+91-22-48913909Short Term Debt Funds or Short Duration Funds
As the name suggests, Short term debt funds, also known as short duration funds, are typically Debt Mutual Funds that invest money for a short duration, usually less than 3 years. Also known as Short Term Income Funds, Short term debt funds invest in debt instruments and money market instruments that include Bank papers (also called Certificate of Deposits), government papers(G-secs) and commercial papers (CPs). This Mutual Fund scheme is suitable for investors who prioritise capital preservation, but also wish to invest for a predominantly longer period to earn good returns over the long term (between 1-3 years). Investors who are willing to invest for a short duration of 1-3 years can look at short term bond funds. Short term debt products can benefit from the interest Accruals in the debt Portfolio and from the tactical exposure to higher duration debt by the respective fund manager.
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Features of Short Duration (Short-Term) Debt Funds
Some of the prominent features of short term funds are:
Liquidity
The short term debt funds are highly liquid as the maturity period is short and the investments avenues allow liquidity. Usually, there are no entry and exit loads charged on these funds. However, some short term debt funds do charge an exit load if the exit is made in a few months. So, the investors are suggested to invest wisely considering all the parameters.
Returns
When it comes to investing in Mutual Funds, returns are what people actually look for. However, this should not be the only parameter while choosing a best short term debt fund to invest. In the recent reports, RBI stated that the investors would earn better returns by Investing in short to mid-term funds that invest in instruments having a maturity between of one to five years. Generally, the fund managers handling such funds prefer investing in high credit rating securities. Thus, ensuring the least possibility of default by the issuers providing safety to investors’ capital. Currently, short term debt funds with a maturity period of one-three years give annualised returns of 9-10% p.a. Investors should not just chase returns, but also look at the credit quality of the portfolio. If you are a conservative investor then it makes sense to ensure that give away some returns for the extra safety.
Interest Rate Risk
Given the short term nature of these funds, the returns are not much affected by inflation and there is a lesser interest rate risk. Typically, short term debt funds generate income from the interest earned on short to medium term Bonds. This accrual income, meaning the accumulated interest, gets added to the Net Asset Value and becomes your final return. Since you know these funds provide steady income, therefore, the returns are less volatile as compared to other long-term income funds. Some short term funds do carry a bit of interest rate risk, this can be measured by a parameter called duration of the portfolio. One can even look at the average maturity of the portfolio. Both these parameters are available on the fact sheets of the scheme. Just remember a simple rule, higher the duration or maturity higher the interest rate risk! If interest rates fall, then this is positive, however, if rates rise, then the returns would be negatively impacted.
Investment Horizons
Short term debt funds do not invest in instruments that have a very long maturity as they try to maintain lower interest rate risk and offer better tax-adjusted returns. Since these funds provide stable returns in a time period of one to three years, investors should try to match the investment timeline with the average maturity of the fund. The instruments they invest in include money market instruments like bonds, commercial paper and certificate of deposits etc.
Active Management Required
Being a short term investment, these funds do not require heavy active management by the fund manager. Once the portions of the portfolio are allotted, the need of actively managing (buying and selling units) the investments is lower, having said this the fund manager needs to ensure that interest rate views are incorporated and he/she is vigilant on the credit quality of the portfolio as well as new opportunities. Their aim to provide steady returns is achieved by ensuring regular active management of the fund.
Dividend Payout
Short term debt funds also offer an option of dividend payout. With this option, the investors can get dividends at regular interval mostly monthly and fortnightly. However, the dividends paid by these funds attract a DDT (Dividend Distribution Tax) of 25% for individual investors.
Benefits of Short Duration (Short-Term) Funds
- The short term bond funds have a shorter maturity so they generally offer safe and stable returns.
- The fluctuations in interest rates of the debt market have a marginal to the insignificant effect on the returns of short term debt funds.
- Being sensitive to changing the interest rate, short term bond funds usually perform better than other funds who are affected by the market fluctuations.
- The liquidity of these funds is high. So, the investors can easily withdraw their investment in case of emergencies.
- Typically, most of the best short term debt funds do not charge any fee for withdrawal. So, there is minimal to no exit load.
- Short term debt funds are tax efficient. The tax charged on the interest of these funds is much less than that of fixed bank deposits.
