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Short Term Debt Funds or Short Duration Funds | Best Short Term Plans

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Short Term Debt Funds or Short Duration Funds

Updated on April 10, 2024 , 8659 views

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.

Top Short Duration (Short-Term) Debt Funds 2024

Some of the best short term debt funds include-

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2023 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Sundaram Short Term Debt Fund Growth ₹36.3802
↑ 0.01
₹3620.811.412.85.3 4.52%1Y 2M 13D1Y 7M 3D
ICICI Prudential Short Term Fund Growth ₹54.453
↓ -0.05
₹18,9871.83.77.45.87.48.02%2Y 7M 2D4Y 9M 4D
HDFC Short Term Debt Fund Growth ₹28.9075
↓ -0.02
₹14,612247.35.47.17.8%2Y 9M 4D3Y 11M 23D
UTI Short Term Income Fund Growth ₹28.8073
↓ -0.01
₹2,503247.276.97.51%2Y 9M 18D3Y 7M 20D
Nippon India Short Term Fund Growth ₹47.6878
↓ -0.04
₹5,9861.83.875.26.87.75%2Y 8M 5D3Y 6M
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Dec 21
*Above is list of best Short Duration funds having AUM/Net Assets above 100 Crore. Sorted on Last 1 Year Return.

1. Sundaram Short Term Debt Fund

(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.

Sundaram Short Term Debt Fund is a Debt - Short term Bond fund was launched on 5 Sep 02. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of 6.9% since its launch.  Ranked 56 in Short term Bond category. .

Below is the key information for 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.

DateValue
31 Mar 19₹10,000
31 Mar 20₹9,482
31 Mar 21₹10,172

Sundaram Short Term Debt Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹197,169.
Net Profit of ₹17,169
Invest Now

Returns for Sundaram Short Term Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21

DurationReturns
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
YearReturns
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Fund Manager information for Sundaram Short Term Debt Fund
NameSinceTenure

Data below for Sundaram Short Term Debt Fund as on 30 Nov 21

Asset Allocation
Asset ClassValue
Debt Sector Allocation
SectorValue
Credit Quality
RatingValue
Top Securities Holdings / Portfolio
NameHoldingValueQuantity

2. ICICI Prudential Short Term Fund

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 CAGR/Annualized return of 7.8% since its launch.  Ranked 11 in Short term Bond category.  Return for 2023 was 7.4% , 2022 was 4.7% and 2021 was 3.9% .

Below is the key information for ICICI Prudential Short Term Fund

ICICI Prudential Short Term Fund
Growth
Launch Date 25 Oct 01
NAV (12 Apr 24) ₹54.453 ↓ -0.05   (-0.09 %)
Net Assets (Cr) ₹18,987 on 29 Feb 24
Category Debt - Short term Bond
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderate
Expense Ratio 1.11
Sharpe Ratio 1.39
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 8.02%
Effective Maturity 4 Years 9 Months 4 Days
Modified Duration 2 Years 7 Months 2 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,919
31 Mar 21₹11,875
31 Mar 22₹12,373
31 Mar 23₹13,083
31 Mar 24₹14,095

ICICI Prudential Short Term Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125
Invest Now

Returns for ICICI Prudential Short Term Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21

DurationReturns
1 Month 0.4%
3 Month 1.8%
6 Month 3.7%
1 Year 7.4%
3 Year 5.8%
5 Year 7.1%
10 Year
15 Year
Since launch 7.8%
Historical performance (Yearly) on absolute basis
YearReturns
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%
2014 11.6%
Fund Manager information for ICICI Prudential Short Term Fund
NameSinceTenure
Manish Banthia19 Nov 0914.38 Yr.
Nikhil Kabra29 Dec 203.26 Yr.

Data below for ICICI Prudential Short Term Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash5.81%
Debt93.94%
Other0.25%
Debt Sector Allocation
SectorValue
Government46.99%
Corporate46.69%
Cash Equivalent5.81%
Securitized0.26%
Credit Quality
RatingValue
AA20.09%
AAA79.91%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.18% Govt Stock 2033
Sovereign Bonds | -
18%₹3,343 Cr331,697,910
8.25% Govt Stock 2033
Sovereign Bonds | -
9%₹1,737 Cr170,908,750
7.06% Govt Stock 2028
Sovereign Bonds | -
7%₹1,363 Cr136,354,250
↓ -2,899,200
8.1% Govt Stock 2034
Sovereign Bonds | -
4%₹809 Cr81,074,740
7.38% Govt Stock 2027
Sovereign Bonds | -
2%₹376 Cr37,227,200
Small Industries Development Bank Of India
Debentures | -
2%₹368 Cr37,000
Pipeline Infrastructure Limited
Debentures | -
2%₹338 Cr3,379
Muthoot Finance Limited
Debentures | -
2%₹301 Cr30,000
LIC Housing Finance Limited
Debentures | -
2%₹300 Cr3,000
Small Industries Development Bank Of India
Debentures | -
2%₹299 Cr3,000

3. HDFC Short Term Debt Fund

(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 CAGR/Annualized return of 8% since its launch.  Ranked 30 in Short term Bond category.  Return for 2023 was 7.1% , 2022 was 3.5% and 2021 was 3.9% .

