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Best Short Term Investment Options | Liquid Funds | Ultra Short

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Best Short Term Investment Options

Updated on January 23, 2020 , 489 views

A short term investment is something that you would want to invest for a short duration. Well, here short term doesn’t have any fix duration, but it’s ideally a financial goal, which is less than three years. So, if you are planning to invest for a short term, here are some of the best short term investment options.

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Top Short Term Investment Instruments in India

1. Liquid Funds

Liquid Funds invest in short-term money market products such as treasury bills, commercial papers, term deposits, etc. Liquid funds invest in securities that have a low maturity period, usually less than 91 days. Liquid funds provide easy liquidity and are less volatile than the other types of debt instruments. Also, these are a better option than traditional bank Savings Account. In comparison to bank account, liquid funds provide 7-8 percent of annual interest.

Investors wanting to invest in liquid funds, can choose amongst the below-mentioned Best Liquid Funds:

FundNAVNet Assets (Cr)1 MO (%)3 MO (%)6 MO (%)1 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
PGIM India Insta Cash Fund Growth ₹254.466
↑ 0.04
₹5030.41.32.86.66.75.35%1M 2D1M 2D
JM Liquid Fund Growth ₹53.4973
↑ 0.01
₹1,8410.41.32.76.46.65.14%24D24D
Indiabulls Liquid Fund Growth ₹1,906.11
↑ 0.27
₹6110.41.32.86.46.65.42%1M 20D1M 20D
Principal Cash Management Fund Growth ₹1,733.25
↑ 0.24
₹2130.41.22.766.25.03%18D19D
Nippon India Liquid Fund  Growth ₹4,772.81
↑ 0.66
₹24,2350.41.32.86.56.75.38%1M 12D1M 15D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20

2. Ultra Short Term Funds

Ultra short duration funds invest in fixed income instruments which have a Macaulay duration between three to six months. Ultra short-term funds help investors avoid interest rate risks and also offer better returns compared to liquid Debt fund. Macaulay duration measures how long it will take the scheme to recoup the investment

Here are some of the best performing ultra short term funds to invest:

FundNAVNet Assets (Cr)1 MO (%)3 MO (%)6 MO (%)1 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Savings Fund Growth ₹393.497
↑ 0.11
₹15,8470.61.63.88.38.56.31%5M 16D6M 7D
Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹27.0286
↑ 0.01
₹16,894-3.6-2.204.79.610.37%5M 19D7M 2D
Indiabulls Ultra Short Term Fund Growth ₹1,915.65
↑ 0.39
₹360.41.43.17.37.65.51%5M 19D
BOI AXA Ultra Short Duration Fund Growth ₹2,393.66
↑ 0.45
₹2930.51.43.37.37.55.73%4M 24D5M 9D
UTI Ultra Short Term Fund Growth ₹3,084.54
↑ 0.53
₹2,2760.51.63.53.23.37.48%3M 7D4M 13D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20

3. Low Duration Funds

The scheme will invest in debt and money market securities with a Macaulay duration between six to 12 months. Low duration funds have a higher maturity duration than liquid and Ultra Short Term fund. Risk-averse investors can invest in this scheme for a short period and earn better returns than that bank savings account. These funds generally offer steady and stable returns.

Here are some of the best low duration funds to invest:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Franklin India Low Duration Fund Growth ₹20.9588
↑ 0.01
₹4,627-6.6-5.2-24.85.212.34%11M 12D1Y 2M 26D
PGIM India Low Duration Fund Growth ₹22.7284
↑ 0.01
₹1181.74.3-9.51.2-9.59.24%8M 23D9M 29D
Baroda Pioneer Treasury Advantage Fund Growth ₹1,731.95
↑ 1.23
₹99-1.3-4.4-19.2-2.5-19.214.51%10M 24D1Y 2M 19D
ICICI Prudential Savings Fund Growth ₹383.731
↑ 0.16
₹21,3061.94.18.87.68.86.69%10M 17D1Y 1M 17D
IDFC Low Duration Fund Growth ₹28.2093
↑ 0.01
₹5,3231.63.88.37.58.35.88%8M 14D9M 15D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20

4. Money Market Fund

The money market fund invests in many markets such as commercial/treasury bills, commercial papers, Certificate of Deposit and other instruments specified by the Reserve Bank of India (RBI). These investments are a good option for risk-averse investors who want to earn good returns in short duration. This debt scheme will invest in money market instruments having a maturity up to one year.

