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15 Short-Term Mutual Funds in India (2023)

Short-Term Mutual Funds

If one is looking for dependable but profitable investment options, short-term mutual funds are a tempting option. In an environment where economic fluctuations are common, these funds provide a sensible mix of low returns and low risk. Despite the excitement surrounding innovative technologies such as artificial intelligence (AI)-powered investments, short-term mutual funds are notable for their consistency and dependability. Without adding artificial intelligence to the mix, let’s examine the subtleties of short-term mutual funds and learn about their advantages in the investing world.

15 Short-Term Mutual Funds in India in 2023

Scheme Name Features
Nippon India Short-Term Fund Direct-Growth NAV: ₹47.60

Expense Ratio: 0.34%

AUM: ₹5147.42 Cr

Axis Short-Term Direct Fund Growth NAV: ₹28.03

Expense Ratio: 0.3%

AUM: ₹7096.45 Cr

ICICI Prudential Short-Term Fund Growth NAV: ₹50.53

Expense Ratio: 1.07%

AUM: ₹14561.49 Cr

Canara Robeco Short Duration Fund Direct-Growth NAV: ₹23.38

Expense Ratio: 0.47%

AUM: ₹520.12 Cr

HDFC Short-Term Debt Fund  NAV: ₹27.50

Expense Ratio: 0.29%

AUM: ₹11028.58 Cr

IDFC Bond Fund Short-Term Plan  NAV: ₹51.05

Expense Ratio: 0.3%

AUM: ₹9456.87Cr

Kotak Bond Short-Term Fund Direct-Growth NAV: ₹47.73

Expense Ratio: 0.36%

AUM: ₹12203.28Cr

HSBC Short Duration Fund Direct-Growth NAV: ₹23.51

Expense Ratio: 0.27%

AUM: ₹3592.2 Cr

Aditya Birla Sun Life Short Term  NAV: ₹42.77

Expense Ratio: 0.38%

AUM: ₹5045.21 Cr

DSP Short-Term Fund Direct Plan-Growth NAV: ₹42.28

Expense Ratio: 0.3%

AUM: ₹2821.74 Cr

SBI Short-Term Debt Fund Direct-Growth NAV: ₹28.52

Expense Ratio: 0.35%

AUM: ₹13289.8 Cr

Invesco India Short-Term Fund Growth NAV: ₹3021.10

Expense Ratio: 1.2%

AUM: ₹397.99 Cr

IDBI Short-Term Bond Fund Growth NAV: ₹23.16

Expense Ratio: 0.75%

AUM: ₹350.16 Cr

Tata Short-Term Bond Direct Plan-Growth NAV: ₹44.38

Expense Ratio: 0.37%

AUM: ₹2,271.32 Cr

Sundaram Short Duration Fund Growth NAV: ₹37.42

Expense Ratio: 0.93%

AUM: ₹200.11Cr

How Do Short-Term Mutual Funds Work?

Debt funds with fixed maturity terms ranging from one to three years, and short-term mutual funds invest in nearly all money market securities and bonds. Even though these funds allocate the majority of their corpus to short-term investments, a tiny percentage may be invested in debt instruments with longer maturities. Actually, a short-duration fund’s degree of exposure to longer-term debts determines its risk profile. The underlying assets’ capital gains and interest payments provide these funds with returns for their investors.

Treasury bills, sovereign bonds, SDLs, CDs, NCDs, debentures, and other money market schemes are among the assets that a short-term fund may hold. Fund policies, stated objectives, price fluctuations, and market dynamics all play a role in determining the allocation weightage.

Factors to Consider Before Investing in Short-Term Mutual Funds

  • Return on Investment (ROI): One important thing to think about is the expected return on investment for your short-term investment. Knowing how much you hope to earn from the investment and when that money might be returned will be crucial. This is particularly crucial if there are other things that can cause a delay in your return, like building delays or the requirement for approvals.
  • Risk Tolerance: Risk tolerance is a crucial component of any short-term investment. You might be able to take on less of a return on your investment than someone with a lower risk tolerance would need to if you have a high level of risk tolerance. Even people with lower risk tolerance levels ought to be able to identify opportunities that give them a return on their investment without putting them in unnecessary danger, though.
  • Investment Period: Any investment that wants to succeed needs to have a deadline and a strategy for what will happen at that point. This implies that, in order to maximize returns, an investor should set a target timeframe for selling or closing out their position, even if they have no intention of doing so after their initial purchase.
  • Liquidity: Liquidity should be taken into account first when making an investment in India. This is a reference to how simple it is to withdraw your money from an investment without suffering significant value loss. If you intend to sell your investments soon, you should make sure that there are many buyers for your shares and that the process of selling them doesn’t take too long or
  • Taxation: When choosing an investment, taxes may be a major consideration. When determining whether the risk of losing money on an investment with low returns is worth it, you should be aware of the amount of tax that will be deducted from your investment profits.

Who Should Invest in Short-Term Mutual Funds?

  • Investors who have an Investment Horizon of at least 12-18 months: Investors looking to hold onto their money for longer than a year are advised to consider these funds, as they may outperform fixed-income instruments like bank savings during that time.
  • First-time Debt Fund Investors: Investors who are willing to make their first debt fund investment may want to look into short-term mutual funds. During an investment horizon, these funds may yield higher returns than a savings account because of their comparatively low risk. Furthermore, the returns on short-term funds are typically higher than those on overnight or liquid funds.
  • Investors Wanting Regular Income: Generally speaking, short-duration funds are less risky than medium- and long-term market-linked investments. As a result, these could offer consistent returns over a brief period of time and possibly outperform returns from fixed-income investment vehicles. 
  • Investors Seeking Alternate to Short-term Savings: Since they earn both interest and capital gains, short-term debt funds typically have higher earning potential than bank deposits. Therefore, these funds not only help investors maximize their investment portfolio’s short-term profit margin, but they are also highly liquid.

How to Invest in the Best Short-Term Mutual Funds?

  • First, you download your favorite investment app on your phone or visit the AMC website.
  • Fill in all your details there
  • And after completing your KYC process.
  • Select your preferred short-term mutual fund.
  • Select between lumpsum and SIP.
  • Establish an auto-debit, link your bank account, and begin investing.

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