Fund Selection Methodology used to find 5 funds
Top Short Duration (Short-Term) Debt Funds 2026
Some of the best short term debt funds include-
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Sundaram Short Term Debt Fund Growth ₹36.3802
↑ 0.01 ₹362 0.8 11.4 12.8 5.3 4.52% 1Y 2M 13D 1Y 7M 3D ICICI Prudential Short Term Fund Growth ₹62.9332
↑ 0.12 ₹21,510 1.4 2.4 6.1 7.5 8 7.41% 2Y 8M 23D 4Y 6M 11D Axis Short Term Fund Growth ₹32.2915
↑ 0.06 ₹11,860 1.3 2.2 6 7.3 8.1 7.22% 2Y 2M 1D 2Y 9M 7D HDFC Short Term Debt Fund Growth ₹33.3993
↑ 0.06 ₹17,271 1.2 2.2 5.8 7.4 7.8 7.25% 2Y 4M 2D 3Y 5M 8D Nippon India Short Term Fund Growth ₹55.0161
↑ 0.10 ₹8,367 1.2 2 5.8 7.2 7.9 7.28% 2Y 5M 23D 3Y Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Dec 21 Research Highlights & Commentary of 5 Funds showcased
Commentary Sundaram Short Term Debt Fund ICICI Prudential Short Term Fund Axis Short Term Fund HDFC Short Term Debt Fund Nippon India Short Term Fund Point 1 Bottom quartile AUM (₹362 Cr). Highest AUM (₹21,510 Cr). Lower mid AUM (₹11,860 Cr). Upper mid AUM (₹17,271 Cr). Bottom quartile AUM (₹8,367 Cr). Point 2 Established history (23+ yrs). Oldest track record among peers (24 yrs). Established history (16+ yrs). Established history (15+ yrs). Established history (23+ yrs). Point 3 Rating: 2★ (bottom quartile). Top rated. Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Rating: 4★ (upper mid). 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: 12.83% (top quartile). 1Y return: 6.08% (upper mid). 1Y return: 6.01% (lower mid). 1Y return: 5.83% (bottom quartile). 1Y return: 5.77% (bottom quartile). Point 6 1M return: 0.20% (bottom quartile). 1M return: 0.55% (top quartile). 1M return: 0.55% (upper mid). 1M return: 0.39% (lower mid). 1M return: 0.34% (bottom quartile). Point 7 Sharpe: 0.98 (bottom quartile). Sharpe: 1.37 (top quartile). Sharpe: 1.22 (upper mid). Sharpe: 1.08 (lower mid). Sharpe: 1.03 (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): 4.52% (bottom quartile). Yield to maturity (debt): 7.41% (top quartile). Yield to maturity (debt): 7.22% (bottom quartile). Yield to maturity (debt): 7.25% (lower mid). Yield to maturity (debt): 7.28% (upper mid). Point 10 Modified duration: 1.20 yrs (top quartile). Modified duration: 2.73 yrs (bottom quartile). Modified duration: 2.17 yrs (upper mid). Modified duration: 2.34 yrs (lower mid). Modified duration: 2.48 yrs (bottom quartile). Sundaram Short Term Debt Fund
ICICI Prudential Short Term Fund
Axis Short Term Fund
HDFC Short Term Debt Fund
Nippon India Short Term Fund
*Above is list of best Short Duration funds having AUM/Net Assets above 100 Crore. Sorted on Last 1 Year Return.
(Erstwhile Sundaram Select Debt Short Term Asset Fund) To earn regular income by investing primarily in fixed income
securities, which may be paid as dividend or reinvested at
the option of the investor. A secondary objective is to
attempt to keep the value of its units reasonably stable. Below is the key information for Sundaram 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 (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 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 1. Sundaram Short Term Debt Fund
Sundaram Short Term Debt Fund
Growth Launch Date 5 Sep 02 NAV (31 Dec 21) ₹36.3802 ↑ 0.01 (0.03 %) Net Assets (Cr) ₹362 on 30 Nov 21 Category Debt - Short term Bond AMC Sundaram Asset Management Company Ltd Rating ☆☆ Risk Moderately Low Expense Ratio 0.96 Sharpe Ratio 0.98 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 250 Exit Load NIL Yield to Maturity 4.52% Effective Maturity 1 Year 7 Months 3 Days Modified Duration 1 Year 2 Months 13 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 Returns for Sundaram Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21 Duration Returns 1 Month 0.2% 3 Month 0.8% 6 Month 11.4% 1 Year 12.8% 3 Year 5.3% 5 Year 5.6% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Fund Manager information for Sundaram Short Term Debt Fund
Name Since Tenure Data below for Sundaram Short Term Debt Fund as on 30 Nov 21
Asset Allocation
Asset Class Value Debt Sector Allocation
Sector Value Credit Quality
Rating Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 2. ICICI Prudential Short Term Fund
ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (15 Apr 26) ₹62.9332 ↑ 0.12 (0.18 %) Net Assets (Cr) ₹21,510 on 15 Mar 26 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.04 Sharpe Ratio 1.37 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 7.41% Effective Maturity 4 Years 6 Months 11 Days Modified Duration 2 Years 8 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,420 31 Mar 23 ₹11,017 31 Mar 24 ₹11,869 31 Mar 25 ₹12,827 31 Mar 26 ₹13,624 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21 Duration Returns 1 Month 0.6% 3 Month 1.4% 6 Month 2.4% 1 Year 6.1% 3 Year 7.5% 5 Year 6.5% 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 16.38 Yr. Nikhil Kabra 29 Dec 20 5.26 Yr. Data below for ICICI Prudential Short Term Fund as on 15 Mar 26
Asset Allocation
Asset Class Value Cash 16.27% Debt 83.43% Other 0.3% Debt Sector Allocation
Sector Value Corporate 69.38% Government 20.75% Cash Equivalent 9.56% Credit Quality
Rating Value AA 18.76% AAA 81.24% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹895 Cr 89,500 LIC Housing Finance Ltd
Debentures | -4% ₹748 Cr 75,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹590 Cr 600 Vedanta Limited
Debentures | -3% ₹588 Cr 58,500 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹517 Cr 525 Small Industries Development Bank Of India
Debentures | -2% ₹441 Cr 44,700 Summit Digitel Infrastructure Limited
Debentures | -1% ₹284 Cr 28,300 Muthoot Finance Limited
Debentures | -1% ₹281 Cr 28,000 Small Industries Development Bank Of India
Debentures | -1% ₹260 Cr 26,000 National Bank For Agriculture And Rural Development
Debentures | -1% ₹260 Cr 26,000
↑ 5,000 3. Axis Short Term Fund
Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (15 Apr 26) ₹32.2915 ↑ 0.06 (0.17 %) Net Assets (Cr) ₹11,860 on 28 Feb 26 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.88 Sharpe Ratio 1.22 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.22% Effective Maturity 2 Years 9 Months 7 Days Modified Duration 2 Years 2 Months 1 Day Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,434 31 Mar 23 ₹10,885 31 Mar 24 ₹11,674 31 Mar 25 ₹12,639 31 Mar 26 ₹13,415 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21 Duration Returns 1 Month 0.5% 3 Month 1.3% 6 Month 2.2% 1 Year 6% 3 Year 7.3% 5 Year 6.2% 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 13.41 Yr. Aditya Pagaria 3 Jul 23 2.75 Yr. Data below for Axis Short Term Fund as on 28 Feb 26
Asset Allocation
Asset Class Value Cash 9.68% Debt 89.9% Other 0.43% Debt Sector Allocation
Sector Value Corporate 74.24% Government 18.65% Cash Equivalent 6.69% Credit Quality
Rating Value AA 14.87% AAA 85.13% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹299 Cr 30,000
↓ -10,000 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -3% ₹209 Cr 213 Power Finance Corporation Limited
Debentures | -2% ₹196 Cr 20,000
↓ -5,000 Indigrid Infrastructure Trust
Debentures | -2% ₹191 Cr 19,000 Jubilant Beverages Limited
Debentures | -2% ₹170 Cr 15,750 Small Industries Development Bank Of India
Debentures | -2% ₹150 Cr 15,000 National Bank For Agriculture & Rural Development
Debentures | -2% ₹148 Cr 15,000 Power Finance Corporation Limited
Debentures | -2% ₹148 Cr 15,000 Bharti Telecom Limited
Debentures | -2% ₹128 Cr 13,000 Embassy Office Parks Reit
Debentures | -2% ₹125 Cr 12,500 4. HDFC Short Term Debt Fund
HDFC Short Term Debt Fund
Growth Launch Date 25 Jun 10 NAV (15 Apr 26) ₹33.3993 ↑ 0.06 (0.17 %) Net Assets (Cr) ₹17,271 on 28 Feb 26 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.69 Sharpe Ratio 1.08 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load NIL Yield to Maturity 7.25% Effective Maturity 3 Years 5 Months 8 Days Modified Duration 2 Years 4 Months 2 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,458 31 Mar 23 ₹10,918 31 Mar 24 ₹11,758 31 Mar 25 ₹12,744 31 Mar 26 ₹13,519 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21 Duration Returns 1 Month 0.4% 3 Month 1.2% 6 Month 2.2% 1 Year 5.8% 3 Year 7.4% 5 Year 6.3% 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 15.78 Yr. Dhruv Muchhal 22 Jun 23 2.78 Yr. Data below for HDFC Short Term Debt Fund as on 28 Feb 26
Asset Allocation
Asset Class Value Cash 4.61% Debt 95.07% Other 0.32% Debt Sector Allocation
Sector Value Corporate 72.09% Government 23.95% Cash Equivalent 3.65% Credit Quality
Rating Value AA 13.43% AAA 86.57% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.18% Gs 2033
Sovereign Bonds | -3% ₹515 Cr 50,000,000 Aditya Birla Renewables Limited
Debentures | -3% ₹437 Cr 43,500 Jubilant Beverages Limited
Debentures | -3% ₹416 Cr 38,500 Jtpm Metal TRaders Limited
