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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. ICICI Prudential Short Term Fund is a Debt - Short term Bond fund was launched on 25 Oct 01. It is a fund with Moderate risk and has given a 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. HDFC Short Term Debt Fund is a Debt - Short term Bond fund was launched on 25 Jun 10. It is a fund with Moderately Low risk and has given a 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. Axis Short Term Fund is a Debt - Short term Bond fund was launched on 22 Jan 10. It is a fund with Moderately Low risk and has given a 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. Nippon India Short Term Fund is a Debt - Short term Bond fund was launched on 18 Dec 02. It is a fund with Moderately Low risk and has given a 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. IDFC Bond Fund Short Term Plan is a Debt - Short term Bond fund was launched on 14 Dec 00. It is a fund with Moderately Low risk and has given a Below is the key information for IDFC Bond Fund Short Term Plan 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 ₹60.6474
↑ 0.03 ₹21,284 2.1 5.1 9 8 7.8 7.08% 2Y 4M 17D 4Y 18D HDFC Short Term Debt Fund Growth ₹32.2822
↑ 0.01 ₹17,019 2.1 5.1 9.2 7.9 8.3 6.87% 2Y 9M 4Y 1M 2D Axis Short Term Fund Growth ₹31.1775
↑ 0.01 ₹9,494 2.2 5.3 9.4 7.7 8 6.83% 2Y 7M 6D 3Y 2M 23D Nippon India Short Term Fund Growth ₹53.2575
↑ 0.03 ₹7,058 2.1 5.3 9.4 7.6 8 6.87% 2Y 8M 16D 3Y 5M 26D IDFC Bond Fund Short Term Plan Growth ₹57.6699
↑ 0.04 ₹10,697 2.1 5.3 9.2 7.6 7.8 6.57% 2Y 10M 10D 3Y 7M 10D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 18 Jul 25 Assets >= 100 Crore & Sorted on 3 Year CAGR Return.
1. ICICI Prudential Short Term Fund
CAGR/Annualized return of 7.9% since its launch. Ranked 11 in Short term Bond category. Return for 2024 was 7.8% , 2023 was 7.4% and 2022 was 4.7% . ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (18 Jul 25) ₹60.6474 ↑ 0.03 (0.05 %) Net Assets (Cr) ₹21,284 on 31 May 25 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.11 Sharpe Ratio 2.39 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 7.08% Effective Maturity 4 Years 18 Days Modified Duration 2 Years 4 Months 17 Days Growth of 10,000 investment over the years.
Date Value 30 Jun 20 ₹10,000 30 Jun 21 ₹10,613 30 Jun 22 ₹10,919 30 Jun 23 ₹11,771 30 Jun 24 ₹12,637 30 Jun 25 ₹13,778 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jul 25 Duration Returns 1 Month 0.6% 3 Month 2.1% 6 Month 5.1% 1 Year 9% 3 Year 8% 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 15.54 Yr. Nikhil Kabra 29 Dec 20 4.42 Yr. Data below for ICICI Prudential Short Term Fund as on 31 May 25
Asset Allocation
Asset Class Value Cash 4.68% Debt 95.07% Other 0.26% Debt Sector Allocation
Sector Value Corporate 63.47% Government 32.04% Cash Equivalent 4.23% Credit Quality
Rating Value AA 17.9% AAA 82.1% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.1% Govt Stock 2034
Sovereign Bonds | -6% ₹1,374 Cr 130,385,280
↓ -21,169,900 7.81% Govt Stock 2033
Sovereign Bonds | -6% ₹1,256 Cr 120,951,240
↓ -550,030 6.99% Govt Stock 2034
Sovereign Bonds | -3% ₹710 Cr 69,574,740 LIC Housing Finance Ltd
Debentures | -3% ₹615 Cr 60,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹556 Cr 55,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹516 Cr 50,500 6.79% Govt Stock 2034
Sovereign Bonds | -2% ₹433 Cr 41,814,710
↓ -57,090,690 Small Industries Development Bank Of India
Debentures | -2% ₹374 Cr 37,000 Small Industries Development Bank Of India
Debentures | -2% ₹368 Cr 36,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹353 Cr 35,000 2. HDFC Short Term Debt Fund
CAGR/Annualized return of 8.1% since its launch. Ranked 30 in Short term Bond category. Return for 2024 was 8.3% , 2023 was 7.1% and 2022 was 3.5% . HDFC Short Term Debt Fund
Growth Launch Date 25 Jun 10 NAV (18 Jul 25) ₹32.2822 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹17,019 on 15 Jun 25 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.71 Sharpe Ratio 2.57 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 6.87% Effective Maturity 4 Years 1 Month 2 Days Modified Duration 2 Years 9 Months Growth of 10,000 investment over the years.
