+91-22-489139095 Best Short Duration (Short Term) Debt Funds To Invest In 2026
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 funds 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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Fund Selection Methodology used to find 5 funds
Best Short Duration Funds or Short Term Debt Funds FY 26 - 27
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity HDFC Short Term Debt Fund Growth ₹33.7139
↑ 0.09 ₹15,463 1.3 2.3 4.8 7.3 7.8 7.85% 2Y 4M 17D 3Y 5M 12D ICICI Prudential Short Term Fund Growth ₹63.4594
↑ 0.16 ₹21,450 1.4 2.4 5.2 7.3 8 7.89% 2Y 4M 24D 3Y 11M 8D Axis Short Term Fund Growth ₹32.581
↑ 0.08 ₹8,955 1.5 2.4 4.9 7.2 8.1 7.67% 2Y 3M 3Y Nippon India Short Term Fund Growth ₹55.521
↑ 0.15 ₹7,295 1.2 2.2 4.6 7.1 7.9 7.78% 2Y 4M 24D 2Y 10M 13D Bandhan Bond Fund Short Term Plan Growth ₹60.1022
↑ 0.15 ₹8,376 1.6 2.6 4.7 7.1 7.5 7.47% 2Y 2M 26D 3Y 18D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 9 Jun 26 Research Highlights & Commentary of 5 Funds showcased
Commentary HDFC Short Term Debt Fund ICICI Prudential Short Term Fund Axis Short Term Fund Nippon India Short Term Fund Bandhan Bond Fund Short Term Plan Point 1 Upper mid AUM (₹15,463 Cr). Highest AUM (₹21,450 Cr). Lower mid AUM (₹8,955 Cr). Bottom quartile AUM (₹7,295 Cr). Bottom quartile AUM (₹8,376 Cr). Point 2 Established history (15+ yrs). Established history (24+ yrs). Established history (16+ yrs). Established history (23+ yrs). Oldest track record among peers (25 yrs). Point 3 Rating: 3★ (lower mid). Top rated. Rating: 3★ (bottom quartile). Rating: 4★ (upper mid). Rating: 2★ (bottom quartile). Point 4 Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Point 5 1Y return: 4.84% (lower mid). 1Y return: 5.20% (top quartile). 1Y return: 4.94% (upper mid). 1Y return: 4.56% (bottom quartile). 1Y return: 4.72% (bottom quartile). Point 6 1M return: 0.78% (top quartile). 1M return: 0.69% (bottom quartile). 1M return: 0.72% (bottom quartile). 1M return: 0.78% (upper mid). 1M return: 0.72% (lower mid). Point 7 Sharpe: -0.38 (lower mid). Sharpe: -0.17 (top quartile). Sharpe: -0.26 (upper mid). Sharpe: -0.42 (bottom quartile). Sharpe: -0.49 (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): 7.85% (upper mid). Yield to maturity (debt): 7.89% (top quartile). Yield to maturity (debt): 7.67% (bottom quartile). Yield to maturity (debt): 7.78% (lower mid). Yield to maturity (debt): 7.47% (bottom quartile). Point 10 Modified duration: 2.38 yrs (lower mid). Modified duration: 2.40 yrs (bottom quartile). Modified duration: 2.25 yrs (upper mid). Modified duration: 2.40 yrs (bottom quartile). Modified duration: 2.24 yrs (top quartile). HDFC Short Term Debt Fund
ICICI Prudential Short Term Fund
Axis Short Term Fund
Nippon India Short Term Fund
Bandhan Bond Fund Short Term Plan
*List Funds based 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. Below is the key information for HDFC Short Term Debt Fund Returns up to 1 year are on 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. Research Highlights for ICICI Prudential Short Term Fund Below is the key information for ICICI Prudential Short Term 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 (Erstwhile IDFC Super Saver Income Fund - Short Term Plan) The primary investment objective of the scheme is to seek to generate stable returns with a low-risk strategy by creating a portfolio that is invested in good quality fixed income & Money Market securities. However, there can be no assurance that the investment objectives of the scheme will be realized. Research Highlights for Bandhan Bond Fund Short Term Plan Below is the key information for Bandhan Bond Fund Short Term Plan Returns up to 1 year are on Assets >= 100 Crore & Sorted on 3 Year CAGR Return.
