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6 Best Ultra Short Term Mutual Funds 2021
Best Ultra short term funds are very short term Mutual Funds that invest in a combination of debt instruments including treasury bills, certificate of deposits, commercial papers and corporate Bonds. Generally, these funds have a residual maturity ranging from 6 months to 1 year.
Ultra Short Bond Funds generally offer good returns with very less market volatility. These funds are for investors who seek to invest money for say a month to a couple of months. Investors who are looking for better returns than Liquid Funds should prefer Investing in Ultra Short Term fund. But before investing in these funds, take a look at the best Ultra Short Term Funds for the financial year 2021-2022.
Why Best Ultra Short Term Funds Over Savings Account?
Conventional investors often restrict themselves from investing in Mutual Funds due to the market risks involved. They prefer Savings Account as they offer good returns with no volatility. Let's look at the illustration below to analyse the returns of both savings account and Ultra Short Funds to understand which is a better investment to choose.
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Illustration:
An investor invests INR 40,00,00 in both Ultra Short Term Funds and savings account with the interest rate 3.5% p.a. and 8% p.a. respectively. See how the returns differ-
| Saving Account | Ultra Short Funds |
|---|---|
| Amount Invested | 40,00,00 |
| Interest Earned (Profit) | 14,000 |
Taxation Breakup (Saving Account) @ 3.5%
| Tax Bracket | Tax | Net Income (Profit) |
|---|---|---|
| 5% | 200 | 13,800 |
| 20% | 800 | 13,200 |
| 30% | 1200 | 12,800 |
Taxation Breakup (Ultra Short Funds) @ 8%
| Tax Bracket | Tax | Net Income (Profit) |
|---|---|---|
| 5% | 3200 | 28,800 |
| 20% | 6400 | 25,600 |
| 30% | 9600 | 22,400 |
The above table clearly portrays the difference in the net income from savings accounts and ultra short term funds. Even the investors falling under the maximum tax bracket of 30% can avail returns of INR 22,400 by investing in ultra short term funds, which is much more than INR 12,800 offered by a savings account.
Top 6 Ultra Short Term Funds for Investments in India FY 21 - 22
To provide a combination of regular income and high liquidity by investing primarily in a mix of short term debt and money market instruments. Franklin India Ultra Short Bond Fund - Super Institutional Plan is a Debt - Ultrashort Bond fund was launched on 18 Dec 07. It is a fund with Moderate risk and has given a Below is the key information for Franklin India Ultra Short Bond Fund - Super Institutional Plan Returns up to 1 year are on (Erstwhile Reliance Liquid Fund - Cash Plan) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Nippon India Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 7 Dec 01. It is a fund with Low risk and has given a Below is the key information for Nippon India Ultra Short Duration Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Regular Income Fund) The fund’s objective is to generate regular income through investments primarily in debt and money market instruments. As a secondary objective, the Scheme also seeks to generate long term capital appreciation from the portion of equity investments under the Scheme. ICICI Prudential Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 3 May 11. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Ultra Short Term Fund Returns up to 1 year are on The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on (Erstwhile UTI - Floating Rate Fund - Short Term Plan) To generate regular income through investment in a portfolio comprising substantially of floating rate debt / money market instruments, fixed rate debt / money market instruments swapped for floating rate returns. The Scheme may also invest a portion of its net assets in fixed rate debt securities and money market instruments .However there can be no assurance that the investment objective of the Scheme will be achieved. The Scheme does not guarantee / indicate any returns. UTI Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 29 Aug 03. It is a fund with Moderately Low risk and has given a Below is the key information for UTI Ultra Short Term Fund Returns up to 1 year are on (Erstwhile SBI Magnum InstaCash Fund) To provide the investors an opportunity to earn returns through investment in
debt & money market securities, while having the benefit of a very high degree of liquidity. SBI Magnum Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 21 May 99. It is a fund with Low risk and has given a Below is the key information for SBI Magnum Ultra Short Duration Fund Returns up to 1 year are on Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹30.109
↑ 0.00 ₹3,785 1.6 3.3 7.7 7.2 4 0% 11M 6D Nippon India Ultra Short Duration Fund Growth ₹3,106.04
↑ 0.36 ₹891 2.3 3.3 5.9 4.4 4.9 5.13% 5M 2D 7M 29D ICICI Prudential Ultra Short Term Fund Growth ₹21.7683
↑ 0.00 ₹9,539 1.2 2.1 5.3 7.1 6.5 4.73% 4M 17D 5M 12D Aditya Birla Sun Life Savings Fund Growth ₹426.653
↑ 0.04 ₹18,188 1.2 1.9 5.1 7.2 7 4.11% 5M 23D 6M 14D UTI Ultra Short Term Fund Growth ₹3,282.07
↑ 0.58 ₹2,328 0.9 1.7 4 4.7 5.3 0% 4M 17D SBI Magnum Ultra Short Duration Fund Growth ₹4,710.61
↑ 0.52 ₹12,342 0.9 1.6 3.9 6.6 5.9 3.56% 4M 6D 4M 28D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 18 Jun 21 500 Crore and sorted on last 1 Year Return.
