Invest in Best Low Duration Mutual Funds in India for 2026
Explore the list of top-performing low duration mutual funds schemes curated by our experts
Best Low Duration Funds
Low Duration Funds are strategic debt mutual fund schemes that invest in debt and money market instruments with maturities between 6 to 12 months. These funds offer investors a balanced approach to generating stable returns while maintaining relatively lower interest rate risk compared to longer-duration debt funds. Ideal for investors seeking short to medium-term investment opportunities with moderate risk and enhanced liquidity.
You would have got
Total Investment
₹ 1200
Expected Returns
₹ 41
Total Value
₹ 1241
Past performance doesn’t assure future results; actual outcome may vary due to market dynamics.
Your Investment Amount
- 1
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per annum
Understanding Low Duration Funds
How Do Low Duration Mutual Funds Work?
Low Duration Mutual Funds pool money from multiple investors to invest in a diversified portfolio of debt and money market instruments with maturities between 6-12 months. Fund managers carefully analyse market trends, credit ratings, and economic factors to select securities that balance returns and risk.
Low Duration Funds FAQs
Low Duration Funds are debt mutual funds investing in short-term debt and money market instruments with a 6-12 month portfolio duration, aiming to provide relatively stable returns with lower interest rate risk.
Unlike longer-duration debt funds, Low Duration Funds have shorter investment tenures, which makes them less vulnerable to interest rate fluctuations. They focus on instruments with shorter maturities, offering greater stability and predictable returns compared to medium or long-duration debt funds.
Low Duration Funds are considered relatively safer compared to equity funds. They carry lower market volatility, reduced interest rate risk, and higher credit quality instruments. However, they are not entirely risk-free and can be impacted by credit, interest rate, and economic risks.
These funds generate returns through interest income from debt instruments, capital appreciation from potential interest rate changes, and strategic portfolio management by experienced fund managers.
Historical data suggests returns typically range between 6-8% annually, though actual returns can vary based on market conditions and fund performance.
Yes, most Low Duration Funds offer Systematic Investment Plans (SIPs) starting from ₹ 500, flexibility to increase or decrease investment amounts, and option for lump sum or periodic investments too.
Low Duration Funds offer high liquidity with: Easy entry and exit options, No significant lock-in periods, Quick redemption processes, Minimal exit load for most funds.
Potential risks include interest rate fluctuations, credit risk of underlying securities, liquidity challenges, reinvestment risks, potential impact of economic changes, and inflation eroding returns.
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