Invest in Best Short Term Funds in India 2024
Discover the best Short term Funds to invest in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Short term Funds in the market.
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What is Short term Mutual Funds?
Short term funds also known as short duration funds are typically investments that invest in debt and money market securities with a investment horizon between 1 to 3 years.
Who Should Invest in Short-Term Mutual Funds?
- Individuals with a short-term investment horizon: People with typically short investment horizon can invest in this fund
- Risk-averse investors: These funds are typically less volatile than equity funds, making them ideal for risk-averse investors.
- Those looking for a stable return: Short term funds offer potentially stable returns than other funds
Best performing Short term Mutual Funds
| Fund name | Category | Risk | 6 months return | 1 year returns | Rating | Fund Size in crores |
| ICICI Prudential Short term funds | Short term Funds | Moderate | 4.02% | 7.59% | 4 | 18228 |
| HSBC Short term funds | Short term Funds | Moderate | 3.77% | 7.09% | 4 | 3739 |
| Bandhan Bond Fund | Short term Funds | Moderate | 3.93% | 7.47% | 4 | 8618 |
| Kotak Bond Short term fund | Short term Funds | Moderate | 3.98% | 7.12% | 3 | 15045 |
| HDFC Short term | Short term Funds | Moderate | 4.27% | 7.73% | 3 | 13080 |
Factors to Consider While Investing in Short-Term Mutual Funds
- Fund Manager’s Experience: Check and invest in funds whose managers have exceptional track record in managing the funds. You can access these information easily by searching online about that particular funds
- Credit Rating of the Underlying Securities: Ensure that your investment goes into securities with good rating
- Historical Returns: Invest in funds that have yielded consistently good returns over the past three or four years
- Expense Ratio: The expense ratio represents the fund’s annual operating costs. Pick the one that has reasonable expense ratio so that it does not bite your returns
- Liquidity: Make sure your fund has enough scope for liquidity so that you can redeem them during emergency
Major Benefits of Short-Term Mutual Funds
- Capital Appreciation: While the objective of the fund is to provide steady returns, they also provide market capitalization when the interest rates are falling
- Regular Income Generation: These funds provide regular income through coupon generation
- Diversification: Investing in these funds diversifies your portfolio by spreading your risk across various debt securities
- Liquidity: Most short-term funds offer good liquidity, allowing you to access your money when needed
Risks Involved in Short-Term Mutual Funds
- Interest Rate Risk: Rising interest rates can potentially impact your friends leading to potential capital losses
- Credit Risk: There’s result of default of debt securities in the fund which can potentially impact your returns
- Inflation Risk: High inflation period may result in your returns not living up to keep up pace with the markets
- Liquidity Risk: During market downturns, investors may find liquidity to be problem
FAQ on Short-term Mutual Funds
1. What is the minimum investment amount in short-term mutual funds?
The minimum investment varies across funds. Typically you can start with investment of Rs. 500 or Rs. 1000
2. How can I invest in short-term mutual funds?
You can invest in short term funds through the respective Fund house website or mutual fund aggregator like Fincover which can help you pick the best short term fund
3. What is the tax treatment of returns from short-term mutual funds?
Short-term capital gains at present is 20% on certain short term mutual funds
4. How can I track the performance of my short-term mutual fund investment?
You can track the performance of short term mutual fund investment through the fund house website
5. Are short-term mutual funds suitable for retirement planning?
They are not suited for retirement planning, ideally they are for typically short term investors
- Tata Mutual Fund
- Canara Robeco Mutual Fund
- PPFAS Mutual Fund
- Nippon India Mutual Fund
- HSBC Mutual Fund
- SBI Mutual Fund
- Edelweiss Mutual Fund
- PGIM India Mutual Fund
- LIC Mutual Fund
- Bandhan Mutual Fund
- Quantum Mutual Fund
- HDFC Mutual Fund
- Axis Mutual Fund
- ITI Mutual Fund
- Kotak Mutual Fund
- ICICI Prudential MF
- Aditya Birla Sunlife MF
- DSP Mutual Funds
- Mirae Asset Mutual Fund
- Motilal Oswal Mutual Fund
- Sundaram Mutual Fund
- Invesco Mutual Fund
- Taurus Mutual Fund
- Whiteoak Capital MF
- Quant Mutual Fund
- JM Financial MF
- UTI Mutual Fund
- Baroda BNP Paribas MF
- Franklin Templeton MF
- Union Mutual Fund