Here are some of the best Money market funds to invest:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
Aditya Birla Sun Life Money Manager Fund Growth ₹265.833
↑ 0.05
₹10,8781.53.57.97.685.91%4M 20D4M 20D
L&T Money Market Fund Growth ₹19.6617
↑ 0.00
₹9021.45.28.17.68.25.78%4M 28D5M 1D
Kotak Money Market Scheme Growth ₹3,265.25
↑ 0.48
₹8,8991.53.57.87.585.84%4M 24D4M 24D
UTI Money Market Fund Growth ₹2,227.27
↑ 0.37
₹7,5151.43.47.87.585.69%3M 22D3M 23D
ICICI Prudential Money Market Fund Growth ₹274.431
↑ 0.04
₹9,1191.43.47.77.47.95.63%4M 4D4M 11D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20

5. Short Term Funds/Short Duration Funds

Short duration funds mainly invest in Commercial Papers, Certificate of Deposits, Money Market Instruments, etc, with a Macaulay duration of one to three years. They may provide a higher level of return than ultra-short-term and liquid funds but will be exposed to higher risks.

Here are some of the best money market funds to invest:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)2018 (%)Debt Yield (YTM)Mod. DurationEff. Maturity
PGIM India Short Maturity Fund Growth ₹32.7947
↑ 0.02
₹460.27.3-1.13.6-0.57.98%2Y 29D2Y 6M 14D
ICICI Prudential Short Term Fund Growth ₹41.5767
↑ 0.02
₹12,3542.14.49.87.19.77.4%2Y 2M 12D2Y 11M 8D
Nippon India Short Term Fund Growth ₹37.2969
↑ 0.03
₹7,0271.84.59.46.89.47.25%1Y 11M 8D2Y 3M 18D
Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹32.9248
↑ 0.02
₹3,1410.93.18.46.68.58.57%1Y 11M 12D2Y 5M 26D
UTI Short Term Income Fund Growth ₹21.3389
↑ 0.01
₹2,0491.94.5-3.62.6-3.97.3%2Y 2Y 3M 24D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20

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6. Bank Fixed Deposits

Bank fixed deposits can be one of the best short term investment options, as these are secure investments. Also, many banks provide better interest rates on FDs, which typically range from 3% to 9.25% per annum. Investors can park their money for a minimum period of 7 days to a maximum of 10 years.

A similar option to Bank FD is Recurring deposit, which is equally effective for short term investment. If you have a habit of saving monthly, then Bank Recurring Deposits are a good option to go. They have a minimum of six months to a maximum of a decade’s tenure. Their interest rates are around 8% per annum.

7. Savings Account

A savings account is the most popular short term investment option in India. Also, it’s the safest and easiest way to access your money. If you invest your money in savings account, you can get around 4% to 7% of the return. However, interest rates may vary bank to bank. One can deposit and withdraw their money as per their convenience and requirements.

8. Fixed Maturity Plans

Fixed Maturity Plan (FMP) is offered by Mutual Funds, which invest in money market and debt instruments. These funds come up with lock-in period varying from a month up to three years. Unlike FDs, you cannot withdraw your money in FMPs before the maturity period. However, FMPs are more tax efficient than FDs, and you can also expect better returns.

Conclusion

Every investor has their own choice of instruments with regards to their goals. In order to invest in the short term Investment plan, one should calculate the amount, risks, tenure, interest rates and liquidity that comes along with each instrument. Since you are planning a short term investment, you should make a smart choice with instruments that have a low risk. Invest Now and make your short term goals successful!

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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