+91-22-62820123
Table of Contents
Short 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.
Talk to our investment specialist
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.
Top Short Duration (Short-Term) Debt Funds 2021
Some of the best short term debt funds include-
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2020 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹36.4194
↑ 0.02 ₹8,302 1.1 3.7 10.9 8.6 11.1 5.13% 2Y 2M 26D 2Y 8M 23D HDFC Short Term Debt Fund Growth ₹24.5206
↑ 0.01 ₹17,928 1.4 3 10.4 9.1 11 5.31% 2Y 7M 9D 3Y 5M 16D ICICI Prudential Short Term Fund Growth ₹45.7108
↑ 0.01 ₹23,696 1.4 3 10.2 8.6 10.6 4.91% 2Y 7D 3Y 22D UTI Short Term Income Fund Growth ₹23.363
↑ 0.01 ₹2,980 0.9 2.3 9.7 3.9 10.5 5.13% 2Y 3M 18D 2Y 9M 14D Axis Short Term Fund Growth ₹23.8114
↑ 0.01 ₹14,992 1.1 2.5 9.5 8.6 10.1 4.83% 2Y 3M 18D 2Y 10M 24D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Jan 21 Short Duration funds having AUM/Net Assets above 100 Crore. Sorted on Last 1 Year Return.
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. Aditya Birla Sun Life Short Term Opportunities Fund is a Debt - Short term Bond fund was launched on 9 May 03. It is a fund with Moderate risk and has given a Below is the key information for Aditya Birla Sun Life Short Term Opportunities 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 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 To generate steady and reasonable income with low risk and high level of liquidity from a portfolio of money market securities and high quality debt. UTI Short Term Income Fund is a Debt - Short term Bond fund was launched on 19 Sep 07. It is a fund with Moderate risk and has given a Below is the key information for UTI Short Term Income 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 1. Aditya Birla Sun Life Short Term Opportunities Fund
CAGR/Annualized return of 7.6% since its launch. Ranked 18 in Short term Bond category. Return for 2020 was 11.1% , 2019 was 8.5% and 2018 was 6.5% . Aditya Birla Sun Life Short Term Opportunities Fund
Growth Launch Date 9 May 03 NAV (20 Jan 21) ₹36.4194 ↑ 0.02 (0.05 %) Net Assets (Cr) ₹8,302 on 31 Dec 20 Category Debt - Short term Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.13 Sharpe Ratio 2.19 Information Ratio -0.14 Alpha Ratio -0.29 Min Investment 1,000 Min SIP Investment 1,000 Exit Load 0-90 Days (0.5%),90 Days and above(NIL) Yield to Maturity 5.13% Effective Maturity 2 Years 8 Months 23 Days Modified Duration 2 Years 2 Months 26 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,132 31 Dec 17 ₹11,755 31 Dec 18 ₹12,520 31 Dec 19 ₹13,584 31 Dec 20 ₹15,086 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 20 Jan 21 Duration Returns 1 Month 0.1% 3 Month 1.1% 6 Month 3.7% 1 Year 10.9% 3 Year 8.6% 5 Year 8.5% 10 Year 15 Year Since launch 7.6% Historical performance (Yearly) on absolute basis
Year Returns 2020 11.1% 2019 8.5% 2018 6.5% 2017 5.6% 2016 11.3% 2015 8.4% 2014 11.3% 2013 10.1% 2012 11.1% 2011 9.5% Fund Manager information for Aditya Birla Sun Life Short Term Opportunities Fund
Name Since Tenure Kaustubh Gupta 11 Sep 14 6.31 Yr. Mohit Sharma 6 Aug 20 0.4 Yr. Data below for Aditya Birla Sun Life Short Term Opportunities Fund as on 31 Dec 20
Asset Allocation
Asset Class Value Cash 15.18% Debt 84.82% Debt Sector Allocation
Sector Value Corporate 49.37% Government 38.69% Cash Equivalent 11.93% Credit Quality
Rating Value A 1.02% AA 17.13% AAA 81.72% Below B 0.12% Top Securities Holdings / Portfolio
Name Holding Value Quantity 8.60% Bihar SDL 2026
Sovereign Bonds | -2% ₹179 Cr 15,887,000 Reliance Industries Limited
