What is the Macaulay duration?

Macaulay duration is the weighted average time before a bondholder receives the bond's cash flows. For Short Duration Funds, it's between 1 to 3 years.

How do you assess the performance of Short Duration Funds?

Check historical returns, credit quality of holdings, expense ratio, and compare them against peers and benchmark indices.

How long should I stay invested in Short Duration Funds?

Ideally, for at least 1 to 3 years to optimise returns and reduce the impact of short-term interest rate movements.

When should I invest in a Short Duration Mutual Fund?

They are suitable when you have short-term goals or expect interest rates to rise moderately.

Should I invest in Short Duration Mutual Funds?

Yes, if you seek better returns than FDs with relatively low risk for a 1–3 year horizon.

How much money should I invest in Short Duration Mutual Funds?

Depends on your short-term goal and risk appetite. Typically, investors allocate emergency funds or idle cash here.

Are Short Duration Funds High Risk?

No, they are considered to be moderate risk instruments, much safer than equity or long-duration debt funds.

Short Duration Mutual Funds

If you’re looking for a way to invest that offers a good balance between safety and returns, short duration funds are worth considering. These funds typically invest in fixed-income securities that mature within 1 to 3 years. Because of their shorter time frame, they handle interest rate changes more smoothly than longer-term debt funds, making them a solid choice for investors who prefer a cautious approach. View More

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List of Short Duration Mutual Funds

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Search Result - 25 Mutual Funds

Fund Name	Fund Size (Cr.)	3Y Returns	5Y Returns

Fund Name	1Y Returns	Rating	Fund Size (Cr.)

What is a Short Duration Mutual Fund?

Short Duration Mutual Fund meaning are a category of debt funds that invest in fixed income instruments with Macaulay duration between 1 to 3 years. As per SEBI guidelines, these funds must maintain this duration range at all times. They primarily invest in corporate bonds, government securities, commercial papers, and certificates of deposit.

They are considered low to moderate risk and offer higher returns than liquid or ultra-Short Duration Funds, typically in the range of 6.5% to 7.5% annually. Their risk-reward profile makes them ideal for investors with a short to medium investment horizon who seek better returns than savings accounts or FDs.

Major Advantages of a Short Duration Fund

1. Better Returns Than Fixed Deposits: Short duration funds have the potential to deliver higher post-tax returns compared to traditional bank fixed deposits.
2. Moderate Risk with More Stability: These funds are less sensitive to interest rate changes than long-duration debt funds, offering greater stability in fluctuating markets.
3. High Liquidity: With easy redemption options and lower exit loads, short duration funds provide quick access to your money, making them ideal for short-term financial needs.
4. Perfect for Short-Term Goals: They suit financial objectives like buying a vehicle, planning a vacation, or building an emergency fund, thanks to their typical 1 to 3-year investment horizon.
5. Reduced Market Volatility Impact: By investing in debt instruments with shorter maturities, these funds maximise exposure to market ups and downs, appealing to conservative investors.
6. Alignment with Financial Timelines: The short duration of these funds helps investors match their investments with medium-term financial goals, ensuring funds are available when needed.

How do Short Duration Mutual Funds Work?

Short duration mutual funds put your money into debt instruments that generally mature within one to three years. Think of things like government bonds or corporate loans that pay interest over a shorter period. Because these investments don’t stretch out too long, they aren’t as affected when interest rates go up or down — so the value tends to stay steadier. A Short Duration Fund investment typically involves parking money in debt instruments with a maturity period of 1 to 3 years, offering better returns than savings accounts.

The fund manager keeps an eye on the market and picks bonds and other fixed-income options that seem reliable, aiming to give you steady returns without taking on too much risk. This makes short duration funds a good fit if you’re looking to grow your money over the next few years but want to avoid the ups and downs that come with longer-term investments.

Another plus is that these funds are fairly liquid, meaning you can usually get your money back without much hassle if you need it. In simple terms, short duration funds help you balance safety and growth, making them a smart choice for medium-term goals like saving for a vacation, a new car, or building an emergency fund.

Who Should Invest in Short Duration Funds?

1. Investors with a Medium-Term Horizon (1–3 years): Short duration funds are suitable for individuals looking to invest for a slightly longer period than liquid or ultra short duration funds. They aim to deliver stable returns while managing interest rate risks effectively.
2. Those Seeking Better Returns Than Bank FDs: These funds typically offer better yields than fixed deposits of similar tenure, though with slightly higher risk. They're a smart option for investors who want to beat inflation without locking in funds for too long.
3. Moderately Risk: Tolerant Investors: Short duration funds carry moderate interest rate risk, making them ideal for investors comfortable with some volatility for higher returns. They're safer than long-term bond funds but more rewarding than ultra short funds.
4. Investors Looking to Diversify Their Debt Portfolio: Including short duration funds in a fixed-income portfolio can help spread risk and enhance overall return potential. They complement other debt instruments like liquid or long-duration funds.