Date Value 30 Jun 20 ₹10,000 30 Jun 21 ₹10,625 30 Jun 22 ₹10,909 30 Jun 23 ₹11,666 30 Jun 24 ₹12,527 30 Jun 25 ₹13,692 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jul 25 Duration Returns 1 Month 0.5% 3 Month 2.1% 6 Month 5.1% 1 Year 9.2% 3 Year 7.9% 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 14.95 Yr. Dhruv Muchhal 22 Jun 23 1.95 Yr. Data below for HDFC Short Term Debt Fund as on 15 Jun 25
Asset Allocation
Asset Class Value Cash 8.33% Debt 91.43% Other 0.24% Debt Sector Allocation
Sector Value Corporate 60.57% Government 31.99% Cash Equivalent 7.2% Credit Quality
Rating Value AA 10.96% AAA 89.04% 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 | -3% ₹445 Cr 43,500 7.11% Govt Stock 2028
Sovereign Bonds | -2% ₹420 Cr 41,500,000 Jubilant Beverages Limited
Debentures | -2% ₹389 Cr 38,500
↑ 38,500 7.26% Govt Stock 2032
Sovereign Bonds | -2% ₹363 Cr 34,500,000 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹333 Cr 32,500 7.1% Govt Stock 2034
Sovereign Bonds | -2% ₹288 Cr 27,500,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹257 Cr 25,000
↑ 25,000 Bajaj Housing Finance Limited
Debentures | -1% ₹255 Cr 25,000 Pipeline Infrastructure Limited
Debentures | -1% ₹254 Cr 24,500 3. Axis Short Term Fund
CAGR/Annualized return of 7.6% since its launch. Ranked 26 in Short term Bond category. Return for 2024 was 8% , 2023 was 6.8% and 2022 was 3.7% . Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (18 Jul 25) ₹31.1775 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹9,494 on 31 May 25 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.92 Sharpe Ratio 2.54 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.83% Effective Maturity 3 Years 2 Months 23 Days Modified Duration 2 Years 7 Months 6 Days Growth of 10,000 investment over the years.
Date Value 30 Jun 20 ₹10,000 30 Jun 21 ₹10,525 30 Jun 22 ₹10,821 30 Jun 23 ₹11,543 30 Jun 24 ₹12,337 30 Jun 25 ₹13,504 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jul 25 Duration Returns 1 Month 0.6% 3 Month 2.2% 6 Month 5.3% 1 Year 9.4% 3 Year 7.7% 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 12.58 Yr. Aditya Pagaria 3 Jul 23 1.91 Yr. Data below for Axis Short Term Fund as on 31 May 25
Asset Allocation
Asset Class Value Cash 14.37% Debt 85.41% Other 0.22% Debt Sector Allocation
Sector Value Corporate 62.34% Government 29.31% Cash Equivalent 8.13% Credit Quality
Rating Value AA 15.31% AAA 84.69% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -7% ₹824 Cr 78,500,000
↓ -19,500,000 National Bank For Agriculture And Rural Development
Debentures | -4% ₹470 Cr 46,000
↑ 10,500 National Bank For Agriculture And Rural Development
Debentures | -3% ₹316 Cr 31,000
↑ 13,500 Power Finance Corporation Limited
Debentures | -3% ₹299 Cr 30,000
↑ 20,000 6.79% Govt Stock 2031
Sovereign Bonds | -2% ₹257 Cr 25,000,000
↑ 15,500,000 Rec Limited
Debentures | -2% ₹241 Cr 23,604
↑ 13,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹204 Cr 20,000 Rec Limited
Debentures | -2% ₹204 Cr 20,000
↑ 20,000 Indigrid Infrastructure Trust
Debentures | -2% ₹193 Cr 19,000 Small Industries Development Bank Of India
Debentures | -1% ₹153 Cr 15,000 4. Nippon India Short Term Fund
CAGR/Annualized return of 7.7% since its launch. Ranked 17 in Short term Bond category. Return for 2024 was 8% , 2023 was 6.8% and 2022 was 3.2% . Nippon India Short Term Fund
Growth Launch Date 18 Dec 02 NAV (18 Jul 25) ₹53.2575 ↑ 0.03 (0.05 %) Net Assets (Cr) ₹7,058 on 31 May 25 Category Debt - Short term Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.96 Sharpe Ratio 2.59 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 6.87% Effective Maturity 3 Years 5 Months 26 Days Modified Duration 2 Years 8 Months 16 Days Growth of 10,000 investment over the years.