Debentures | -2% ₹168 Cr 1,600 6.79% Govt Stock 2027
Sovereign Bonds | -2% ₹165 Cr 15,500,000
↓ -1,000,000 8.15% Govt Stock 2026
Sovereign Bonds | -2% ₹164 Cr 14,500,000 State Bank Of India
Debentures | -2% ₹154 Cr 1,500 Rural Electrification Corporation Limited
Debentures | -2% ₹143 Cr 1,400 07.77 OD SDL 2023
Sovereign Bonds | -2% ₹139 Cr 13,000,000 7.32% Govt Stock 2024
Sovereign Bonds | -2% ₹135 Cr 12,500,000 8.24% Govt Stock 2027
Sovereign Bonds | -2% ₹131 Cr 11,500,000 Power Finance Corporation Limited
Debentures | -2% ₹128 Cr 1,200 2. HDFC Short Term Debt Fund
CAGR/Annualized return of 8.9% since its launch. Ranked 30 in Short term Bond category. Return for 2020 was 11% , 2019 was 9.7% and 2018 was 7% . HDFC Short Term Debt Fund
Growth Launch Date 25 Jun 10 NAV (20 Jan 21) ₹24.5206 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹17,928 on 31 Dec 20 Category Debt - Short term Bond AMC HDFC Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.4 Sharpe Ratio 2.59 Information Ratio 0.53 Alpha Ratio -0.91 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 5.31% Effective Maturity 3 Years 5 Months 16 Days Modified Duration 2 Years 7 Months 9 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹10,931 31 Dec 17 ₹11,644 31 Dec 18 ₹12,460 31 Dec 19 ₹13,671 31 Dec 20 ₹15,169 Returns for HDFC Short Term Debt Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 20 Jan 21 Duration Returns 1 Month 0.2% 3 Month 1.4% 6 Month 3% 1 Year 10.4% 3 Year 9.1% 5 Year 8.6% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2020 11% 2019 9.7% 2018 7% 2017 6.5% 2016 9.3% 2015 8.7% 2014 10.4% 2013 8.4% 2012 10.1% 2011 9.2% Fund Manager information for HDFC Short Term Debt Fund
Name Since Tenure Anil Bamboli 25 Jun 10 10.53 Yr. Anand Laddha 21 Oct 20 0.2 Yr. Data below for HDFC Short Term Debt Fund as on 31 Dec 20
Asset Allocation
Asset Class Value Cash 13.17% Debt 86.83% Debt Sector Allocation
Sector Value Corporate 48.51% Government 38.6% Cash Equivalent 11.12% Securitized 1.76% Credit Quality
Rating Value AA 15.16% AAA 84.84% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.77% GOI 2030
Sovereign Bonds | -4% ₹788 Cr 79,500,000
↑ 7,500,000 7.32% Govt Stock 2024
Sovereign Bonds | -3% ₹585 Cr 54,000,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹362 Cr 3,500 6.79% Govt Stock 2027
Sovereign Bonds | -2% ₹325 Cr 30,500,000 Housing Development Finance Corporation Limited
Debentures | -2% ₹315 Cr 3,000 5.79% Govt Stock 2030
Sovereign Bonds | -2% ₹303 Cr 30,500,000
↓ -4,500,000 State Bank of India
Debentures | -2% ₹299 Cr 2,750 Indinfravit Trust
Debentures | -2% ₹297 Cr 2,900 State Bank Of India
Debentures | -2% ₹286 Cr 2,800 State Bank of India
Debentures | -1% ₹262 Cr 2,500 3. ICICI Prudential Short Term Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 11 in Short term Bond category. Return for 2020 was 10.6% , 2019 was 9.7% and 2018 was 5.8% . ICICI Prudential Short Term Fund
Growth Launch Date 25 Oct 01 NAV (20 Jan 21) ₹45.7108 ↑ 0.01 (0.03 %) Net Assets (Cr) ₹23,696 on 31 Dec 20 Category Debt - Short term Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Moderate Expense Ratio 1.15 Sharpe Ratio 2.6 Information Ratio -0.24 Alpha Ratio -0.95 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-7 Days (0.25%),7 Days and above(NIL) Yield to Maturity 4.91% Effective Maturity 3 Years 22 Days Modified Duration 2 Years 7 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,113 31 Dec 17 ₹11,769 31 Dec 18 ₹12,457 31 Dec 19 ₹13,662 31 Dec 20 ₹15,117 Returns for ICICI Prudential Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 20 Jan 21 Duration Returns 1 Month 0.2% 3 Month 1.4% 6 Month 3% 1 Year 10.2% 3 Year 8.6% 5 Year 8.5% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2020 10.6% 2019 9.7% 2018 5.8% 2017 5.9% 2016 11.1% 2015 8% 2014 11.6% 2013 7.2% 2012 9.5% 2011 8.7% Fund Manager information for ICICI Prudential Short Term Fund