How to Invest in Short Duration Funds?

Investing in short duration funds through 5paisa is a simple, streamlined process that puts you in control of your money with just a few clicks. Here’s how to get started:

1. Create Your 5paisa Account: Begin by signing up on the 5paisa platform. The registration process is quick, and you can complete it online without visiting a branch.
2. Complete KYC Formalities: Upload your PAN, Aadhaar, and other required documents for KYC verification. 5paisa ensures a fully digital process, so you don’t need to worry about paperwork delays.
3. Explore Fund Options: Once your account is active, head to the mutual fund section and browse through a curated list of short duration funds. 5paisa offers detailed insights, ratings, and comparisons to help you make an informed choice.
4. Choose How to Invest: Depending on your financial plan, you can either go for a one-time investment or start a SIP (Systematic Investment Plan) directly through the platform. 5paisa allows you to set SIP dates and amounts with complete flexibility.
5. Track and Adjust as Needed: After investing, you can monitor fund performance using 5paisa’s intuitive dashboard. You’ll find tools to track returns, compare funds, and rebalance your portfolio when necessary—all in one place.

By using 5paisa, you not only gain access to top mutual funds but also benefit from a tech-driven platform that simplifies investing without compromising on research or control.

Factors to Consider While Investing in Short Duration Funds

1. Risk Profile: While safer than equity funds, Short Duration Funds carry interest rate and credit risk.
2. Return Potential: Historical returns average between 6.5% to 7.5%, but not guaranteed.
Fund Manager Expertise: Choose funds managed by reputed fund houses with consistent past performance.
Expense Ratio: Lower expense ratio ensures more of your returns stay with you.

How Are Short Duration Funds Taxed?

Short duration funds are treated as debt funds for tax purposes. The table below illustrates how are these funds taxed:

Investment Date	Holding Period	Tax Treatment	Tax Rate
Before April 1, 2023	≥ 24 months	LTCG	12.5% (no indexation)
Before April 1, 2023	< 24 months	STCG	As per income tax slab
On/After April 1, 2023	Any duration	STCG	As per income tax slab

Risks Involved When Investing in Short Duration Funds

1. Credit Risk: Risk of issuer defaulting on payment obligations.
2. Interest Rate Risk: If rates rise sharply, bond prices fall, affecting NAV.
3. Liquidity Risk: Difficulty in selling lower-rated debt instruments at the right price.
4. Reinvestment Risk: Income earned might need to be reinvested at lower interest rates.

Popular Short Duration Mutual Funds

Fund Name
Min Investment Amt
AUM
3Y Returns

Short Duration Mutual Funds

Kickstart your SIP journey with just ₹100!

List of Short Duration Mutual Funds

Category

Sub Category

Rating

What is a Short Duration Mutual Fund?

Major Advantages of a Short Duration Fund

How do Short Duration Mutual Funds Work?

Who Should Invest in Short Duration Funds?

How to Invest in Short Duration Funds?

Factors to Consider While Investing in Short Duration Funds

How Are Short Duration Funds Taxed?

Risks Involved When Investing in Short Duration Funds

Popular Short Duration Mutual Funds

ICICI Pru Short Term Fund - Direct Growth

₹ 1000

₹ 20,9350

8.28%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 20,935

3Y Return

8.28%

Nippon India Short Duration Fund - Direct Growth

₹ 100

₹ 9,7230

8.07%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 9,723

3Y Return

8.07%

Aditya Birla SL Short Term Fund-DirGrowth

₹ 1000

₹ 10,5750

8.04%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 10,575

3Y Return

8.04%

AXIS Short Duration Fund - Direct Growth

₹ 100

₹ 12,7080

8.03%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 12,708

3Y Return

8.03%

Mahindra Manulife Short Duration Fund - Dir Growth

₹ 500

₹ 980

7.98%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 98

3Y Return

7.98%

HDFC Short Term Debt Fund - Direct Growth

₹ 100

₹ 18,0790

7.96%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 18,079

3Y Return

7.96%

Baroda BNP Paribas Short Duration Fund-Dir Growth

₹ 500

₹ 2840

7.93%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 284

3Y Return

7.93%

Kotak Bond - Short Term Fund - Direct Growth

₹ 100

₹ 18,0220

7.88%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 18,022

3Y Return

7.88%

Mirae Asset Short Duration Fund - Direct Growth

₹ 99

₹ 5890

7.84%

Min SIP Investment Amt

₹ 99

AUM (Cr.)

₹ 589

3Y Return

7.84%

Sundaram Short Duration Fund - Direct Growth

₹ 100

₹ 1900

7.81%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 190

3Y Return

7.81%

Other Calculators

FAQs

What is the Macaulay duration?

