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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)
ICICI Prudential Ultra Short Term FundDebtModerately High6.8%5star8,558
Aditya Birla Sun Life Savings FundDEBTModerate6.8%5star16,540
Mahindra ALP-Samay Bachat YojanaDebtModerate6.8%5star643
Kotak Savings FundDebtModerately Low6.0%4star12,428
SBI Magnum Ultra Short Duration FundDebtModerately Low5.8%4star14,272
DSP Low Duration FundDebtModerately Low6.5%3star3,966
Canara Robeco Savings FundDebtModerately Low6.3%3star1,395
Invesco India Ultra Short Term FundDebtModerate5.5%3star971
L&T Ultra Short Term FundDebtModerately Low5.6%3star1,966
BOI AXA Ultra Short Duration FundDebtModerately Low5.0%3star403
DSP Ultra Short FundDebtModerately Low5.2%3star3,263
Essel Ultra Short Term FundDebtModerately Low4.4%3star24
Canara Robeco Ultra Short Term FundDebtModerately Low4.9%3star460
Tata Ultra Short Term FundDebtModerate5.5%3star519
Sundaram Ultra Short Term FundDebtLow5.4%3star1,003
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 8.01% annualized returns in the last three years. In the last year, its returns were 6.85%. 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 6.85% 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
AUM8,558Cr
1Y Returns6.8%

Aditya Birla Sun Life Savings Direct Growth

Fund Performance: This fund has given 7.73% annualized returns in the last three years. In the last year, its returns were 6.8%. 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 6.8% 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
AUM16,540Cr
1Y Returns6.8%

Mahindra Manulife Low Duration Fund Direct Growth

Fund Performance: This fund has given 7.73% annualized returns in the last three years. In the last year, its returns were 6.82%. 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 6.82% 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 ₹500.

Min Investment Amt₹1,000
AUM643Cr
1Y Returns6.8%

Kotak Savings Fund Direct Growth

Fund Performance: This fund has given 7.37% annualized returns in the last three years. In the last year, its returns were 6.01%. 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 6.01% 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
AUM12,428Cr
1Y Returns6.0%

SBI Magnum Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 7.31% annualized returns in the last three years. In the last year, its returns were 5.77%. 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 5.77% 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 ₹500.

Min Investment Amt₹5,000
AUM14,272Cr
1Y Returns5.8%

DSP Low Duration Fund Direct Growth

Fund Performance: This fund has given 7.73% 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 ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM3,966Cr
1Y Returns6.5%

Canara Robeco Savings Fund Direct Growth

Fund Performance: This fund has given 7.26% annualized returns in the last three years. In the last year, its returns were 6.25%. 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 6.25% 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
AUM1,395Cr
1Y Returns6.3%

Invesco India Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.17% annualized returns in the last three years. In the last year, its returns were 5.51%. 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 5.51% 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
AUM971Cr
1Y Returns5.5%

L&T Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 7.08% annualized returns in the last three years. In the last year, its returns were 5.58%. 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 5.58% 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
AUM1,966Cr
1Y Returns5.6%

BOI AXA Ultra Short Duration Fund Direct Growth

Fund Performance: This fund has given 6.82% annualized returns in the last three years. In the last year, its returns were 4.95%. 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 4.95% 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 ₹1,000.

Min Investment Amt₹5,000
AUM403Cr
1Y Returns5.0%

DSP Ultra Short Fund Direct Plan Growth

Fund Performance: This fund has given 6.36% annualized returns in the last three years. In the last year, its returns were 5.18%. 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 5.18% 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
AUM3,263Cr
1Y Returns5.2%

Essel Ultra Short Term Fund Super Institutional Plan Direct Growth

Fund Performance: This fund has given 6.3% annualized returns in the last three years. In the last year, its returns were 4.37%. 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 4.37% 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
AUM24Cr
1Y Returns4.4%

Canara Robeco Ultra Short Term Fund Direct Growth

Fund Performance: This fund has given 6.23% annualized returns in the last three years. In the last year, its returns were 4.88%. 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 4.88% 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 ₹1,000.

Min Investment Amt₹5,000
AUM460Cr
1Y Returns4.9%

Tata Ultra Short Term Fund Direct Growth

Fund Performance: In the last year, its returns were 5.45%. 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 5.45% 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
AUM519Cr
1Y Returns5.5%

Sundaram Ultra Short Term Fund Direct Growth

Fund Performance: 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 ₹1,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹1,000
AUM1,003Cr
1Y Returns5.4%

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