Invest in Best Short Duration Mutual Funds in India for 2025
Explore the list of top-performing short duration mutual funds schemes curated by our experts
Best Short Duration Funds
Short Duration Mutual Funds are strategic debt investment instruments designed to provide investors with a balanced approach to earning returns while managing risk. These funds invest in debt and money market instruments with a specific maturity profile, typically between 1-3 years, offering a compelling option for investors seeking moderate risk and consistent returns.
You would have got
Total Investment
₹ 1200
Expected Returns
₹ 35
Total Value
₹ 1235
Past performance doesn’t assure future results; actual outcome may vary due to market dynamics.
Your Investment Amount
- 1
- 2
- 3
- 4
- 5
per annum
Understanding Short Duration Mutual Funds
How Do Short Duration Mutual Funds Work?
Short Duration Mutual Funds strategically invest in debt and money market instruments with maturities between 1-3 years. Fund managers carefully select securities to balance risk and potential returns, focusing on:
- High-quality corporate bonds
- Government securities
- Commercial papers
- Certificate of deposits
These funds provide investors with:
- Moderate risk profile
- Potential for steady income
- Liquidity and flexibility
Frequently Asked Questions
Short Duration Mutual Funds are debt mutual fund schemes that invest in fixed-income securities and money market instruments with a specific maturity profile typically ranging between 1-3 years. These funds aim to provide investors with relatively stable returns while maintaining a moderate risk profile.
Unlike liquid or overnight funds, short duration funds have a slightly longer investment horizon. They invest in securities with medium-term maturities, offering potentially higher returns compared to ultra-short-term funds while maintaining lower volatility than long-duration debt funds.
Short Duration Funds are considered relatively safer compared to equity funds, but still subject to market and credit risks. Professional management and diversification help mitigate these risks.
Historically, these funds have delivered returns ranging between 7-9% annually, depending on market conditions and specific fund performance. Remember, past performance does not guarantee future results.
When investing in Short Duration Funds, experts recommend:
- Minimum investment period: 1-3 years
- Optimal investment horizon: 2-4 years
- Allows riding out short-term market fluctuations
- Provides opportunity to maximise potential returns
Yes, investors can start with Systematic Investment Plans (SIPs) from ₹ 100, lump sum investments from @rs 1,000, with the flexibility to increase investments gradually.
It's recommended that your review frequency be as follows:
- Quarterly performance check
- Annual comprehensive portfolio review
- Monitor the fund's:
- Returns
- Expense ratio
- Portfolio composition
- Credit quality
Key evaluation parameters should include historical performance, expense ratio, fund manager's track record, portfolio credit rating, interest rate sensitivity, and Asset under management (AUM).
Yes, most short duration funds offer high liquidity, minimal exit load after a specific period, ability to redeem units partially or fully, and no lock-in period.
In comparison to fixed deposits, Short Duration Funds offer potentially higher returns, are more tax-efficient, provide greater flexibility, are professionally managed, have market-linked returns, and are slightly higher risk than fixed deposits.
Choice offers comprehensive fund research, expert consulting services, a user-friendly investment platform, regular portfolio insights, and advanced investment tools for you to make well-informed decisions.
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