+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 ₹33.0888
↓ -0.04 ₹18,079 0.8 2.4 7.1 7.6 7.8 7.11% 2Y 5M 12D 3Y 6M 25D ICICI Prudential Short Term Fund Growth ₹62.2628
↓ -0.10 ₹20,935 1 2.5 7.3 7.6 8 7.32% 2Y 6M 29D 4Y 7M 24D Axis Short Term Fund Growth ₹31.9692
↓ -0.03 ₹12,708 0.8 2.4 7.3 7.5 8.1 7.04% 2Y 3M 14D 2Y 10M 2D Nippon India Short Term Fund Growth ₹54.5118
↓ -0.08 ₹9,723 0.6 2.2 7.1 7.4 7.9 0% Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹49.1238
↓ -0.08 ₹10,575 0.7 2.3 7 7.4 7.7 7.22% 2Y 9M 18D 3Y 6M 25D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 6 Feb 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 Aditya Birla Sun Life Short Term Opportunities Fund Point 1 Upper mid AUM (₹18,079 Cr). Highest AUM (₹20,935 Cr). Lower mid AUM (₹12,708 Cr). Bottom quartile AUM (₹9,723 Cr). Bottom quartile AUM (₹10,575 Cr). Point 2 Established history (15+ yrs). Oldest track record among peers (24 yrs). Established history (16+ yrs). Established history (23+ yrs). Established history (22+ yrs). Point 3 Rating: 3★ (bottom quartile). Top rated. Rating: 3★ (bottom quartile). Rating: 4★ (upper mid). Rating: 4★ (lower mid). Point 4 Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderate. Point 5 1Y return: 7.08% (lower mid). 1Y return: 7.34% (upper mid). 1Y return: 7.34% (top quartile). 1Y return: 7.08% (bottom quartile). 1Y return: 6.98% (bottom quartile). Point 6 1M return: 0.22% (bottom quartile). 1M return: 0.23% (lower mid). 1M return: 0.24% (top quartile). 1M return: 0.23% (upper mid). 1M return: 0.15% (bottom quartile). Point 7 Sharpe: 1.26 (lower mid). Sharpe: 1.58 (top quartile). Sharpe: 1.41 (upper mid). Sharpe: 1.15 (bottom quartile). Sharpe: 1.14 (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): 7.11% (lower mid). Yield to maturity (debt): 7.32% (top quartile). Yield to maturity (debt): 7.04% (bottom quartile). Yield to maturity (debt): 0.00% (bottom quartile). Yield to maturity (debt): 7.22% (upper mid). Point 10 Modified duration: 2.45 yrs (lower mid). Modified duration: 2.58 yrs (bottom quartile). Modified duration: 2.29 yrs (upper mid). Modified duration: 0.00 yrs (top quartile). Modified duration: 2.80 yrs (bottom quartile). HDFC Short Term Debt Fund
ICICI Prudential Short Term Fund
Axis Short Term Fund
Nippon India Short Term Fund
Aditya Birla Sun Life Short Term Opportunities Fund
*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 An Open ended Income scheme with the objective to generate regular income by investing primarily in investment grade fixed income securities / money market instruments with short to medium term maturities and across the credit spectrum within the universe of investment grade rating. Research Highlights for Aditya Birla Sun Life Short Term Opportunities Fund Below is the key information for Aditya Birla Sun Life Short Term Opportunities Fund 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 (06 Feb 26) ₹33.0888 ↓ -0.04 (-0.12 %) Net Assets (Cr) ₹18,079 on 31 Dec 25 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.69 Sharpe Ratio 1.26 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.11% Effective Maturity 3 Years 6 Months 25 Days Modified Duration 2 Years 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,401 31 Jan 23 ₹10,801 31 Jan 24 ₹11,599 31 Jan 25 ₹12,560 31 Jan 26 ₹13,459 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Feb 26 Duration Returns 1 Month 0.2% 3 Month 0.8% 6 Month 2.4% 1 Year 7.1% 3 Year 7.6% 5 Year 6.3% 10 Year 15 Year Since launch 8% 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 15.53 Yr. Dhruv Muchhal 22 Jun 23 2.53 Yr. Data below for HDFC Short Term Debt Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Cash 5.8% Debt 93.93% Other 0.27% Debt Sector Allocation
Sector Value Corporate 66.14% Government 28.12% Cash Equivalent 5.47% Credit Quality
Rating Value AA 13.08% AAA 86.92% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -3% ₹516 Cr 50,000,000 Aditya Birla Renewables Limited
Debentures | -2% ₹440 Cr 43,500 Jubilant Beverages Limited
