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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)
PGIM India Ultra Short Term FundDebtLow to Moderate4.1%5star542
ICICI Prudential Ultra Short Term FundDebtModerately High5.4%5star10,338
Aditya Birla Sun Life Savings FundDebtModerate4.8%5star18,789
Kotak Savings FundDebtLow to Moderate4.0%4star10,545
SBI Magnum Ultra Short Duration FundDebtLow to Moderate3.9%4star12,142
Axis Ultra Short Term FundDebtModerate4.7%4star6,092
Mahindra Manulife Ultra Short Term FundDebtModerately Low4.0%4star200
HDFC Ultra Short Term FundDebtModerate4.4%4star16,034
Invesco India Ultra Short Term FundDebtLow to Moderate3.9%3star655
IDFC Ultra Short Term FundDebtLow to Moderate3.6%3star5,477
L&T Ultra Short Term FundDebtLow to Moderate3.6%3star2,769
Baroda Ultra Short Duration FundDebtLow to Moderate4.0%3star145
IDBI Ultra Short Term FundDebtLow to Moderate4.3%3star389
BOI AXA Ultra Short Duration FundDebtLow to Moderate3.6%3star315
DSP Ultra Short FundDebtLow to Moderate3.8%3star3,244
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 8.58% annualized returns in the last three years. In the last year, its returns were 4.1%. 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 4.1% 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
AUM542Cr
1Y Returns4.1%

ICICI Prudential Ultra Short Term 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 5.39%. 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 5.39% 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
AUM10,338Cr
1Y Returns5.4%

Aditya Birla Sun Life Savings Direct Growth

Fund Performance: This fund has given 7.26% annualized returns in the last three years. In the last year, its returns were 4.82%. 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 4.82% 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
AUM18,789Cr
1Y Returns4.8%

Kotak Savings Fund Direct Growth

Fund Performance: This fund has given 6.73% annualized returns in the last three years. In the last year, its returns were 4.05%. 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 4.05% 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
AUM10,545Cr
1Y Returns4.0%

SBI Magnum Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 6.61% annualized returns in the last three years. In the last year, its returns were 3.88%. 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 3.88% 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
AUM12,142Cr
1Y Returns3.9%

Axis Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 4.66%. 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 4.66% 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
AUM6,092Cr
1Y Returns4.7%

Mahindra Manulife Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 4.04%. 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 4.04% 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
AUM200Cr
1Y Returns4.0%

HDFC Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 4.41%. 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 4.41% 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
AUM16,034Cr
1Y Returns4.4%

Invesco India Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.52% annualized returns in the last three years. In the last year, its returns were 3.86%. 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 3.86% 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
AUM655Cr
1Y Returns3.9%

IDFC Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.5% annualized returns in the last three years. In the last year, its returns were 3.6%. 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 3.6% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹100. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹100
AUM5,477Cr
1Y Returns3.6%

L&T Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.42% annualized returns in the last three years. In the last year, its returns were 3.61%. 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 3.61% 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
AUM2,769Cr
1Y Returns3.6%

Baroda Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 6.28% annualized returns in the last three years. In the last year, its returns were 3.95%. 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 3.95% 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
AUM145Cr
1Y Returns4.0%

IDBI Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.14% annualized returns in the last three years. In the last year, its returns were 4.34%. 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 4.34% 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
AUM389Cr
1Y Returns4.3%

BOI AXA Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 6.1% annualized returns in the last three years. In the last year, its returns were 3.57%. 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 3.57% 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
AUM315Cr
1Y Returns3.6%

DSP Ultra Short Fund Direct Plan Growth

Fund Performance: This fund has given 5.71% annualized returns in the last three years. In the last year, its returns were 3.84%. 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 3.84% 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
AUM3,244Cr
1Y Returns3.8%

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