1. Franklin India Ultra Short Bond Fund - Super Institutional Plan
CAGR/Annualized return of 8.5% since its launch. Return for 2020 was 4% , 2019 was 9.6% and 2018 was 8.7% . Franklin India Ultra Short Bond Fund - Super Institutional Plan
Growth Launch Date 18 Dec 07 NAV (18 Jun 21) ₹30.109 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹3,785 on 30 Apr 21 Category Debt - Ultrashort Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆ Risk Moderate Expense Ratio 0.52 Sharpe Ratio 7.35 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 0% Effective Maturity 11 Months 6 Days Modified Duration Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,938 31 May 18 ₹11,776 31 May 19 ₹12,927 31 May 20 ₹13,467 31 May 21 ₹14,515
Purchase not allowed Returns for Franklin India Ultra Short Bond Fund - Super Institutional Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 0.9% 3 Month 1.6% 6 Month 3.3% 1 Year 7.7% 3 Year 7.2% 5 Year 7.8% 10 Year 15 Year Since launch 8.5% Historical performance (Yearly) on absolute basis
Year Returns 2020 4% 2019 9.6% 2018 8.7% 2017 8.2% 2016 9.7% 2015 9.7% 2014 10% 2013 10% 2012 10.3% 2011 9.4% Fund Manager information for Franklin India Ultra Short Bond Fund - Super Institutional Plan
Name Since Tenure Santosh Kamath 25 Oct 18 2.52 Yr. Pallab Roy 1 Jun 08 12.92 Yr. Data below for Franklin India Ultra Short Bond Fund - Super Institutional Plan as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 40.89% Debt 59.11% Debt Sector Allocation
Sector Value Corporate 59.11% Cash Equivalent 40.89% Credit Quality
Rating Value A 49.06% AA 50.86% AAA 0.07% Top Securities Holdings / Portfolio
Name Holding Value Quantity SBI Overnight Fund Dir Gr
Investment Fund | -20% ₹766 Cr 2,278,672
↓ -1,385,514 JM Financial Credit Solutions Limited
Debentures | -14% ₹535 Cr 5,400 Edelweiss Commodities Services Limited
Debentures | -10% ₹373 Cr 7,500 Edelweiss Commodities Services Limited
Debentures | -10% ₹361 Cr 3,650 Tata Realty and Infrastructure Limited
Debentures | -6% ₹239 Cr 2,000 Clix Capital Services Private Limited
Debentures | -6% ₹235 Cr 2,350 Clix Capital Services Private Limited
Debentures | -5% ₹200 Cr 2,000 PNB Housing Finance Limited
Debentures | -5% ₹192 Cr 1,910 Clix Finance India Private Limited
Debentures | -3% ₹100 Cr 1,000 Clix Capital Services Private Limited
Debentures | -3% ₹100 Cr 1,000 2. Nippon India Ultra Short Duration Fund
CAGR/Annualized return of 6% since its launch. Ranked 62 in Ultrashort Bond category. Return for 2020 was 4.9% , 2019 was 0.9% and 2018 was 7.3% . Nippon India Ultra Short Duration Fund
Growth Launch Date 7 Dec 01 NAV (18 Jun 21) ₹3,106.04 ↑ 0.36 (0.01 %) Net Assets (Cr) ₹891 on 30 Apr 21 Category Debt - Ultrashort Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Low Expense Ratio 1.09 Sharpe Ratio 1.03 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 5.13% Effective Maturity 7 Months 29 Days Modified Duration 5 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,609 31 May 18 ₹11,239 31 May 19 ₹12,036 31 May 20 ₹12,102 31 May 21 ₹12,675 Returns for Nippon India Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 1.4% 3 Month 2.3% 6 Month 3.3% 1 Year 5.9% 3 Year 4.4% 5 Year 5% 10 Year 15 Year Since launch 6% Historical performance (Yearly) on absolute basis
Year Returns 2020 4.9% 2019 0.9% 2018 7.3% 2017 5.8% 2016 6.8% 2015 7.6% 2014 8.4% 2013 8.5% 2012 9.2% 2011 9% Fund Manager information for Nippon India Ultra Short Duration Fund