Date Value 30 Jun 20 ₹10,000 30 Jun 21 ₹10,604 30 Jun 22 ₹10,879 30 Jun 23 ₹11,594 30 Jun 24 ₹12,396 30 Jun 25 ₹13,570 Returns for Nippon India Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jul 25 Duration Returns 1 Month 0.5% 3 Month 2.1% 6 Month 5.3% 1 Year 9.4% 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 5.33 Yr. Kinjal Desai 25 May 18 7.02 Yr. Sushil Budhia 31 Mar 21 4.17 Yr. Data below for Nippon India Short Term Fund as on 31 May 25
Asset Allocation
Asset Class Value Cash 5.61% Debt 94.14% Other 0.25% Debt Sector Allocation
Sector Value Corporate 61.49% Government 34.73% Cash Equivalent 3.54% Credit Quality
Rating Value AA 9.89% AAA 90.11% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2030
Sovereign Bonds | -6% ₹506 Cr 48,000,000
↓ -2,500,000 7.17% Govt Stock 2030
Sovereign Bonds | -6% ₹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
↑ 8,500 Aditya Birla Housing Finance Limited
Debentures | -2% ₹203 Cr 20,000 Bajaj Housing Finance Limited
Debentures | -2% ₹175 Cr 17,500
↑ 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% ₹167 Cr 16,500 7.1% Govt Stock 2029
Sovereign Bonds | -2% ₹166 Cr 16,000,000 5. IDFC Bond Fund Short Term Plan
CAGR/Annualized return of 7.4% since its launch. Ranked 47 in Short term Bond category. Return for 2024 was 7.8% , 2023 was 6.9% and 2022 was 2.8% . IDFC Bond Fund Short Term Plan
Growth Launch Date 14 Dec 00 NAV (18 Jul 25) ₹57.6699 ↑ 0.04 (0.07 %) Net Assets (Cr) ₹10,697 on 31 May 25 Category Debt - Short term Bond AMC IDFC Asset Management Company Limited Rating ☆☆ Risk Moderately Low Expense Ratio 0.77 Sharpe Ratio 2.45 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.57% Effective Maturity 3 Years 7 Months 10 Days Modified Duration 2 Years 10 Months 10 Days Growth of 10,000 investment over the years.
Date Value 30 Jun 20 ₹10,000 30 Jun 21 ₹10,458 30 Jun 22 ₹10,665 30 Jun 23 ₹11,365 30 Jun 24 ₹12,159 30 Jun 25 ₹13,288 Returns for IDFC Bond Fund Short Term Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jul 25 Duration Returns 1 Month 0.6% 3 Month 2.1% 6 Month 5.3% 1 Year 9.2% 3 Year 7.6% 5 Year 5.8% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2024 7.8% 2023 6.9% 2022 2.8% 2021 3.4% 2020 9.7% 2019 9.7% 2018 6.5% 2017 5.9% 2016 8.8% 2015 8.1% Fund Manager information for IDFC Bond Fund Short Term Plan
Name Since Tenure Suyash Choudhary 11 Mar 11 14.24 Yr. Brijesh Shah 10 Jun 24 0.98 Yr. Data below for IDFC Bond Fund Short Term Plan as on 31 May 25
Asset Allocation
Asset Class Value Cash 29.41% Debt 70.34% Other 0.25% Debt Sector Allocation
Sector Value Government 47.82% Corporate 41.2% Cash Equivalent 10.73% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Govt Stock 2033
Sovereign Bonds | -20% ₹2,116 Cr 201,600,000
↑ 199,900,000 7.26% Govt Stock 2033
Sovereign Bonds | -15% ₹1,646 Cr 156,200,000
↓ -30,200,000 Bajaj Housing Finance Limited
Debentures | -5% ₹482 Cr 47,500,000 Tata Capital Limited
Debentures | -4% ₹445 Cr 44,100,000 7.26% Govt Stock 2032
Sovereign Bonds | -3% ₹363 Cr 34,500,000
↑ 34,500,000 Bajaj Finance Limited
Debentures | -3% ₹291 Cr 29,000,000 LIC Housing Finance Ltd
Debentures | -3% ₹274 Cr 27,000,000 Tata Capital Housing Finance Limited
Debentures | -2% ₹253 Cr 25,000,000 LIC Housing Finance Ltd
Debentures | -2% ₹249 Cr 24,500,000 Bajaj Housing Finance Limited
Debentures | -2% ₹177 Cr 17,500,000
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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