1. HDFC Short Term Debt Fund
HDFC Short Term Debt Fund
Growth Launch Date 25 Jun 10 NAV (09 Jun 26) ₹33.7139 ↑ 0.09 (0.25 %) Net Assets (Cr) ₹15,463 on 30 Apr 26 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.69 Sharpe Ratio -0.39 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.85% Effective Maturity 3 Years 5 Months 12 Days Modified Duration 2 Years 4 Months 17 Days Growth of 10,000 investment over the years.
Date Value 31 May 21 ₹10,000 31 May 22 ₹10,268 31 May 23 ₹10,963 31 May 24 ₹11,751 31 May 25 ₹12,886 31 May 26 ₹13,426 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 9 Jun 26 Duration Returns 1 Month 0.8% 3 Month 1.3% 6 Month 2.3% 1 Year 4.8% 3 Year 7.3% 5 Year 6.2% 10 Year 15 Year Since launch 7.9% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.8% 2023 8.3% 2022 7.1% 2021 3.5% 2020 3.9% 2019 11% 2018 9.7% 2017 7% 2016 6.5% 2015 9.3% Fund Manager information for HDFC Short Term Debt Fund
Name Since Tenure Anil Bamboli 25 Jun 10 15.95 Yr. Dhruv Muchhal 22 Jun 23 2.95 Yr. Data below for HDFC Short Term Debt Fund as on 30 Apr 26
Asset Allocation
Asset Class Value Cash 4.17% Debt 95.49% Other 0.34% Debt Sector Allocation
Sector Value Corporate 72.37% Government 24.2% Cash Equivalent 3.09% Credit Quality
Rating Value AA 15.15% AAA 84.85% Top Securities Holdings / Portfolio
Name Holding Value Quantity Aditya Birla Renewables Limited
Debentures | -3% ₹435 Cr 43,500 Jubilant Beverages Limited
Debentures | -3% ₹417 Cr 38,500 Jtpm Metal TRaders Limited
Debentures | -2% ₹378 Cr 36,000 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹350 Cr 35,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -2% ₹345 Cr 350 7.18% Govt Stock 2033
Sovereign Bonds | -2% ₹308 Cr 30,500,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹300 Cr 30,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹290 Cr 29,170 Bajaj Housing Finance Limited
Debentures | -2% ₹251 Cr 25,000 Power Finance Corporation Limited
Debentures | -2% ₹247 Cr 25,000 2. ICICI Prudential Short Term Fund
ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (09 Jun 26) ₹63.4594 ↑ 0.16 (0.25 %) Net Assets (Cr) ₹21,450 on 30 Apr 26 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.04 Sharpe Ratio -0.17 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 7.89% Effective Maturity 3 Years 11 Months 8 Days Modified Duration 2 Years 4 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 May 21 ₹10,000 31 May 22 ₹10,290 31 May 23 ₹11,074 31 May 24 ₹11,874 31 May 25 ₹12,969 31 May 26 ₹13,579 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 9 Jun 26 Duration Returns 1 Month 0.7% 3 Month 1.4% 6 Month 2.4% 1 Year 5.2% 3 Year 7.3% 5 Year 6.4% 10 Year 15 Year Since launch 7.8% Historical performance (Yearly) on absolute basis
Year Returns 2024 8% 2023 7.8% 2022 7.4% 2021 4.7% 2020 3.9% 2019 10.6% 2018 9.7% 2017 5.8% 2016 5.9% 2015 11.1% Fund Manager information for ICICI Prudential Short Term Fund
Name Since Tenure Manish Banthia 19 Nov 09 16.54 Yr. Nikhil Kabra 29 Dec 20 5.42 Yr. Data below for ICICI Prudential Short Term Fund as on 30 Apr 26
Asset Allocation
Asset Class Value Cash 9.09% Debt 90.62% Other 0.29% Debt Sector Allocation
Sector Value Corporate 68.67% Government 29.19% Cash Equivalent 1.85% Credit Quality
Rating Value AA 19.57% AAA 80.43% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹892 Cr 89,500 LIC Housing Finance Ltd
Debentures | -3% ₹748 Cr 75,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹592 Cr 600 Vedanta Limited
Debentures | -3% ₹588 Cr 58,500 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹519 Cr 525 Small Industries Development Bank Of India
Debentures | -2% ₹438 Cr 44,700 6.48% Govt Stock 2035
Sovereign Bonds | -2% ₹409 Cr 42,500,000
↓ -10,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹408 Cr 41,000 Summit Digitel Infrastructure Limited
Debentures | -1% ₹283 Cr 28,300 Muthoot Finance Limited
Debentures | -1% ₹281 Cr 28,000 3. Axis Short Term Fund
Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (09 Jun 26) ₹32.581 ↑ 0.08 (0.24 %) Net Assets (Cr) ₹8,955 on 30 Apr 26 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.88 Sharpe Ratio -0.26 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.67% Effective Maturity 3 Years Modified Duration 2 Years 3 Months Growth of 10,000 investment over the years.
