.8% 2015 8.1% Fund Manager information for Nippon India Short Term Fund
Name Since Tenure Vivek Sharma 1 Feb 20 5.5 Yr. Kinjal Desai 25 May 18 7.19 Yr. Sushil Budhia 31 Mar 21 4.34 Yr. Data below for Nippon India Short Term Fund as on 30 Jun 25
Asset Allocation
Asset Class Value Cash 4.98% Debt 94.74% Other 0.27% Debt Sector Allocation
Sector Value Corporate 60.76% Government 35.35% Cash Equivalent 3.61% Credit Quality
Rating Value AA 11.73% AAA 88.27% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2030
Sovereign Bonds | -6% ₹506 Cr 48,000,000 7.17% Govt Stock 2030
Sovereign Bonds | -5% ₹486 Cr 46,500,000 7.02% Govt Stock 2031
Sovereign Bonds | -3% ₹260 Cr 25,000,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹225 Cr 22,000 7.17% State Government Securities
Sovereign Bonds | -2% ₹211 Cr 20,500,000 Aditya Birla Housing Finance Limited
Debentures | -2% ₹204 Cr 20,000 Bajaj Housing Finance Limited
Debentures | -2% ₹175 Cr 17,500 Small Industries Development Bank Of India
Debentures | -2% ₹170 Cr 16,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹170 Cr 16,500 Can Fin Homes Limited
Debentures | -2% ₹168 Cr 16,500 5. UTI Short Term Income Fund
UTI Short Term Income Fund
Growth Launch Date 19 Sep 07 NAV (08 Aug 25) ₹32.0234 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹3,281 on 30 Jun 25 Category Debt - Short term Bond AMC UTI Asset Management Company Ltd Rating ☆☆☆☆ Risk Moderate Expense Ratio 0.94 Sharpe Ratio 1.89 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 6.76% Effective Maturity 3 Years 3 Months 11 Days Modified Duration 2 Years 7 Months 6 Days Growth of 10,000 investment over the years.
Date Value 31 Jul 20 ₹10,000 31 Jul 21 ₹10,463 31 Jul 22 ₹11,250 31 Jul 23 ₹12,012 31 Jul 24 ₹12,897 31 Jul 25 ₹14,013 Returns for UTI Short Term Income Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 8 Aug 25 Duration Returns 1 Month 0.3% 3 Month 1.9% 6 Month 4.5% 1 Year 8.5% 3 Year 7.6% 5 Year 7% 10 Year 15 Year Since launch 6.7% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.9% 2023 6.9% 2022 3.8% 2021 8.4% 2020 10.5% 2019 -3.9% 2018 6% 2017 6.1% 2016 10.1% 2015 8.3% Fund Manager information for UTI Short Term Income Fund
Name Since Tenure Anurag Mittal 8 Apr 25 0.31 Yr. Sudhir Agarwal 25 Oct 12 12.77 Yr. Data below for UTI Short Term Income Fund as on 30 Jun 25
Asset Allocation
Asset Class Value Cash 10.01% Debt 89.77% Other 0.22% Debt Sector Allocation
Sector Value Corporate 65.05% Government 28.97% Cash Equivalent 5.77% Credit Quality
Rating Value AA 9.59% AAA 90.41% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.79% Govt Stock 2034
Sovereign Bonds | -9% ₹314 Cr 3,050,000,000 National Housing Bank
Debentures | -5% ₹179 Cr 17,500 Small Industries Development Bank Of India
Debentures | -5% ₹179 Cr 17,500 LIC Housing Finance Ltd
Debentures | -5% ₹179 Cr 1,750 Power Finance Corporation Limited
Debentures | -5% ₹178 Cr 17,500 National Bank For Agriculture And Rural Development
Debentures | -4% ₹143 Cr 14,000
↑ 5,000 Axis Bank Ltd.
Debentures | -4% ₹142 Cr 1,500,000,000 National Bank For Agriculture And Rural Development
Debentures | -4% ₹127 Cr 12,500 Export Import Bank Of India
Debentures | -4% ₹127 Cr 12,500 Mankind Pharma Limited
Debentures | -3% ₹102 Cr 10,000
Why Invest In Best Short Duration Debt Funds?
Given the short term nature of these investments, Short Duration (Short Term) Debt Funds do not offer very high returns like Equity Funds. However, there are certainly several reasons that ensure Investing in the best Short Duration (Short Term) Debt funds is totally worth to consider. Some of those include-
Short Duration (Short Term) debt funds are a highly suitable option for investors who are willing to make investments that have a slightly higher maturity than liquid & ultra short term debt funds but on the same hand are not very risky.
Being a short term investment, this fund is highly suitable for those who want to park their idle cash for 1-3 years to earn better returns than Fixed Income investment options like FDs.
As per the analysis, short term bond funds offer a better rate of return in accordance with the risk involved as compared to long term Bonds. Short Duration Funds are less sensitive to the rising Inflation than other intermediate and long term debt funds.
Lastly, the Short Duration (Short Term) debt funds are highly liquid, meaning that the investors can have an easy access to their cash. However, some schemes under this category do charge an exit load if the investment is redeemed in a very short duration (mostly 1 month to 6 months). So, it is always suggested to invest in best Short Duration Debt Funds wisely.
How to Invest in Short Duration Debt Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
Conclusion
Investors can tweak their investment portfolios as per their risk profile. As the bond market offers the advantage of falling interest rates, one can earn better returns by increasing the duration o the investment. This is where Short Duration (Short Term) Debt Funds come in. These funds invest in debt market to offer long term returns over the duration of 2-3 years. So, invest in best Short Duration Funds today!
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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Research Highlights for ICICI Prudential Short Term Fund