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Ultra Short Term Debt fund are highly suitable for a short-term Investment plan. These funds invest in debt instruments that have an average maturity of more than 91 days. Comparitive to Fixed Depoists, these funds provide better returns. FDs have a predetermined interest rate which does not change with the due course of time. However, in case of Ultra short term funds, the returns are variable depending on the performance of the scheme. Currently, as per FY 2017-18, the FD rates Range between 6%-7% p.a. whereas, in case of Ultra Short Term fund, the returns ranged approximately more than 7.4% p.a.
Investors who are looking to park their money for a year or less can ideally invest in this scheme. To earn better returns, one can invest in below-mentioned top-performing Ultra Short Term Debt Funds that have constantly performed well in the Market.
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Fund NAV Net Assets (Cr) Rating 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2022 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Exit Load Aditya Birla Sun Life Savings Fund Growth ₹470.543
₹14,525 ☆☆☆☆☆ 2 3.6 6.5 5.2 4.8 7.56% 5M 8D 5M 16D NIL Kotak Savings Fund Growth ₹37.1848
₹10,606 ☆☆☆ 2 3.5 6.2 4.5 4.5 7.54% 6M 25D 9M 18D NIL SBI Magnum Ultra Short Duration Fund Growth ₹5,163.42
₹11,493 ☆☆☆ 2 3.5 6.3 4.6 4.5 7.44% 5M 12D 5M 26D NIL Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 5 Jun 23
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 debt Mutual 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
Some of the important tips to consider while Investing in ultra-short funds are:
Investment Tenure: Investors planning to invest in ultra-short debt funds should stay invested for minimum 3 months and more.
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.
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