Name Since Tenure Vivek Sharma 1 Oct 13 7.59 Yr. Kinjal Desai 25 May 18 2.94 Yr. Data below for Nippon India Ultra Short Duration Fund as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 45.34% Debt 54.66% Debt Sector Allocation
Sector Value Corporate 49.03% Cash Equivalent 36.43% Government 14.54% Credit Quality
Rating Value A 5.43% AA 29.06% AAA 65.51% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.35% Govt Stock 2022
Sovereign Bonds | -12% ₹104 Cr 10,000,000 91 DTB 17062021
Sovereign Bonds | -11% ₹100 Cr 10,000,000 Shriram Transport Finance Company Limited
Debentures | -5% ₹45 Cr 450
↑ 450 Bajaj Housing Finance Limited
Debentures | -5% ₹42 Cr 400 Piramal Capital & Housing Finance Limited
Debentures | -5% ₹40 Cr 500
↑ 500 Ahmedabad-Maliya Tollway Limited
Debentures | -4% ₹38 Cr 380 Asirvad Micro Finance Private Limited
Debentures | -4% ₹35 Cr 335 U.P. Power Corporation Limited
Debentures | -4% ₹33 Cr 650 Vivriti Capital Private Limited
Debentures | -3% ₹30 Cr 300
↑ 300 REC Limited
Debentures | -3% ₹26 Cr 250 3. ICICI Prudential Ultra Short Term Fund
CAGR/Annualized return of 8% since its launch. Ranked 27 in Ultrashort Bond category. Return for 2020 was 6.5% , 2019 was 8.4% and 2018 was 7.5% . ICICI Prudential Ultra Short Term Fund
Growth Launch Date 3 May 11 NAV (18 Jun 21) ₹21.7683 ↑ 0.00 (0.01 %) Net Assets (Cr) ₹9,539 on 30 Apr 21 Category Debt - Ultrashort Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆ Risk Moderate Expense Ratio 0.96 Sharpe Ratio 3.22 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Months (0.5%),1 Months and above(NIL) Yield to Maturity 4.73% Effective Maturity 5 Months 12 Days Modified Duration 4 Months 17 Days Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,907 31 May 18 ₹11,622 31 May 19 ₹12,589 31 May 20 ₹13,538 31 May 21 ₹14,293 Returns for ICICI Prudential Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 0.4% 3 Month 1.2% 6 Month 2.1% 1 Year 5.3% 3 Year 7.1% 5 Year 7.4% 10 Year 15 Year Since launch 8% Historical performance (Yearly) on absolute basis
Year Returns 2020 6.5% 2019 8.4% 2018 7.5% 2017 6.9% 2016 9.8% 2015 9.1% 2014 14.8% 2013 3.1% 2012 9.4% 2011 Fund Manager information for ICICI Prudential Ultra Short Term Fund
Name Since Tenure Manish Banthia 15 Nov 16 4.46 Yr. Ritesh Lunawat 15 Jun 17 3.88 Yr. Data below for ICICI Prudential Ultra Short Term Fund as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 49.11% Debt 50.89% Debt Sector Allocation
Sector Value Corporate 53.23% Cash Equivalent 35.61% Government 11.15% Credit Quality
Rating Value A 2.61% AA 42% AAA 55.4% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 DTB 19082021
Sovereign Bonds | -6% ₹619 Cr 62,500,000 REC Limited
Debentures | -3% ₹287 Cr 2,850 Talwandi Sabo Power Limited
Debentures | -2% ₹237 Cr 2,362
↑ 1,692 The Tata Power Company Limited
Debentures | -2% ₹223 Cr 2,084
↑ 2,084 Reliance Ports and Terminals Limited
Debentures | -2% ₹206 Cr 2,019 Manappuram Finance Limited
Debentures | -2% ₹204 Cr 2,000 Shriram Transport Finance Company Limited
Debentures | -2% ₹200 Cr 2,000
↑ 2,000 Embassy Office Parks Reit
Debentures | -2% ₹171 Cr 1,397
↑ 720 8.79% Govt Stock 2021