Name Since Tenure Manish Banthia 19 Nov 09 11.12 Yr. Nikhil Kabra 29 Dec 20 0.01 Yr. Data below for ICICI Prudential Short Term Fund as on 31 Dec 20
Asset Allocation
Asset Class Value Cash 27.87% Debt 72.13% Debt Sector Allocation
Sector Value Corporate 40.4% Government 35.2% Cash Equivalent 23.71% Securitized 0.69% Credit Quality
Rating Value AA 19.14% AAA 80.86% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.77% GOI 2030
Sovereign Bonds | -5% ₹1,160 Cr 117,000,000
↓ -5,000,000 6.22% Govt Stock 2035
Sovereign Bonds | -3% ₹687 Cr 69,000,000
↑ 18,000,000 6.79% Govt Stock 2027
Sovereign Bonds | -2% ₹544 Cr 51,000,000 7.94% Govt Stock 2021
Sovereign Bonds | -2% ₹509 Cr 50,000,000
↑ 50,000,000 Pipeline Infrastructure Private Limited
Debentures | -2% ₹453 Cr 4,129 6.18% Govt Stock 2024
Sovereign Bonds | -2% ₹451 Cr 43,000,000
↓ -30,000,000 91 DTB 7012021
Sovereign Bonds | -2% ₹400 Cr 40,000,000 GOI Floating Rate Bond 2024
Sovereign Bonds | -2% ₹395 Cr 40,000,000
↑ 20,000,000 6.19% Govt Stock 2034
Sovereign Bonds | -2% ₹394 Cr 39,600,000
↓ -13,000,000 GOVT STOCK
Sovereign Bonds | -2% ₹380 Cr 38,000,000
↑ 10,000,000 4. UTI Short Term Income Fund
CAGR/Annualized return of 6.6% since its launch. Ranked 10 in Short term Bond category. Return for 2020 was 10.5% , 2019 was -3.9% and 2018 was 6% . UTI Short Term Income Fund
Growth Launch Date 19 Sep 07 NAV (20 Jan 21) ₹23.363 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹2,980 on 31 Dec 20 Category Debt - Short term Bond AMC UTI Asset Management Company Ltd Rating ☆☆☆☆ Risk Moderate Expense Ratio 0.82 Sharpe Ratio 2.65 Information Ratio -0.72 Alpha Ratio -0.66 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 5.13% Effective Maturity 2 Years 9 Months 14 Days Modified Duration 2 Years 3 Months 18 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹11,008 31 Dec 17 ₹11,677 31 Dec 18 ₹12,378 31 Dec 19 ₹11,893 31 Dec 20 ₹13,139 Returns for UTI Short Term Income Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 20 Jan 21 Duration Returns 1 Month 0% 3 Month 0.9% 6 Month 2.3% 1 Year 9.7% 3 Year 3.9% 5 Year 5.5% 10 Year 15 Year Since launch 6.6% Historical performance (Yearly) on absolute basis
Year Returns 2020 10.5% 2019 -3.9% 2018 6% 2017 6.1% 2016 10.1% 2015 8.3% 2014 10.9% 2013 9% 2012 11.2% 2011 10.7% Fund Manager information for UTI Short Term Income Fund
Name Since Tenure Sudhir Agarwal 25 Oct 12 8.19 Yr. Data below for UTI Short Term Income Fund as on 31 Dec 20
Asset Allocation
Asset Class Value Cash 24.99% Debt 75.01% Debt Sector Allocation
Sector Value Government 45.29% Corporate 32.11% Cash Equivalent 20.08% Securitized 2.52% Credit Quality
Rating Value AA 9.34% AAA 90.66% Top Securities Holdings / Portfolio
Name Holding Value Quantity 5.22% GOI 2025
Sovereign Bonds | -6% ₹181 Cr 1,800,000,000
↓ -200,000,000 7.68% Govt Stock 2023
Sovereign Bonds | -5% ₹158 Cr 1,450,000,000 5.77% GOI 2030
Sovereign Bonds | -4% ₹134 Cr 1,350,000,000
↓ -750,000,000 7.32% Govt Stock 2024
Sovereign Bonds | -4% ₹108 Cr 1,000,000,000 Housing and Urban Development Corporation Limited (Hudco)
Debentures | -4% ₹105 Cr 1,000 Housing Development Finance Corporation Limited
Debentures | -3% ₹101 Cr 1,000 Hindustan Petroleum Corporation Limited
Debentures | -3% ₹101 Cr 1,000 Housing Development Finance Corporation Limited
Debentures | -3% ₹100 Cr 1,000 India Grid Trust
Unlisted bonds | -3% ₹75 Cr 750 Power Finance Corporation Ltd.