Below is the key information for HDFC Short Term Debt Fund

HDFC Short Term Debt Fund
Growth
Launch Date 25 Jun 10
NAV (12 Apr 24) ₹28.9075 ↓ -0.02   (-0.08 %)
Net Assets (Cr) ₹14,612 on 29 Feb 24
Category Debt - Short term Bond
AMC HDFC Asset Management Company Limited
Rating
Risk Moderately Low
Expense Ratio 0.74
Sharpe Ratio 1.06
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 300
Exit Load NIL
Yield to Maturity 7.8%
Effective Maturity 3 Years 11 Months 23 Days
Modified Duration 2 Years 9 Months 4 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,969
31 Mar 21₹11,903
31 Mar 22₹12,448
31 Mar 23₹12,996
31 Mar 24₹13,995

HDFC Short Term Debt Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132
Invest Now

Returns for HDFC Short Term Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21

DurationReturns
1 Month 0.4%
3 Month 2%
6 Month 4%
1 Year 7.3%
3 Year 5.4%
5 Year 6.9%
10 Year
15 Year
Since launch 8%
Historical performance (Yearly) on absolute basis
YearReturns
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%
2014 10.4%
Fund Manager information for HDFC Short Term Debt Fund
NameSinceTenure
Anil Bamboli25 Jun 1013.78 Yr.
Dhruv Muchhal22 Jun 230.78 Yr.

Data below for HDFC Short Term Debt Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash3.54%
Debt96.18%
Other0.28%
Debt Sector Allocation
SectorValue
Corporate49.98%
Government46.35%
Cash Equivalent2.97%
Securitized0.43%
Credit Quality
RatingValue
AA15.96%
AAA84.04%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.18% Govt Stock 2033
Sovereign Bonds | -
8%₹1,053 Cr104,500,000
7.69% Govt Stock 2028
Sovereign Bonds | -
4%₹513 Cr51,500,000
7.1% Govt Stock 2029
Sovereign Bonds | -
3%₹370 Cr37,000,000
6.79% Govt Stock 2027
Sovereign Bonds | -
3%₹362 Cr36,500,000
7.26% Govt Stock 2032
Sovereign Bonds | -
3%₹349 Cr34,500,000
Bharti Telecom Limited
Debentures | -
2%₹274 Cr2,750
State Bank Of India
Debentures | -
2%₹249 Cr2,500
National Bank for Agriculture and Rural Development
Domestic Bonds | -
2%₹226 Cr22,500
Small Industries Development Bank Of India
Debentures | -
2%₹202 Cr20,000
TVS Credit Services Limited
Debentures | -
2%₹201 Cr200

4. UTI Short Term Income Fund

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 CAGR/Annualized return of 6.6% since its launch.  Ranked 10 in Short term Bond category.  Return for 2023 was 6.9% , 2022 was 3.8% and 2021 was 8.4% .

Below is the key information for UTI Short Term Income Fund

UTI Short Term Income Fund
Growth
Launch Date 19 Sep 07
NAV (12 Apr 24) ₹28.8073 ↓ -0.01   (-0.02 %)
Net Assets (Cr) ₹2,503 on 29 Feb 24
Category Debt - Short term Bond
AMC UTI Asset Management Company Ltd
Rating
Risk Moderate
Expense Ratio 0.95
Sharpe Ratio 0.97
Information Ratio 0
Alpha Ratio 0
Min Investment 10,000
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 7.51%
Effective Maturity 3 Years 7 Months 20 Days
Modified Duration 2 Years 9 Months 18 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹9,610
31 Mar 21₹10,419
31 Mar 22₹11,372
31 Mar 23₹11,879
31 Mar 24₹12,787

UTI Short Term Income Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹197,169.
Net Profit of ₹17,169
Invest Now

Returns for UTI Short Term Income Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21

DurationReturns
1 Month 0.5%
3 Month 2%
6 Month 4%
1 Year 7.2%
3 Year 7%
5 Year 5%
10 Year
15 Year
Since launch 6.6%
Historical performance (Yearly) on absolute basis
YearReturns
2023 6.9%
2022 3.8%
2021 8.4%
2020 10.5%
2019 -3.9%
2018 6%
2017 6.1%
2016 10.1%
2015 8.3%
2014 10.9%
Fund Manager information for UTI Short Term Income Fund
NameSinceTenure
Sudhir Agarwal25 Oct 1211.44 Yr.