Sovereign Bonds | -2% ₹154 Cr 15,000,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹152 Cr 1,500 4. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.7% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2020 was 7% , 2019 was 8.5% and 2018 was 7.6% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (18 Jun 21) ₹426.653 ↑ 0.04 (0.01 %) Net Assets (Cr) ₹18,188 on 30 Apr 21 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.39 Sharpe Ratio 2.6 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 4.11% Effective Maturity 6 Months 14 Days Modified Duration 5 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,849 31 May 18 ₹11,574 31 May 19 ₹12,585 31 May 20 ₹13,566 31 May 21 ₹14,316 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 0.3% 3 Month 1.2% 6 Month 1.9% 1 Year 5.1% 3 Year 7.2% 5 Year 7.4% 10 Year 15 Year Since launch 7.7% Historical performance (Yearly) on absolute basis
Year Returns 2020 7% 2019 8.5% 2018 7.6% 2017 7.2% 2016 9.2% 2015 8.9% 2014 9.7% 2013 9.5% 2012 9.7% 2011 9.2% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 11 Oct 14 6.56 Yr. Kaustubh Gupta 15 Jul 11 9.8 Yr. Monika Gandhi 22 Mar 21 0.11 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 39.99% Debt 60.01% Debt Sector Allocation
Sector Value Corporate 49.45% Government 28.2% Cash Equivalent 22.35% Credit Quality
Rating Value AA 9.92% AAA 90.08% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.79% Govt Stock 2021
Sovereign Bonds | -14% ₹2,501 Cr 243,600,000
↑ 47,500,000 Citicorp Finance (India) Limited
Debentures | -3% ₹501 Cr 5,000 364 DTB 07052021
Sovereign Bonds | -3% ₹500 Cr 50,000,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹401 Cr 4,000 8.83% Govt Stock 2023
Sovereign Bonds | -2% ₹334 Cr 30,500,000 REC Limited
Debentures | -2% ₹329 Cr 3,200 Rural Electrification Corporation Limited
Debentures | -2% ₹320 Cr 3,150 IDFC First Bank Limited
Debentures | -1% ₹246 Cr 25,000
↑ 25,000 Muthoot Finance Limited
Debentures | -1% ₹241 Cr 2,350 Housing Development Finance Corporation Limited
Debentures | -1% ₹237 Cr 2,362 5. UTI Ultra Short Term Fund
CAGR/Annualized return of 6.9% since its launch. Ranked 27 in Ultrashort Bond category. Return for 2020 was 5.3% , 2019 was 3.3% and 2018 was 7% . UTI Ultra Short Term Fund
Growth Launch Date 29 Aug 03 NAV (18 Jun 21) ₹3,282.07 ↑ 0.58 (0.02 %) Net Assets (Cr) ₹2,328 on 30 Apr 21 Category Debt - Ultrashort Bond AMC UTI Asset Management Company Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.95 Sharpe Ratio 2.32 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 2,500 Exit Load NIL Yield to Maturity 0% Effective Maturity 4 Months 17 Days Modified Duration Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,812 31 May 18 ₹11,487 31 May 19 ₹12,355 31 May 20 ₹12,667 31 May 21 ₹13,205 Returns for UTI Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 0.3% 3 Month 0.9% 6 Month 1.7% 1 Year 4% 3 Year 4.7% 5 Year 5.7% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2020 5.3% 2019 3.3% 2018 7% 2017 6.6% 2016 8.9% 2015 8.5% 2014 8.8% 2013 9.8% 2012 9% 2011 8.2% Fund Manager information for UTI Ultra Short Term Fund
Name Since Tenure Sudhir Agarwal 1 Jul 15 5.92 Yr. Ritesh Nambiar 1 Jul 15 5.92 Yr. Data below for UTI Ultra Short Term Fund as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 71.08% Debt 28.92% Debt Sector Allocation
Sector Value Cash Equivalent 46.62% Corporate 43.48% Government 9.9% Credit Quality
Rating Value A 3.06% AA 11.81% AAA 85.13% Top Securities Holdings / Portfolio
Name Holding Value Quantity 91 DTB 15072021