Date Value 31 May 21 ₹10,000 31 May 22 ₹10,269 31 May 23 ₹10,951 31 May 24 ₹11,674 31 May 25 ₹12,808 31 May 26 ₹13,380 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 9 Jun 26 Duration Returns 1 Month 0.7% 3 Month 1.5% 6 Month 2.4% 1 Year 4.9% 3 Year 7.2% 5 Year 6.1% 10 Year 15 Year Since launch 7.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 8.1% 2023 8% 2022 6.8% 2021 3.7% 2020 3.5% 2019 10.1% 2018 9.8% 2017 6.3% 2016 5.9% 2015 9.6% Fund Manager information for Axis Short Term Fund
Name Since Tenure Devang Shah 5 Nov 12 13.58 Yr. Aditya Pagaria 3 Jul 23 2.91 Yr. Data below for Axis Short Term Fund as on 30 Apr 26
Asset Allocation
Asset Class Value Cash 15.19% Debt 84.42% Other 0.4% Debt Sector Allocation
Sector Value Corporate 74.65% Government 21.58% Cash Equivalent 3.37% Credit Quality
Rating Value AA 14.66% AAA 85.34% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -3% ₹299 Cr 30,000
↓ -5,000 6.68% Govt Stock 2040
Sovereign Bonds | -3% ₹237 Cr 25,123,800
↑ 25,000,000 6.48% Govt Stock 2035
Sovereign Bonds | -3% ₹225 Cr 23,387,300
↓ -16,000,000 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹209 Cr 213 National Bank For Agriculture And Rural Development
Debentures | -2% ₹199 Cr 20,000 Small Industries Development Bank Of India
Debentures | -2% ₹198 Cr 20,000 Power Finance Corporation Limited
Debentures | -2% ₹196 Cr 20,000 Indigrid Infrastructure Trust
Debentures | -2% ₹191 Cr 19,000 Jubilant Beverages Limited
Debentures | -2% ₹171 Cr 15,750 L&T Metro Rail (Hyderabad) Limited
Debentures | -1% ₹122 Cr 12,500 4. Nippon India Short Term Fund
Nippon India Short Term Fund
Growth Launch Date 18 Dec 02 NAV (09 Jun 26) ₹55.521 ↑ 0.15 (0.28 %) Net Assets (Cr) ₹7,295 on 30 Apr 26 Category Debt - Short term Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.94 Sharpe Ratio -0.42 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.78% Effective Maturity 2 Years 10 Months 13 Days Modified Duration 2 Years 4 Months 24 Days Growth of 10,000 investment over the years.