Debentures | -2% ₹374 Cr 36,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -2% ₹354 Cr 350 Jamnagar Utilities & Power Private Limited
Debentures | -2% ₹353 Cr 35,000 Bajaj Housing Finance Limited
Debentures | -2% ₹252 Cr 25,000 Pipeline Infrastructure Limited
Debentures | -2% ₹249 Cr 24,500 Power Finance Corporation Limited
Debentures | -2% ₹247 Cr 25,000 TATA Communications Limited
Debentures | -2% ₹246 Cr 25,000 5. Nippon India Short Term Fund
Nippon India Short Term Fund
Growth Launch Date 18 Dec 02 NAV (15 Apr 26) ₹55.0161 ↑ 0.10 (0.18 %) Net Assets (Cr) ₹8,367 on 28 Feb 26 Category Debt - Short term Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.94 Sharpe Ratio 1.03 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.28% Effective Maturity 3 Years Modified Duration 2 Years 5 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 Mar 21 ₹10,000 31 Mar 22 ₹10,491 31 Mar 23 ₹10,876 31 Mar 24 ₹11,680 31 Mar 25 ₹12,644 31 Mar 26 ₹13,400 Returns for Nippon India Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21 Duration Returns 1 Month 0.3% 3 Month 1.2% 6 Month 2% 1 Year 5.8% 3 Year 7.2% 5 Year 6.1% 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 6.17 Yr. Kinjal Desai 25 May 18 7.86 Yr. Sushil Budhia 31 Mar 21 5.01 Yr. Amber Singhania 11 Mar 26 0.06 Yr. Data below for Nippon India Short Term Fund as on 28 Feb 26
Asset Allocation
Asset Class Value Cash 8.96% Debt 90.7% Other 0.34% Debt Sector Allocation
Sector Value Corporate 59.09% Government 33.67% Cash Equivalent 6.9% Credit Quality
Rating Value AA 14.73% AAA 85.27% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Gs 2030
Sovereign Bonds | -4% ₹295 Cr 28,500,000
↓ -16,000,000 7.17% Karnataka Sdl 2030
Sovereign Bonds | -3% ₹253 Cr 25,000,000 7.93% Uttarpradesh Sdl 2030
Sovereign Bonds | -3% ₹234 Cr 22,500,000 SHIVSHAKTI SECURITISATION TRUST
Unlisted bonds | -3% ₹224 Cr 225 7.17% Madhyapradesh Sgs 2031
Sovereign Bonds | -3% ₹207 Cr 20,500,000 SIDDHIVINAYAK SECURITISATION TRUST
Unlisted bonds | -2% ₹199 Cr 200 Small Industries Development Bank Of India
Debentures | -2% ₹167 Cr 16,500 KNOWLEDGE REALTY TRUST 7.54%
Debentures | -2% ₹160 Cr 16,000 Export Import Bank Of India
Debentures | -2% ₹151 Cr 15,000 Nuvoco Vistas Corporation Limited
Debentures | -2% ₹143 Cr 14,500
Short Term Debt Fund Taxation
Tax implication on debt funds is computed in the following manner-
Short Term Capital Gains
If the holding period of a debt investment is less than 36 months, then it is classified as a short-term investment and these are taxed as per individual's tax slab.
Long Term Capital Gains
If the holding period of debt investment is more than 36 months, then it is classified as a long-term investment and is taxed at 20% with an indexation benefit.
| Capital Gains | Investment Holding Gains | Taxation |
|---|---|---|
| Short Term Capital Gains | Less than 36 months | As per individual's tax slab |
| Long Term Capital Gains | More than 36 months | 20% with indexation benefits |
Risks Involved with Short Term Mutual Funds
Alike all the financial securities, Short term debt funds have certain flaws as well. Some of the risks accompanying these funds include-
Risk of Rising Inflation
Short term debt funds are ideal having a short term financial goal of one to three years and not for long term. So, the investors who are looking for long term investments should invest in Equity Funds, which offers the benefits of rising inflation while yielding good returns.
Risk of Changing Interest Rates
The change in interest rate in the economy has a little effect on short term debt funds, though the impact is very marginal. As the tenure of duration is short, the impact of interest rate changes in insignificant. However, investors should always look at the duration or maturity of the fund before making any conclusions. A high duration/maturity exposes the Fund to interest rate risk.
Risk of Credit
Usually, short term debt funds invest in instruments that have a high credit rating and have a safe track record. However, there are times when the asset managing company that is managing the fund defaults, the investor has to take the challenge of managing the risk on his own. So, the investors must keep this in mind and invest wisely. Hence, it is always advisable to look a getting into a fund with a good quality portfolio.
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 Sundaram Short Term Debt Fund