How do you assess the performance of Short Duration Funds?

How long should I stay invested in Short Duration Funds?

When should I invest in a Short Duration Mutual Fund?

Should I invest in Short Duration Mutual Funds?

How much money should I invest in Short Duration Mutual Funds?

Are Short Duration Funds High Risk?

Open Free Demat Account

Short Duration Mutual Funds

Kickstart your SIP journey with just ₹100!

List of Short Duration Mutual Funds

Category

Sub Category

Rating

What is a Short Duration Mutual Fund?

Major Advantages of a Short Duration Fund

How do Short Duration Mutual Funds Work?

Who Should Invest in Short Duration Funds?

How to Invest in Short Duration Funds?

Factors to Consider While Investing in Short Duration Funds

How Are Short Duration Funds Taxed?

Risks Involved When Investing in Short Duration Funds

Popular Short Duration Mutual Funds

ICICI Pru Short Term Fund - Direct Growth ₹ 1000 ₹ 20,9350 8.28% Min SIP Investment Amt ₹ 1000 AUM (Cr.) ₹ 20,935 3Y Return 8.28%

Nippon India Short Duration Fund - Direct Growth ₹ 100 ₹ 9,7230 8.07% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 9,723 3Y Return 8.07%

Aditya Birla SL Short Term Fund-DirGrowth ₹ 1000 ₹ 10,5750 8.04% Min SIP Investment Amt ₹ 1000 AUM (Cr.) ₹ 10,575 3Y Return 8.04%

AXIS Short Duration Fund - Direct Growth ₹ 100 ₹ 12,7080 8.03% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 12,708 3Y Return 8.03%

Mahindra Manulife Short Duration Fund - Dir Growth ₹ 500 ₹ 980 7.98% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 98 3Y Return 7.98%

HDFC Short Term Debt Fund - Direct Growth ₹ 100 ₹ 18,0790 7.96% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 18,079 3Y Return 7.96%

Baroda BNP Paribas Short Duration Fund-Dir Growth ₹ 500 ₹ 2840 7.93% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 284 3Y Return 7.93%

Kotak Bond - Short Term Fund - Direct Growth ₹ 100 ₹ 18,0220 7.88% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 18,022 3Y Return 7.88%

Mirae Asset Short Duration Fund - Direct Growth ₹ 99 ₹ 5890 7.84% Min SIP Investment Amt ₹ 99 AUM (Cr.) ₹ 589 3Y Return 7.84%

Sundaram Short Duration Fund - Direct Growth ₹ 100 ₹ 1900 7.81% Min SIP Investment Amt ₹ 100 AUM (Cr.) ₹ 190 3Y Return 7.81%

Other Calculators

FAQs

What is the Macaulay duration?

How do you assess the performance of Short Duration Funds?

How long should I stay invested in Short Duration Funds?

When should I invest in a Short Duration Mutual Fund?

Should I invest in Short Duration Mutual Funds?

How much money should I invest in Short Duration Mutual Funds?

Are Short Duration Funds High Risk?

Open Free Demat Account

ICICI Pru Short Term Fund - Direct Growth

₹ 1000

₹ 20,9350

8.28%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 20,935

3Y Return

8.28%

Nippon India Short Duration Fund - Direct Growth

₹ 100

₹ 9,7230

8.07%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 9,723

3Y Return

8.07%

Aditya Birla SL Short Term Fund-DirGrowth

₹ 1000

₹ 10,5750

8.04%

Min SIP Investment Amt

₹ 1000

AUM (Cr.)

₹ 10,575

3Y Return

8.04%

AXIS Short Duration Fund - Direct Growth

₹ 100

₹ 12,7080

8.03%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 12,708

3Y Return

8.03%

Mahindra Manulife Short Duration Fund - Dir Growth

₹ 500

₹ 980

7.98%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 98

3Y Return

7.98%

HDFC Short Term Debt Fund - Direct Growth

₹ 100

₹ 18,0790

7.96%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 18,079

3Y Return

7.96%

Baroda BNP Paribas Short Duration Fund-Dir Growth

₹ 500

₹ 2840

7.93%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 284

3Y Return

7.93%

Kotak Bond - Short Term Fund - Direct Growth

₹ 100

₹ 18,0220

7.88%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 18,022

3Y Return

7.88%

Mirae Asset Short Duration Fund - Direct Growth

₹ 99

₹ 5890

7.84%

Min SIP Investment Amt

₹ 99

AUM (Cr.)

₹ 589

3Y Return

7.84%

Sundaram Short Duration Fund - Direct Growth

₹ 100

₹ 1900

7.81%

Min SIP Investment Amt

₹ 100

AUM (Cr.)

₹ 190

3Y Return

7.81%