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)
ICICI Prudential Ultra Short Term FundDebtModerate8.0%5star6,940
PGIM India Ultra Short Term FundDebtModerately Low53.8%5star142
Aditya Birla Sun Life Savings FundDebtModerately Low7.7%5star16,218
Mahindra ALP-Samay Bachat YojanaDebtModerately Low7.8%5star512
Indiabulls Ultra Short Term FundDebtModerately Low6.5%4star22
Kotak Savings FundDebtModerately Low7.1%4star11,176
SBI Magnum Ultra Short Duration FundDebtLow6.9%4star12,635
YES Ultra Short Term FundDebtModerately Low4.8%4star61
DSP Ultra Short FundDebtModerately Low6.2%3star2,540
Invesco India Ultra Short Term FundDebtModerate6.5%3star667
IDBI Ultra Short Term FundDebtModerately Low6.1%3star263
L&T Ultra Short Term FundDebtModerately Low6.6%3star2,045
Tata Ultra Short Term FundDebtModerately Low6.3%3star202
Canara Robeco Ultra Short Term FundDebtLow5.9%3star253
Canara Robeco Savings FundDebtModerately Low7.2%3star1,228
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.

ICICI Prudential Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 8.06% annualized returns in the last three years. In the last year, its returns were 8.03%. 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 8.03% 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
AUM6,940Cr
1Y Returns8.0%

PGIM India Ultra Short Term Direct Growth

Fund Performance: This fund has given 9.45% annualized returns in the last three years. In the last year, its returns were 53.75%. 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 53.75% 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
AUM142Cr
1Y Returns53.8%

Aditya Birla Sun Life Savings Direct Growth

Fund Performance: This fund has given 7.84% annualized returns in the last three years. In the last year, its returns were 7.72%. 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 7.72% 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
AUM16,218Cr
1Y Returns7.7%

Mahindra Manulife Low Duration Fund Direct Growth

Fund Performance: This fund has given 7.87% annualized returns in the last three years. In the last year, its returns were 7.83%. 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 7.83% 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
AUM512Cr
1Y Returns7.8%

Indiabulls Ultra Short Term Direct Fund Growth

Fund Performance: This fund has given 7.3% annualized returns in the last three years. In the last year, its returns were 6.52%. 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 6.52% 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
AUM22Cr
1Y Returns6.5%

Kotak Savings Fund Direct Growth

Fund Performance: This fund has given 7.56% annualized returns in the last three years. In the last year, its returns were 7.08%. 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 7.08% 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
AUM11,176Cr
1Y Returns7.1%

SBI Magnum Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 7.59% annualized returns in the last three years. In the last year, its returns were 6.87%. 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 6.87% 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
AUM12,635Cr
1Y Returns6.9%

YES Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 4.77%. 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 4.77% 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
AUM61Cr
1Y Returns4.8%

DSP Ultra Short Fund Direct Plan Growth

Fund Performance: This fund has given 6.61% annualized returns in the last three years. In the last year, its returns were 6.22%. 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 6.22% 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
AUM2,540Cr
1Y Returns6.2%

Invesco India Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.39% annualized returns in the last three years. In the last year, its returns were 6.47%. 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 6.47% 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
AUM667Cr
1Y Returns6.5%

IDBI Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.92% annualized returns in the last three years. In the last year, its returns were 6.09%. 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 6.09% 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
AUM263Cr
1Y Returns6.1%

L&T Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.34% annualized returns in the last three years. In the last year, its returns were 6.6%. 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 6.6% 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
AUM2,045Cr
1Y Returns6.6%

Tata Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 6.31%. 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 6.31% 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
AUM202Cr
1Y Returns6.3%

Canara Robeco Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.55% annualized returns in the last three years. In the last year, its returns were 5.9%. 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 5.9% 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
AUM253Cr
1Y Returns5.9%

Canara Robeco Savings Fund Direct Growth

Fund Performance: This fund has given 7.42% annualized returns in the last three years. In the last year, its returns were 7.16%. 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 7.16% 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
AUM1,228Cr
1Y Returns7.2%

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