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Top funds for short term investment

Top funds for short term investment
by 5paisa Research Team 14/01/2022

With the US Fed firm on its hawkish stance, even the RBI is likely to follow the suit, in such a scenario short duration funds are something to look to park short-term money.

The US Fed seems now seized of this consideration and the year ahead looks like one of policy normalization, even as the bond markets continue to signal the same. Even the Reserve Bank of India’s (RBI) commentary remains quite dovish so far. Going forward, policy normalization may still require sporadic bond market interventions to control the pace of pass-through and in line with the often-expressed desire for an orderly evolution of the yield curve.

The year ahead will thus likely be one of this transition and hence will likely continue to throw up significant volatility. Therefore, for parking short-term money or actively managing your fixed-income portfolio, invest in funds that are low on duration. Even at this stage adding a floater fund is also likely to benefit as it moves along with interest rates rather than against it.

The credit space is much better, however, the spreads for the most part is quite low especially when compared with the relatively higher term spreads on offer. Given this, and the continued prospects for volatility as we turn the year, our preference would remain for quality-oriented corporate bond funds and short-duration funds.

Below is the list of top five short-duration funds that you can consider to park your short-term money.

Trailing Returns (%) 

3-Month 

6-Month 

1-Year 

3-Year 

5-Year 

Nippon India Short Term Fund 

0.7 

2.2 

4.6 

7.6 

6.7 

Axis Short Term Fund 

0.6 

1.9 

3.7 

7.7 

7.0 

HDFC Short Term Debt Fund 

0.6 

2.0 

3.8 

8.0 

7.5 

Aditya Birla Sun Life Short Term Fund 

0.6 

2.0 

3.9 

7.7 

6.9 

ICICI Prudential Short Term Fund 

0.5 

1.9 

3.7 

7.9 

7.0 

Returns above 1-Year are annualised

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