Sovereign Bonds | -9% ₹199 Cr 2,000,000,000
↑ 2,000,000,000 Reliance Industries Limited
Debentures | -4% ₹104 Cr 1,000
↑ 500 364 DTB 29072021
Sovereign Bonds | -4% ₹99 Cr 1,000,000,000 6.17% Govt Stock 2021
Sovereign Bonds | -4% ₹96 Cr 950,000,000
↓ -1,350,000,000 Hindalco Industries Limited
Debentures | -3% ₹78 Cr 750
↑ 750 8.20% Govt Stock 2022
Sovereign Bonds | -3% ₹67 Cr 650,000,000
↑ 650,000,000 Avanse Financial Services Limited
Debentures | -3% ₹65 Cr 650 Housing Development Finance Corporation Limited
Debentures | -2% ₹51 Cr 500 Power Finance Corporation Limited
Debentures | -2% ₹51 Cr 500 REC Limited
Debentures | -2% ₹50 Cr 500 6. SBI Magnum Ultra Short Duration Fund
CAGR/Annualized return of 7.3% since its launch. Return for 2020 was 5.9% , 2019 was 8% and 2018 was 7.9% . SBI Magnum Ultra Short Duration Fund
Growth Launch Date 21 May 99 NAV (18 Jun 21) ₹4,710.61 ↑ 0.52 (0.01 %) Net Assets (Cr) ₹12,342 on 30 Apr 21 Category Debt - Ultrashort Bond AMC SBI Funds Management Private Limited Rating ☆☆☆ Risk Low Expense Ratio 0.52 Sharpe Ratio 1.71 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 3.56% Effective Maturity 4 Months 28 Days Modified Duration 4 Months 6 Days Growth of 10,000 investment over the years.
Date Value 31 May 16 ₹10,000 31 May 17 ₹10,697 31 May 18 ₹11,424 31 May 19 ₹12,393 31 May 20 ₹13,319 31 May 21 ₹13,880 Returns for SBI Magnum Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 18 Jun 21 Duration Returns 1 Month 0.3% 3 Month 0.9% 6 Month 1.6% 1 Year 3.9% 3 Year 6.6% 5 Year 6.7% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 2020 5.9% 2019 8% 2018 7.9% 2017 6.6% 2016 7.7% 2015 8.3% 2014 9% 2013 9.3% 2012 9.3% 2011 8.7% Fund Manager information for SBI Magnum Ultra Short Duration Fund
Name Since Tenure Rajeev Radhakrishnan 1 May 10 11.09 Yr. Data below for SBI Magnum Ultra Short Duration Fund as on 30 Apr 21
Asset Allocation
Asset Class Value Cash 63.29% Debt 36.71% Debt Sector Allocation
Sector Value Cash Equivalent 43.49% Corporate 29.96% Government 26.56% Credit Quality
Rating Value AA 3.1% AAA 96.9% Top Securities Holdings / Portfolio
Name Holding Value Quantity Rural Electrification Corporation Limited
Debentures | -5% ₹635 Cr 6,250 8.79% Govt Stock 2021
Sovereign Bonds | -4% ₹513 Cr 50,000,000 8.20% Govt Stock 2022
Sovereign Bonds | -3% ₹414 Cr 40,000,000 Mahindra & Mahindra Financial Services Limited
Debentures | -3% ₹384 Cr 3,000 9.05% M.P. GS 2021
Sovereign Bonds | -2% ₹307 Cr 30,000,000
↑ 30,000,000 05.54 MP SDL 2021
Sovereign Bonds | -2% ₹297 Cr 29,500,000 Reliance Industries Limited
Debentures | -2% ₹269 Cr 2,600
↑ 2,600 Housing Development Finance Corporation Limited
Debentures | -2% ₹234 Cr 2,300 Muthoot Finance Limited
Debentures | -2% ₹229 Cr 2,280,000
↑ 400,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹228 Cr 2,250
Features Of Ultra Short Term Funds
Fund Type: Open-ended
Fund Category: Debt fund
Minimum Amount: INR 5,000 - 10,000
Risk Involved: Low -risk
Redemption: T+1, meaning that if you register the redemption request before 3 PM, you shall get the redemption amount after a day. However, if the redemption request is sent after 3 PM, the redemption request shall be processed day after.
Things to Consider as an Investor
1. Risk
