Ultra Short Duration Mutual Funds

Ultra short duration funds, a category of debt mutual funds, invest in fixed-income instruments with a portfolio duration typically between three to six months.

These funds aim to offer better returns than liquid funds by taking on slightly higher interest rate and credit risk. However, they still maintain a relatively low sensitivity to interest rate movements compared to longer-duration debt funds. Ultra short duration funds are suitable for investors looking for short-term parking of funds with the potential for moderate returns. The best-performing Ultra Short Duration Funds are listed in the table below for your consideration.

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List of Ultra Short Duration Mutual Funds

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What is an Ultra Short Duration Mutual Fund?

Ultra Short Duration Mutual Funds are a category of debt mutual funds that invest in a mix of debt and money market instruments with a Macaulay duration between 1 to 3 years, as defined by SEBI. These funds primarily invest in high-quality corporate bonds, government securities, and other fixed-income instruments. They aim to offer better returns than ultra-short or liquid funds while maintaining moderate risk levels.

Ultra Short Term Funds make investments on money market instruments and debt assets to help the Macaulay. The portfolio of the fund has a duration of three to six months. These funds are therefore perfect for conservative investors with a three to six month investment horizon.

Investors who wish to reach certain financial objectives within six months are the ideal candidates for these funds. These funds typically yield returns in the region of 7 to 9%.
 

Popular Ultra Short Duration Mutual Funds

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 8,772
  • 3Y Return
  • 7.65%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 18,981
  • 3Y Return
  • 7.57%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 6,211
  • 3Y Return
  • 7.53%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 16,269
  • 3Y Return
  • 7.51%

  • Min SIP Investment Amt
  • ₹ ₹ 150
  • AUM (Cr.)
  • ₹ 4,684
  • 3Y Return
  • 7.46%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 1,595
  • 3Y Return
  • 7.46%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 4,011
  • 3Y Return
  • 7.46%

  • Min SIP Investment Amt
  • ₹ ₹ 99
  • AUM (Cr.)
  • ₹ 1,780
  • 3Y Return
  • 7.44%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 2,551
  • 3Y Return
  • 7.41%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 205
  • 3Y Return
  • 7.39%

FAQs

Macaulay duration is a way to measure how long, on average, it takes to get your money back from a bond investment—considering both interest payments and the final maturity amount. The Macauley duration for mutual fund Ultra Short Duration is a handy indicator of how sensitive the fund might be to interest rate changes. A shorter duration usually means less volatility when rates move.

Evaluate historical returns, consistency, expense ratio, and the credit quality of the underlying securities.

These funds are best suited for holding periods of anywhere between three months to a couple of years. Staying invested within this range helps you ride out minor rate movements and make the most of the fund’s income-generating potential without taking on unnecessary risk.

If you’ve got surplus funds that you don’t need right away—say for upcoming expenses within the next 1–2 years—ultra short duration funds can be a smart alternative to a savings account. They offer better yield potential with relatively low exposure to interest rate swings, making them ideal for short to medium-term financial goals.

If you are looking for a balance between risk and return for a 1-3 year investment horizon, Ultra Short Duration Funds can be a suitable option.

The amount depends on your personal financial goals, how comfortable you are with some level of risk, and how long you plan to keep your money invested. It’s best to align your investment size with these factors rather than investing a fixed sum without considering your overall financial plan.

They come with moderate risk. While they are generally safer than longer-duration debt funds, they are still exposed to interest rate changes and the credit quality of the securities they hold. This means some fluctuations in returns can occur, but the risk is usually lower compared to funds with longer maturities.

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