Date Value 31 May 21 ₹10,000 31 May 22 ₹10,260 31 May 23 ₹10,913 31 May 24 ₹11,643 31 May 25 ₹12,795 31 May 26 ₹13,294 Returns for Nippon India Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 9 Jun 26 Duration Returns 1 Month 0.8% 3 Month 1.2% 6 Month 2.2% 1 Year 4.6% 3 Year 7.1% 5 Year 6% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.9% 2023 8% 2022 6.8% 2021 3.2% 2020 4.4% 2019 9.5% 2018 9.4% 2017 5.5% 2016 5.7% 2015 9.8% Fund Manager information for Nippon India Short Term Fund
Name Since Tenure Vivek Sharma 1 Feb 20 6.33 Yr. Kinjal Desai 25 May 18 8.02 Yr. Sushil Budhia 31 Mar 21 5.17 Yr. Amber Singhania 11 Mar 26 0.22 Yr. Data below for Nippon India Short Term Fund as on 30 Apr 26
Asset Allocation
Asset Class Value Cash 5.92% Debt 93.71% Other 0.38% Debt Sector Allocation
Sector Value Corporate 60.26% Government 34.75% Cash Equivalent 4.61% Credit Quality
Rating Value AA 13.37% AAA 86.63% Top Securities Holdings / Portfolio
Name Holding Value Quantity SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹220 Cr 225 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹196 Cr 200 Bharti Telecom Limited
Debentures | -2% ₹174 Cr 17,500 Small Industries Development Bank Of India
Debentures | -2% ₹165 Cr 16,500 Knowledge Realty TRust
Debentures | -2% ₹159 Cr 16,000 7.93% Uttarpradesh Sdl 2030
Sovereign Bonds | -2% ₹153 Cr 15,000,000 Export Import Bank Of India
Debentures | -2% ₹150 Cr 15,000 Rural Electrification Corporation Limited
Debentures | -2% ₹133 Cr 1,300 7.17% Madhyapradesh Sgs 2031
Sovereign Bonds | -2% ₹124 Cr 12,500,000 7.32% Govt Stock 2030
Sovereign Bonds | -2% ₹123 Cr 12,000,000 5. Bandhan Bond Fund Short Term Plan
Bandhan Bond Fund Short Term Plan
Growth Launch Date 14 Dec 00 NAV (09 Jun 26) ₹60.1022 ↑ 0.15 (0.24 %) Net Assets (Cr) ₹8,376 on 30 Apr 26 Category Debt - Short term Bond AMC IDFC Asset Management Company Limited Rating ☆☆ Risk Moderately Low Expense Ratio 0.8 Sharpe Ratio -0.49 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.47% Effective Maturity 3 Years 18 Days Modified Duration 2 Years 2 Months 26 Days Growth of 10,000 investment over the years.
Date Value 31 May 21 ₹10,000 31 May 22 ₹10,171 31 May 23 ₹10,856 31 May 24 ₹11,570 31 May 25 ₹12,693 31 May 26 ₹13,217 Returns for Bandhan Bond Fund Short Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 9 Jun 26 Duration Returns 1 Month 0.7% 3 Month 1.6% 6 Month 2.6% 1 Year 4.7% 3 Year 7.1% 5 Year 5.9% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.5% 2023 7.8% 2022 6.9% 2021 2.8% 2020 3.4% 2019 9.7% 2018 9.7% 2017 6.5% 2016 5.9% 2015 8.8% Fund Manager information for Bandhan Bond Fund Short Term Plan
Name Since Tenure Suyash Choudhary 11 Mar 11 15.24 Yr. Brijesh Shah 10 Jun 24 1.98 Yr. Data below for Bandhan Bond Fund Short Term Plan as on 30 Apr 26
Asset Allocation
Asset Class Value Cash 41.2% Debt 58.43% Other 0.37% Debt Sector Allocation
Sector Value Corporate 73.63% Government 17.66% Cash Equivalent 8.35% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -5% ₹403 Cr 40,500,000 Small Industries Development Bank of India
Debentures | -4% ₹317 Cr 32,500,000 Bajaj Finance Limited
Debentures | -3% ₹272 Cr 27,500,000
↓ -2,500,000 LIC Housing Finance Ltd
Debentures | -3% ₹270 Cr 27,000,000 Tata Capital Housing Finance Limited
Debentures | -3% ₹250 Cr 25,000,000 LIC Housing Finance Ltd
Debentures | -3% ₹245 Cr 24,500,000 6.88% Uttarpradesh Sdl 2031
Sovereign Bonds | -3% ₹244 Cr 25,000,000 Small Industries Development Bank Of India
Debentures | -3% ₹229 Cr 23,500,000 Indian Railway Finance Corporation Limited
Debentures | -2% ₹200 Cr 20,000,000 Rec Limited
Debentures | -2% ₹189 Cr 18,500,000
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 HDFC Short Term Debt Fund