Best Ultra Short Term Mutual Funds

Ultra short-term mutual fund schemes are debt schemes which invest in fixed income generating instruments up to maturities of six months.

As per SEBI, an ultra short-term fund is open-ended debt scheme with Macaulay duration of about three to six months. While being closely similar to liquid funds, the best ultra short-term funds can provide higher returns with comparable liquidity.

These funds serve as an investment instrument of choice for anyone look to park their money for shorter durations and earn reasonable dividends from it.

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Top 10 Ultra Short Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
DHFL Pramerica Ultra Short Term FundDebtModerately Low13.4%5star143
ICICI Prudential Ultra Short Term FundDebtModerate8.5%5star8,612
Mahindra ALP-Samay Bachat YojanaDebtModerately Low8.4%5star503
Indiabulls Ultra Short Term FundDebtModerately Low7.6%4star256
Invesco India Ultra Short Term FundDebtModerate7.4%4star560
Kotak Savings FundDebtModerately Low7.6%4star12,951
Canara Robeco Savings FundDebtModerately Low7.6%4star1,126
SBI Magnum Ultra Short Duration FundDebtLow7.5%4star14,116
YES Ultra Short Term FundDebtModerately LowN.A4star36
BOI AXA Ultra Short Duration FundDebtModerately Low7.2%4star295
Aditya Birla Sun Life Savings FundDebtModerately Low7.9%4star16,489
DSP BlackRock Money Manager FundDebtModerately Low7.4%3star2,594
L&T Ultra Short Term FundDebtModerately Low7.4%3star2,786
Canara Robeco Ultra Short Term FundDebtLow6.8%3star202
DSP BlackRock Low Duration Fund DebtModerately Low8.3%3star2,980
View All Top 10 Ultra Short Mutual Funds

Features of Ultra Short Term Mutual Fund

Ultra short-term funds are ideal for investors looking to park their money for a shorter duration. The best ultra short-term funds in India are comparatively immune to interest rate risks due to shorter maturity of the underlying assets when compared with the other debts funds. On the contrary, these are riskier than liquid funds which come with even lower risks.

Many investors use liquid funds to alter their investments through Systematic Transfer Plans (STP), but UST funds can serve as a better option to start an STP. These funds are tailor-made for conservative investors.

Taxability

By investing in mutual fund schemes, you earn capital gains which can via a short term or a long-term investment. The rate of taxation depends on the time of your investment called the holding period.

These schemes held for more than 3 years are charged a long-term capital gain tax of 20% with indexation benefits. However, if the funds are sold before 36 months from the date of purchase, a short-term capital gain tax as per the income tax slab will be applicable. A dividend distribution tax will also be charged on the distribution of dividends for investors who opt for the same.

Who Are These Funds Suited For?

Investors seeking investment opportunities for a period of six to twelve months should consider investing in these funds. However, even the best ultra short-term funds can be exposed to credit risk, so investors ready to accept such volatility should only consider these funds. Ultra short-term funds can also be used for systematic transfer plans to invest in other funds and avoid making a single lump-sum investment. These funds are ideal for investors who wish to take advantage of interest rate changes and low yields. However, investors seeking guaranteed returns should opt for other safer options.

Major Advantages

These funds serve as a perfect tool for short-term parking of money. Investors planning to invest for a period up to a year can opt for some of the best ultra short-term mutual funds in India which generate higher returns compared to the liquid funds. These mutual funds provide even higher returns during a falling interest rate market scenario. It is worth noting that UST funds can turn out to be risky if the fund house has made investments in low rated instruments.

As stated earlier you can consider these funds as ideal instruments to park money for short term, like money for school fees, insurance premiums etc.

These funds can also be used to park a portion of the retirement corpus to generate regular income via a systematic withdrawal plan. The best ultra short-term funds in India serve as a substitute for short-term bank deposits and can generate higher returns. These funds can also be used in combination with liquid funds to build an emergency fund.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

PGIM India Ultra Short Term Direct Growth

Fund Performance: This fund has given 9.55% annualized returns in the last three years. In the last year, its returns were 13.44%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 13.44% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM143Cr
1Y Returns13.4%

ICICI Prudential Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 8.12% annualized returns in the last three years. In the last year, its returns were 8.5%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 8.5% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM8,612Cr
1Y Returns8.5%

Mahindra Low Duration Bachat Yojana Direct Growth

Fund Performance: This fund has given 7.83% annualized returns in the last three years. In the last year, its returns were 8.41%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 8.41% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹1,000
AUM503Cr
1Y Returns8.4%

Indiabulls Ultra Short Term Direct Fund Growth

Fund Performance: This fund has given 7.6% annualized returns in the last three years. In the last year, its returns were 7.61%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.61% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM256Cr
1Y Returns7.6%

Invesco India Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.65% annualized returns in the last three years. In the last year, its returns were 7.39%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.39% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹1,000
AUM560Cr
1Y Returns7.4%

Kotak Savings Fund Direct Growth

Fund Performance: This fund has given 7.6% annualized returns in the last three years. In the last year, its returns were 7.58%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.58% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM12,951Cr
1Y Returns7.6%

Canara Robeco Savings Fund Direct Growth

Fund Performance: This fund has given 7.38% annualized returns in the last three years. In the last year, its returns were 7.64%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.64% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM1,126Cr
1Y Returns7.6%

SBI Magnum Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 7.55% annualized returns in the last three years. In the last year, its returns were 7.51%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.51% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹5,000.

Min Investment Amt₹5,000
AUM14,116Cr
1Y Returns7.5%

YES Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were NA. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing NA returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹500
AUM36Cr
1Y ReturnsNA

BOI AXA Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 7.58% annualized returns in the last three years. In the last year, its returns were 7.17%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.17% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM295Cr
1Y Returns7.2%

Aditya Birla Sun Life Savings Direct Growth

Fund Performance: This fund has given 7.78% annualized returns in the last three years. In the last year, its returns were 7.92%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.92% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹1,000
AUM16,489Cr
1Y Returns7.9%

DSP Ultra Short Fund Direct Plan Growth

Fund Performance: This fund has given 6.8% annualized returns in the last three years. In the last year, its returns were 7.42%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.42% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM2,594Cr
1Y Returns7.4%

L&T Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.5% annualized returns in the last three years. In the last year, its returns were 7.39%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.39% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹10,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹10,000
AUM2,786Cr
1Y Returns7.4%

Canara Robeco Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.69% annualized returns in the last three years. In the last year, its returns were 6.77%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 6.77% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM202Cr
1Y Returns6.8%

DSP Low Duration Fund Direct Growth

Fund Performance: This fund has given 7.76% annualized returns in the last three years. In the last year, its returns were 8.31%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 8.31% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM2,980Cr
1Y Returns8.3%

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