Top 10 Short Duration Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Indiabulls Income FundDebtModerate10.2%5star11
Indiabulls Short Term FundDebtLow10.0%5star108
Baroda Pioneed Credit Risk FundDebtModerate5.0%5star886
SBI Magnum Constant Maturity FundDebtModerately Low16.9%5star394
DSP BlackRock Savings Fund DebtModerately Low8.4%5star1,205
Kotak Dynamic Bond FundDebtModerately Low14.4%5star680
Franklin India Dynamic Accrual FundDebtModerate10.3%5star3,923
Sundaram Short Term Credit Risk FundDebtModerately Low0.7%5star364
IDBI Liquid FundDebtLow7.6%5star1,755
ICICI Prudential Ultra Short Term FundDebtModerate9.0%5star4,792
View All Top 10 Short Duration Mutual Funds

Best Short Duration Mutual Funds

Short Duration Mutual Funds are funds that invest at least 65% of the total corpus in debt securities such as Government bonds, gold funds, fund of funds, and international funds, etc. However, Short Duration mutual funds come with trade off. Short Duration generally translates to low returns. Short Duration Mutual Funds do not have a Fixed Investment Horizon.

Short Duration Mutual Funds invest in money market instruments like bonds, treasury bills, etc. Unlike equity mutual funds, they are associated with a lot less risk. Their returns are also much more stable when compared to equity funds. When investing for a short period of time, like less than 2 years, debt funds make very good investments.

One can use Short Duration Mutual Funds as an emergency fund. These are meant for parking your money and keep it handy so that you can redeem it as and when required. Returns are taxed as per your income tax slab if sold before three years.

Purpose: Invest in these funds if you want to park your money as an emergency fund, and redeem as per need.

Let's have a closer look

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

Indiabulls Income Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Medium Duration segment and provided 8.68% annualized returns in the last 3 years. In the last 1 year, it gave 10.18% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 10.18% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Malay Shah

Launch Date03 Mar 2013
Min Investment Amt500
Groww Rating5star
AUM11Cr
1Y Returns10.2%

Indiabulls Short Term Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Short Duration segment and provided 8.54% annualized returns in the last 3 years. In the last 1 year, it gave 9.97% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 9.97% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Malay Shah

Launch Date12 Sep 2013
Min Investment Amt500
Groww Rating5star
AUM108Cr
1Y Returns10.0%

Baroda Pioneed Credit Risk Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 8.13% annualized returns in the last 3 years. In the last 1 year, it gave 5.05% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 5.05% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Alok Kumar Sahoo, Karn Kumar

Launch Date22 Jan 2015
Min Investment Amt5,000
Groww Rating5star
AUM886Cr
1Y Returns5.0%

SBI Magnum Constant Maturity Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Gilt segment and provided 11.33% annualized returns in the last 3 years. In the last 1 year, it gave 16.89% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 16.89% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Dinesh Ahuja

Launch Date01 Jan 2013
Min Investment Amt5,000
Groww Rating5star
AUM394Cr
1Y Returns16.9%

DSP Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Money Market segment and provided 7.09% annualized returns in the last 3 years. In the last 1 year, it gave 8.39% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.39% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Kedar Karnik, Rahul Vekaria

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating5star
AUM1,205Cr
1Y Returns8.4%

Kotak Dynamic Bond Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Dynamic segment and provided 9.97% annualized returns in the last 3 years. In the last 1 year, it gave 14.44% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 14.44% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Deepak Agrawal

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM680Cr
1Y Returns14.4%

Franklin India Dynamic Accrual Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Dynamic segment and provided 9.78% annualized returns in the last 3 years. In the last 1 year, it gave 10.25% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 10.25% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Sachin Padwal-Desai, Santosh Kamath, Umesh Sharma

Launch Date31 Dec 2012
Min Investment Amt10,000
Groww Rating5star
AUM3,923Cr
1Y Returns10.3%

Sundaram Short Term Credit Risk Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Credit Risk segment and provided 5.6% annualized returns in the last 3 years. In the last 1 year, it gave 0.73% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 0.73% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Sandeep Agarwal

Launch Date26 Feb 2015
Min Investment Amt5,000
Groww Rating5star
AUM364Cr
1Y Returns0.7%

IDBI Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.18% annualized returns in the last 3 years. In the last 1 year, it gave 7.59% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.59% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Raju Sharma

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM1,755Cr
1Y Returns7.6%

ICICI Prudential Ultra Short Term Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Ultra Short Duration segment and provided 8.69% annualized returns in the last 3 years. In the last 1 year, it gave 8.99% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.99% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Rajat Chandak, Manish Banthia, Ritesh Lunawat

Launch Date09 Jan 2013
Min Investment Amt5,000
Groww Rating5star
AUM4,792Cr
1Y Returns9.0%

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When should I invest in short duration mutual funds?

This is contextual. If you do not wish to invest directly in stocks (because you have better things to do or just don’t feel like it), you can choose equity mutual funds (defined below). If you would like to lower your tax outgo compared to a fixed or recurring deposit and if possible with better returns, you can choose debt mutual funds (defined below). The clearer you are about your need, the faster and confident you will be in taking decisions regarding mutual funds – well, this applies to anything in life!

Who issues very short duration mutual funds?

Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.

When is the right time to start investing in Mutual Funds?

The answer to this question depends on the rating and performance of mutual fund you are investing into and the amount of risk you are willing to take. Depending on the above factors let's go ahead: 1) the performance of mutual fund you are investing into makes a lot of difference since a lot of research needs to be done before investing. i) how that particular fund is diversifying its assets since many of funds are sector funds and some others put a lot of money into one sector like banking/finance. ii) But if that particular sector doesn't perform well in the long term you would end up losing your money iii) Some sectors like FMCG (HUL, Dabur) or automobile like Maruti Suzuki(because of innovations it brings in) almost make profits throughout the year and hence it's very advantageous to invest in them for long-term in these sectors. Investment time: more than 3 years. 2) The amount of risk you are willing to take i) It is important since if you want to invest in low-risk funds, debt funds will be the best option(moderate returns, low risk) investment time period: less than 1 or 1.5 years ii) But if you want high returns, more diversification equity mutual funds will be the best since the higher the risk, more will be the returns. Investment time: depending on the performance of fund (on an average 4 or greater than 4 years) iii) For a balanced portfolio, you may invest into balanced mutual funds where there is a combination of both equity and debt mutual funds which will again help you to invest for a good duration like less than 2-3 years.

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Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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