Data below for UTI Short Term Income Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash7.8%
Debt91.98%
Other0.22%
Debt Sector Allocation
SectorValue
Government49.63%
Corporate42.34%
Cash Equivalent7.8%
Credit Quality
RatingValue
AA9.94%
AAA90.06%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.37% Govt Stock 2028
Sovereign Bonds | -
16%₹430 Cr4,250,000,000
↓ -1,000,000,000
182 DTB 29082024
Sovereign Bonds | -
13%₹339 Cr3,500,000,000
India (Republic of)
- | -
10%₹266 Cr2,750,000,000
↑ 2,750,000,000
National Bank For Agriculture And Rural Development
Debentures | -
8%₹226 Cr22,500
Power Finance Corporation Ltd.
Debentures | -
7%₹202 Cr20,000
Small Industries Development Bank of India
Debentures | -
7%₹201 Cr20,000
Rural Electrification Corporation Limited
Debentures | -
7%₹183 Cr18,000
LIC Housing Finance Limited
Debentures | -
5%₹125 Cr1,250
↑ 1,250
India Grid TRust
Debentures | -
3%₹75 Cr750
Shriram Finance Limited
Debentures | -
3%₹70 Cr7,000

5. Nippon India Short Term Fund

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 CAGR/Annualized return of 7.6% since its launch.  Ranked 17 in Short term Bond category.  Return for 2023 was 6.8% , 2022 was 3.2% and 2021 was 4.4% .

Below is the key information for Nippon India Short Term Fund

Nippon India Short Term Fund
Growth
Launch Date 18 Dec 02
NAV (12 Apr 24) ₹47.6878 ↓ -0.04   (-0.09 %)
Net Assets (Cr) ₹5,986 on 29 Feb 24
Category Debt - Short term Bond
AMC Nippon Life Asset Management Ltd.
Rating
Risk Moderately Low
Expense Ratio 1.16
Sharpe Ratio 0.66
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 100
Exit Load NIL
Yield to Maturity 7.75%
Effective Maturity 3 Years 6 Months
Modified Duration 2 Years 8 Months 5 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 19₹10,000
31 Mar 20₹10,880
31 Mar 21₹11,750
31 Mar 22₹12,326
31 Mar 23₹12,779
31 Mar 24₹13,723

Nippon India Short Term Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132
Invest Now

Returns for Nippon India Short Term Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 31 Dec 21

DurationReturns
1 Month 0.5%
3 Month 1.8%
6 Month 3.8%
1 Year 7%
3 Year 5.2%
5 Year 6.5%
10 Year
15 Year
Since launch 7.6%
Historical performance (Yearly) on absolute basis
YearReturns
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%
2014 11.3%
Fund Manager information for Nippon India Short Term Fund
NameSinceTenure
Vivek Sharma1 Feb 204.17 Yr.
Kinjal Desai25 May 185.86 Yr.
Sushil Budhia31 Mar 213.01 Yr.

Data below for Nippon India Short Term Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash9.57%
Debt90.17%
Other0.26%
Debt Sector Allocation
SectorValue
Corporate54.91%
Government37.54%
Cash Equivalent6.68%
Securitized0.61%
Credit Quality
RatingValue
AA10.97%
AAA89.03%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
7.17% Govt Stock 2030
Sovereign Bonds | -
12%₹723 Cr72,000,000
↑ 10,000,000
7.1% Govt Stock 2029
Sovereign Bonds | -
6%₹375 Cr37,500,000
↑ 15,000,000
7.06% Govt Stock 2028
Sovereign Bonds | -
5%₹325 Cr32,500,000
National Bank For Agriculture And Rural Development
Debentures | -
3%₹201 Cr20,000
↑ 5,000
LIC Housing Finance Ltd. 7.84%
Debentures | -
3%₹200 Cr20,000
↑ 20,000
07.86 MH Sdl 2030
Sovereign Bonds | -
3%₹164 Cr16,000,000
↓ -500,000
India Grid TRust
Debentures | -
3%₹159 Cr1,600
Rural Electrification Corporation Limited
Debentures | -
3%₹150 Cr15,000
Small Industries Development Bank Of India
Debentures | -
2%₹146 Cr14,500
Bharti Telecom Limited
Debentures | -
2%₹127 Cr12,500

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-In-Short-Term-Debt-Funds

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.

Disclaimer:
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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