Debentures | -2% ₹412 Cr 38,500 Jtpm Metal TRaders Limited
Debentures | -2% ₹371 Cr 36,000 7.26% Govt Stock 2032
Sovereign Bonds | -2% ₹357 Cr 34,500,000 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹356 Cr 35,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -2% ₹352 Cr 350 6.22% Govt Stock 2028
Sovereign Bonds | -1% ₹257 Cr 25,500,000 National Bank For Agriculture And Rural Development
Debentures | -1% ₹255 Cr 25,000 Bajaj Housing Finance Limited
Debentures | -1% ₹254 Cr 25,000 2. ICICI Prudential Short Term Fund
ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (06 Feb 26) ₹62.2628 ↓ -0.10 (-0.16 %) Net Assets (Cr) ₹20,935 on 31 Dec 25 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.04 Sharpe Ratio 1.58 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 7.32% Effective Maturity 4 Years 7 Months 24 Days Modified Duration 2 Years 6 Months 29 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,385 31 Jan 23 ₹10,908 31 Jan 24 ₹11,740 31 Jan 25 ₹12,658 31 Jan 26 ₹13,603 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Feb 26 Duration Returns 1 Month 0.2% 3 Month 1% 6 Month 2.5% 1 Year 7.3% 3 Year 7.6% 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 16.13 Yr. Nikhil Kabra 29 Dec 20 5.01 Yr. Data below for ICICI Prudential Short Term Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Cash 14.83% Debt 84.88% Other 0.29% Debt Sector Allocation
Sector Value Corporate 67.71% Government 22.39% Cash Equivalent 9.61% Credit Quality
Rating Value AA 18.95% AAA 81.05% Top Securities Holdings / Portfolio
Name Holding Value Quantity LIC Housing Finance Ltd
Debentures | -4% ₹757 Cr 75,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹613 Cr 60,500 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹603 Cr 600 6.48% Govt Stock 2035
Sovereign Bonds | -3% ₹595 Cr 60,000,750
↑ 59,949,150 Vedanta Limited
Debentures | -3% ₹588 Cr 58,500
↑ 7,500 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹528 Cr 525 6.82% Govt Stock 2033
Sovereign Bonds | -2% ₹497 Cr 48,109,040
↓ -62,500 7.1% Govt Stock 2034
Sovereign Bonds | -2% ₹425 Cr 41,358,430 6.54% Govt Stock 2034
Sovereign Bonds | -2% ₹408 Cr 40,110,060
↓ -8,571,420 6.22% Govt Stock 2028
Sovereign Bonds | -2% ₹331 Cr 32,821,800 3. Axis Short Term Fund
Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (06 Feb 26) ₹31.9692 ↓ -0.03 (-0.11 %) Net Assets (Cr) ₹12,708 on 31 Dec 25 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.88 Sharpe Ratio 1.41 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.04% Effective Maturity 2 Years 10 Months 2 Days Modified Duration 2 Years 3 Months 14 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,387 31 Jan 23 ₹10,793 31 Jan 24 ₹11,543 31 Jan 25 ₹12,469 31 Jan 26 ₹13,389 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Feb 26 Duration Returns 1 Month 0.2% 3 Month 0.8% 6 Month 2.4% 1 Year 7.3% 3 Year 7.5% 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 13.16 Yr. Aditya Pagaria 3 Jul 23 2.5 Yr. Data below for Axis Short Term Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Cash 10.98% Debt 88.77% Other 0.25% Debt Sector Allocation
Sector Value Corporate 69.02% Government 25.06% Cash Equivalent 5.68% Credit Quality
Rating Value AA 14.55% AAA 85.45% Top Securities Holdings / Portfolio
Name Holding Value Quantity 6.28% Govt Stock 2032
Sovereign Bonds | -4% ₹467 Cr 47,385,300
↑ 4,500,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹405 Cr 40,000
↑ 2,500 Power Finance Corporation Limited
Debentures | -2% ₹248 Cr 25,000 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹214 Cr 213 7.18% Govt Stock 2033
Sovereign Bonds | -2% ₹196 Cr 19,000,000
↓ -4,500,000 Indigrid Infrastructure Trust
Debentures | -2% ₹192 Cr 19,000 National Bank For Agriculture And Rural Development
Debentures | -1% ₹182 Cr 18,000 7.26% Govt Stock 2032
Sovereign Bonds | -1% ₹181 Cr 17,500,000
↑ 17,500,000 Bharti Telecom Limited
Debentures | -1% ₹179 Cr 18,000
↑ 18,000 Jubilant Beverages Limited
Debentures | -1% ₹169 Cr 15,750 4. Nippon India Short Term Fund
Nippon India Short Term Fund