Unlike other debt funds, the ultra-short term funds are somewhat immune to interest rate risks because of the short maturity of their underlying assets. However, as compared to liquid funds, these funds are pretty risky. The investment strategy of the fund manager may introduce credit risk when he incorporates low-credit rated securities in the expectation of an upgrade in future. Moreover, the introduction of government securities may increase the volatility of the fund more than expected.
2. Return
An investor can expect returns of around 7-9% from this fund in a stable interest rate environment. This return is moderately higher than what a liquid fund offers. However, even though these funds are fixed-income havens, they may not offer guaranteed returns. You need to look at Yield to Maturity (ytm) to understand what to expect with the investments at the time of investment.
3. Cost
Ultra short-term funds charge a fee to manage your money called an expense ratio. Till now the Securities and Exchange Board of India (SEBI) had mandated the upper limit of expense ratio to be 2.25% (might change time to time). Considering the overall returns generated by these funds as compared to liquid funds, a long-term holding period and lower expense ratio would help in recovering the money gone out by way of interest rate fluctuations.
4. Investment Horizon
Ultra short-term funds earn from the coupon of short-term instruments. The prices of these securities may change on a day-to-day Basis and have a relatively longer maturity. These are much more volatile than liquid funds and a short time frame may seem inadequate to generate sufficient returns. As compared to liquid funds, you need to hold these funds for comparatively longer horizon owing to a higher average maturity of the underlying securities.
5. Financial Goals
You may use these funds for a variety of purposes. If you need to park money for a period of 3 months to a year, then these funds may come handy. Additionally, you may want these to transfer your funds to a riskier haven like Equity Funds. Put a lump sum in these funds and initiate a Systematic Transfer Plan (STP) to equity funds. You may look at them as an additional haven to be used as an emergency fund. If you need monthly income, then invest a portion of your superannuation portfolio in these and initiate a systematic withdrawal plan (SWP).
6. Taxation
Dividends of Ultra Short Term Funds in India are tax-free in the hands of the investor. The AMC deducts a Dividend Distribution Tax (DDT) on behalf of the investor before it sends the dividend to the investor. If the investor has invested in a growth fund and redeemed his/her investment within 1 year, he/she may have to pay Short Term Capital Gains Tax (STCG).
How to Invest in Ultra Short Term 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
In today’s time, people face financial insecurities every now and then. In such a case, smart investments made in Mutual Funds help. Ultra Short Term funds are one such Smart investment that offers good returns to investors in order to manage financial insecurities. So, invest in the best Ultra Short Term funds today!
The way to wealth is easy, spend less than you earn and INVEST the difference wisely!
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well explained and got to know which one i need to pick it p
Get deep insight of the funds. Better than moneycontrol and valuereserach sort of sites.
Very good information
Presentation is very good