Short duration debt mutual funds invest in fixed income securities with a portfolio duration of 1-3 years. They offer better returns than savings accounts and liquid funds while maintaining relatively low interest rate risk. Short duration funds are ideal for parking money for 1-3 year goals like building an emergency fund, saving for a vacation, or bridging the gap between fixed deposits.
These funds primarily invest in high-quality corporate bonds, government securities and money market instruments. They are less volatile than medium or long duration debt funds, making them suitable for conservative investors seeking stable, predictable returns above inflation without equity market risk.
| # | Fund Name | NAV (₹) | 1Y Return ▼ | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|---|
| 1 | Tata Ultra Short Term Fund | 15.81 | +6.47% | +7.41% | +6.53% |
| 2 | Nippon India Ultra Short Duration Fund- Direct Plan- Growth Option | 4,718.71 | +6.44% | +7.50% | +7.54% |
| 3 | Mirae Asset Ultra Short Duration Fund Direct Growth | 1,400.83 | +6.25% | +7.31% | +6.44% |
| 4 | Mahindra Manulife Ultra Short Duration Fund | 1,492.43 | +6.24% | +7.23% | +6.37% |
| 5 | Axis Ultra Short Duration Fund | 16.56 | +6.20% | +7.34% | +6.54% |
| 6 | ICICI Prudential Ultra Short Term Fund | 31.75 | +6.17% | +7.33% | +6.57% |
| 7 | UTI Ultra Short Duration Fund - Direct Plan - Growth Option | 4,813.96 | +6.16% | +7.25% | +6.96% |
| 8 | Franklin India Ultra Short Duration Fund | 11.29 | +6.14% | — | — |
| 9 | Invesco India Ultra Short Duration Fund | 3,048.45 | +6.14% | +7.24% | +6.37% |
| 10 | Aditya Birla Sun Life Savings Fund - Growth | 591.26 | +6.12% | +7.40% | +6.55% |
| 11 | DSP Ultra Short Fund | 3,921.31 | +6.10% | +7.32% | +6.41% |
| 12 | LIC MF Ultra Short Duration Fund | 1,429.39 | +6.10% | +7.02% | +6.04% |
| 13 | Baroda BNP Paribas Ultra Short Duration Fund | 1,653.13 | +6.02% | +7.17% | +6.42% |
| 14 | ITI Ultra Short Duration Fund - Direct Plan - Growth Option | 1,353.68 | +5.98% | +7.03% | +6.18% |
| 15 | CANARA ROBECO ULTRA SHORT TERM FUND - DIRECT PLAN - GROWTH OPTION | 4,272.88 | +5.97% | +6.96% | +6.06% |
| 16 | Kotak Savings Fund-Growth | 47.51 | +5.97% | +7.15% | +6.35% |
| 17 | Sundaram Ultra Short Duration Fund (Formerly Known as Principal Ultra Short Term Fund)- Direct Plan -Growth Option | 3,097.84 | +5.97% | +7.19% | — |
| 18 | BANDHAN ULTRA SHORT DURATION FUND | 16.29 | +5.94% | +7.07% | +6.21% |
| 19 | HSBC Ultra Short Duration Fund | 1,451.79 | +5.94% | +7.14% | +6.32% |
| 20 | BANK OF INDIA Ultra Short Duration Fund | 3,458.67 | +5.92% | +6.79% | +5.99% |
Data sourced from AMFI & mfapi.in. Returns are annualised CAGR. Past performance doesn't guarantee future results. Last updated: 07 Jun 2026
Frequently Asked Questions
Are short duration funds safer than equity funds?
Yes, short duration funds carry significantly lower risk than equity funds. Their primary risks are interest rate risk (minimal due to short duration) and credit risk (mitigated by investing in high-quality papers).
What returns can I expect from short duration funds?
Short duration funds typically deliver 6-8% returns annually, which is 1-2% higher than savings accounts and comparable to or slightly above fixed deposit rates, with better tax efficiency for longer holding periods.
How are short duration funds taxed?
Gains from short duration funds are taxed as per your income tax slab regardless of holding period, following the 2023 tax changes for debt mutual funds. Despite this, they remain tax-efficient for investors in lower tax brackets.
When should I choose short duration funds over liquid funds?
Choose short duration funds when your investment horizon is 1-3 years. For money needed within 3-6 months, liquid funds are more appropriate. Short duration funds offer slightly higher returns for the longer holding period.