Growth Launch Date 18 Dec 02 NAV (06 Feb 26) ₹54.5118 ↓ -0.08 (-0.15 %) Net Assets (Cr) ₹9,723 on 31 Dec 25 Category Debt - Short term Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.94 Sharpe Ratio 1.15 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 0% Effective Maturity Modified Duration Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,479 31 Jan 23 ₹10,833 31 Jan 24 ₹11,597 31 Jan 25 ₹12,526 31 Jan 26 ₹13,429 Returns for Nippon India Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Feb 26 Duration Returns 1 Month 0.2% 3 Month 0.6% 6 Month 2.2% 1 Year 7.1% 3 Year 7.4% 5 Year 6.2% 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 5.92 Yr. Kinjal Desai 25 May 18 7.61 Yr. Sushil Budhia 31 Mar 21 4.76 Yr. Lokesh Maru 5 Sep 25 0.32 Yr. Divya Sharma 5 Sep 25 0.32 Yr. Data below for Nippon India Short Term Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Cash 6.96% Debt 92.8% Other 0.24% Debt Sector Allocation
Sector Value Corporate 54.24% Government 41.49% Cash Equivalent 4.03% Credit Quality
Rating Value AA 14.61% AAA 85.39% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2030
Sovereign Bonds | -5% ₹514 Cr 49,500,000
↑ 2,500,000 7.02% Govt Stock 2031
Sovereign Bonds | -4% ₹379 Cr 37,000,000 7.17% Govt Stock 2030
Sovereign Bonds | -3% ₹299 Cr 29,000,000 07.17 KA Sdl 2030
Sovereign Bonds | -3% ₹253 Cr 25,000,000 07.93 Up SDL 2030
Sovereign Bonds | -2% ₹233 Cr 22,500,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -2% ₹226 Cr 225 7.17 Madhya Pradesh SDL 2031
Sovereign Bonds | -2% ₹205 Cr 20,500,000 Aditya Birla Housing Finance Limited
Debentures | -2% ₹203 Cr 20,000 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹201 Cr 200 Small Industries Development Bank Of India
Debentures | -2% ₹169 Cr 16,500 5. Aditya Birla Sun Life Short Term Opportunities Fund
Aditya Birla Sun Life Short Term Opportunities Fund
Growth Launch Date 9 May 03 NAV (06 Feb 26) ₹49.1238 ↓ -0.08 (-0.15 %) Net Assets (Cr) ₹10,575 on 31 Dec 25 Category Debt - Short term Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderate Expense Ratio 1 Sharpe Ratio 1.14 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load 0-90 Days (0.5%),90 Days and above(NIL) Yield to Maturity 7.22% Effective Maturity 3 Years 6 Months 25 Days Modified Duration 2 Years 9 Months 18 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 21 ₹10,000 31 Jan 22 ₹10,419 31 Jan 23 ₹10,875 31 Jan 24 ₹11,645 31 Jan 25 ₹12,570 31 Jan 26 ₹13,447 Returns for Aditya Birla Sun Life Short Term Opportunities Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Feb 26 Duration Returns 1 Month 0.2% 3 Month 0.7% 6 Month 2.3% 1 Year 7% 3 Year 7.4% 5 Year 6.2% 10 Year 15 Year Since launch 7.2% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.7% 2023 7.9% 2022 6.9% 2021 4.2% 2020 3.8% 2019 11.1% 2018 8.5% 2017 6.5% 2016 5.6% 2015 11.3% Fund Manager information for Aditya Birla Sun Life Short Term Opportunities Fund
Name Since Tenure Kaustubh Gupta 11 Sep 14 11.31 Yr. Mohit Sharma 6 Aug 20 5.41 Yr. Data below for Aditya Birla Sun Life Short Term Opportunities Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Cash 2.29% Debt 97.44% Other 0.28% Debt Sector Allocation
Sector Value Corporate 63.03% Government 34.4% Cash Equivalent 2.29% Credit Quality
Rating Value AA 14.8% AAA 85.2% Top Securities Holdings / Portfolio
Name Holding Value Quantity Bharti Telecom Limited
Debentures | -5% ₹509 Cr 51,000 Rec Limited
Debentures | -4% ₹456 Cr 45,000 Indian Railway Finance Corporation Limited
Debentures | -4% ₹420 Cr 42,500 National Bank For Agriculture And Rural Development
Debentures | -4% ₹405 Cr 40,000 Tata Capital Housing Finance Limited
Debentures | -3% ₹349 Cr 35,000 Jtpm Metal TRaders Limited
Debentures | -3% ₹297 Cr 28,773 7.1% Govt Stock 2034
Sovereign Bonds | -3% ₹292 Cr 28,406,400 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹281 Cr 280 7.18% Govt Stock 2033
Sovereign Bonds | -3% ₹273 Cr 26,500,000 Power Finance Corporation Limited
Debentures | -3% ₹271 Cr 27,500
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