Debentures | -2% ₹62 Cr 600 5. Axis Short Term Fund
CAGR/Annualized return of 8.2% since its launch. Ranked 26 in Short term Bond category. Return for 2020 was 10.1% , 2019 was 9.8% and 2018 was 6.3% . Axis Short Term Fund
Growth Launch Date 22 Jan 10 NAV (20 Jan 21) ₹23.8114 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹14,992 on 31 Dec 20 Category Debt - Short term Bond AMC Axis Asset Management Company Limited Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.92 Sharpe Ratio 2.79 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 4.83% Effective Maturity 2 Years 10 Months 24 Days Modified Duration 2 Years 3 Months 18 Days Growth of 10,000 investment over the years.
Date Value 31 Dec 15 ₹10,000 31 Dec 16 ₹10,964 31 Dec 17 ₹11,615 31 Dec 18 ₹12,352 31 Dec 19 ₹13,559 31 Dec 20 ₹14,934 Returns for Axis Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 20 Jan 21 Duration Returns 1 Month 0.1% 3 Month 1.1% 6 Month 2.5% 1 Year 9.5% 3 Year 8.6% 5 Year 8.2% 10 Year 15 Year Since launch 8.2% Historical performance (Yearly) on absolute basis
Year Returns 2020 10.1% 2019 9.8% 2018 6.3% 2017 5.9% 2016 9.6% 2015 8.1% 2014 10% 2013 7.3% 2012 10.1% 2011 9.2% Fund Manager information for Axis Short Term Fund
Name Since Tenure Devang Shah 5 Nov 12 8.16 Yr. Data below for Axis Short Term Fund as on 31 Dec 20
Asset Allocation
Asset Class Value Cash 14.91% Debt 85.09% Debt Sector Allocation
Sector Value Corporate 46.21% Government 42.93% Cash Equivalent 9.57% Securitized 1.29% Credit Quality
Rating Value AA 5.09% AAA 94.91% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.32% Govt Stock 2024
Sovereign Bonds | -7% ₹991 Cr 91,500,000
↑ 14,000,000 6.79% Govt Stock 2027
Sovereign Bonds | -3% ₹513 Cr 48,090,400
↑ 24,000,000 State Bank Of India
Debentures | -3% ₹491 Cr 4,800
↓ -250 Food Corporation of India
Debentures | -3% ₹486 Cr 4,550
↓ -500 7.42% MH SDL 2022
Sovereign Bonds | -3% ₹426 Cr 40,747,500 Power Finance Corporation Ltd.
Debentures | -3% ₹407 Cr 3,950 Reliance Industries Limited
Debentures | -2% ₹357 Cr 3,400 Housing Development Finance Corporation Limited
Debentures | -2% ₹277 Cr 2,680 Housing Development Finance Corporation Limited
Debentures | -2% ₹233 Cr 2,300 8.83% Govt Stock 2023
Sovereign Bonds | -1% ₹224 Cr 20,025,000
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.
AMFI Registration No. 112358 | CIN: U74999MH2016PTC282153
Shepard Technologies Pvt. Ltd. (with ARN code 112358) makes no warranties or representations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable.
©2021 Shepard Technologies Private Limited. All Rights Reserved