Top Short Term Bond Funds Rated by FINCASH for 2025 - 2026

Updated on August 8, 2025 , 1384 views

If you want to invest just for 3 years, then a Short Term bond Fund is the ideal plan to consider. short term bond Funds invest in debt instruments & money market instruments that include government papers (G-secs) and commercial papers (CPs). These funds are highly suitable investors with a low-risk appetite who seek quick returns and a steady flow of Income without being affected by the daily changes in the bond markets.

As the bond Market offers the advantage of falling interest rates, one can earn better returns by increasing the duration of the investment. This is where Short Term Bond Funds come in. These funds invest in debt market to offer long-term returns over the duration of 2-3 years. Investors who are keen to invest in these funds, following are the top rated schemes to invest in.

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Top Rated Short Term Bond Funds

Fund	NAV	Net Assets (Cr)	Rating	3 MO (%)	6 MO (%)	1 YR (%)	3 YR (%)	2024 (%)	Debt Yield (YTM)	Mod. Duration	Eff. Maturity	Information Ratio	Exit Load
PGIM India Short Maturity Fund Growth	₹39.3202 ↓ 0.00	₹28	☆☆☆☆☆	1.2	3.1	6.1	4.2		7.18%	1Y 7M 28D	1Y 11M 1D	0	0-6 Months (0.5%),6 Months and above(NIL)
Baroda Pioneer Short Term Bond Fund Growth	₹29.5399 ↑ 0.01	₹300	☆☆☆	1.9	4.8	8.7	7.5	7.7	6.8%	2Y 8M 16D	3Y 4M 10D	0	0-15 Days (0.25%),15 Days and above(NIL)
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Sep 23
Note: Ratio's shown as on 15 Sep 23

Research Highlights & Commentary of 2 Funds showcased

Commentary	PGIM India Short Maturity Fund	Baroda Pioneer Short Term Bond Fund
Point 1	Bottom quartile AUM (₹28 Cr).	Highest AUM (₹300 Cr).
Point 2	Oldest track record among peers (22 yrs).	Established history (15+ yrs).
Point 3	Top rated.	Rating: 3★ (bottom quartile).
Point 4	Risk profile: Moderate.	Risk profile: Moderately Low.
Point 5	1Y return: 6.08% (bottom quartile).	1Y return: 8.70% (upper mid).
Point 6	1M return: 0.43% (upper mid).	1M return: 0.33% (bottom quartile).
Point 7	Sharpe: -0.98 (bottom quartile).	Sharpe: 1.79 (upper mid).
Point 8	Information ratio: 0.00 (upper mid).	Information ratio: 0.00 (bottom quartile).
Point 9	Yield to maturity (debt): 7.18% (upper mid).	Yield to maturity (debt): 6.80% (bottom quartile).
Point 10	Modified duration: 1.66 yrs (upper mid).	Modified duration: 2.71 yrs (bottom quartile).

PGIM India Short Maturity Fund

Bottom quartile AUM (₹28 Cr).
Oldest track record among peers (22 yrs).
Top rated.
Risk profile: Moderate.
1Y return: 6.08% (bottom quartile).
1M return: 0.43% (upper mid).
Sharpe: -0.98 (bottom quartile).
Information ratio: 0.00 (upper mid).
Yield to maturity (debt): 7.18% (upper mid).
Modified duration: 1.66 yrs (upper mid).

Baroda Pioneer Short Term Bond Fund

Highest AUM (₹300 Cr).
Established history (15+ yrs).
Rating: 3★ (bottom quartile).
Risk profile: Moderately Low.
1Y return: 8.70% (upper mid).
1M return: 0.33% (bottom quartile).
Sharpe: 1.79 (upper mid).
Information ratio: 0.00 (bottom quartile).
Yield to maturity (debt): 6.80% (bottom quartile).
Modified duration: 2.71 yrs (bottom quartile).

Why Are These Top Performers?

Fincash has employed the following parameters for shortlisting the top performing funds:

Past Returns: Return analysis of last 3 years
Parameters & Weights: Information ratio with some modifications for our ratings and rankings
Qualitative & Quantitative Analysis: Quantitative measures like average maturity, credit quality, expense ratio, etc., including fund age and the size of the fund has been considered. Qualitative analysis like the reputation of the fund along with the fund manager is one of the important parameters that you would see in the listed funds.
Asset Size: The minimum AUM criteria for short term bond funds are INR 100 Crores with some exceptions at times for new funds that are doing well in the market.
Performance with Respect to Benchmark: Peer average

Smart Tips to Invest in Short Term Bond Funds

Some of the important tips to consider while Investing in short term bond funds are:

Investment Tenure: Investors planning to invest in short term bond funds should stay invested for minimum one year.
Invest via a SIP: SIP or Systematic Investment plan is the most efficient way to invest in a Mutual Fund. They not only provide a systematic way of investing, but also ensures regular investment growth. You can invest in a SIP with an amount as low as INR 500.

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.