Best Short Term Mutual Funds

1. What are Short term mutual funds?

Mutual fund schemes that offer a maturity from a minimum of 15 to 91 days or below that are short term mutual funds. The maturity depends on the assets. This investment option is best suited for people seeking asset options with low risk.   For investors on the look out for some of the best short term mutual funds (15 days or less) available, the liquid fund option is great bet. Others looking at a maturity period of 2 to 4 months can choose from the ultra-short-term funds available.

2. How are short term mutual funds taxed?

Dividend option and growth option are two categories in short term mutual fund options. The tax treatment for a growth option mutual fund is the same as that of a bank fixed deposit and the income that is earned from this fund is taken into account as part of the overall income earned by the investor and thus taxed. There is a tax-exempt option for an investor opting for a dividend option. In such a case, the investment is tax exempt.

3. What is the returns potential of short term mutual funds?

Short term mutual funds held for a short time period offer a comparatively higher return on investment as against a bank deposit. The return could range from anywhere between 8%-9%, again, depending on the assets in the short-term fund portfolio. Taking into consideration the tax benefits, the return on these investments tends to be higher than the post-tax returns that are generated from other forms of investment schemes.  

4. Top 10 Short Term Mutual Funds

In no particular order, following are some of the top short-term mutual funds investors can explore.

a. HDFC Medium Term Opportunities Fund – Growth Option

This short-term fund with an asset class of fixed interest comes with a minimum investment amount of Rs. 5000 and a minimum top-up amount of Rs. 1000. With an expense ratio of 0.36% and a Net Asset Value of Rs. 19.2251, the HDFC Medium Term Opportunities Fund is a good bet for an investor seeking an investment option in this category.

b. Aditya Birla Sun Life Short Term Fund – Discipline Advantage Plan

This comes under the Money Market asset class and requires a minimum of Rs. 1000 as investment. It has a top-up option starting at a minimum of Rs. 1000. The expense ration for this fund stands at 0.35% and a Net Asset Value of Rs. 20. 304.

c. ICICI Prudential Banking and PSU Debt Fund – Growth

This fund is a fixed interest asset class with a minimum investment requirement of Rs. 5000 and a minimum top-up of Rs. 1000. With a Net Asset Value of Rs. 19.7976 it is one of the top funds available in its category.

d. Aditya Birla Sun Life Short Term Fund – Growth – Regular Plan

With a Net Asset Value of Rs. 65. 9793, the Aditya Birla Sun Life fund is a great investment option in the Money Market asset class. The expense ratio for the fund is at 0.33% and requires a minimum investment of Rs. 1000 and a top-up option of the same amount as well.

e. ICICI Prudential Short Term – Growth Option

This money market asset class (short-term debt fund) has a high expense ratio of 1.21% and a comparatively higher Net Asset Value as well, presently at Rs. 35.946.  It offers investors investment opportunities with a minimum of Rs. 1000 and a similar amount for a top-up.

f. DHFL Pramerica Short Maturity Fund – Growth

This short-term fund from DHFL is another great option for investment in the money market asset class. The fund comes with a minimum investment requirement of Rs. 5000 and a top-up  of minimum Rs. 1000. It’s compound annual growth rate has climbed 7.89% since the time of its inception and its Net Asset Value stands at Rs. 31. 6004.

g. Aditya Birla Sun Life Short Term Opportunities Fund – Growth – Regular Plan

This forms another good short-term investment choice in the money market asset class with an expense ratio of 1.3% and a minimum investment and top-up option of Rs. 1000. The Aditya Birla Sun Life has a Net Asset Value of Rs. 28. 6495.

h. ICICI Prudential Banking and PSU Debt Fund Retail Growth

The ICICI Prudential Banking and PSU fund comes under the fixed interest asset class and has an expense ratio of 0.53%. With a Net Asset Value of Rs. 18.6656 and a minimum investment amount of Rs. 5000, top-up option of minimum Rs. 1000, it is a viable option for investors.

i. HDFC Banking and PSU Debt Fund-Regular Plan – Growth Option

This money market asset class short term debt fund offers a minimum investment option of Rs. 5000 with a minimum top-up of Rs. 1000. With an expense ratio of 0.71% and a compound annual growth rate of 8.69% since inception has given this fund a positive outlook for attracting investors.

j. Aditya Birla Sun Life Treasury Optimizer Plan – Regular Plan – Growth

Another short term mutual fund from Aditya Birla offers a fixed interest asset class investment option for investors with an expense ratio of 0.59%. The fund has a minimum investment requirement of Rs. 1000 and a minimum top-up plan for the same amount. The Net Asset Value of the fund stands at Rs. 219.8006 while its compound annual growth rate has seen a surge of 8.31% since its inception. For investors in the Indian market, these are some of the best known short term mutual funds to pick from. Their performance in the market justify their inclusion in this list. However, it is important to note that mutual fund investments are subject to market risks and investors are advised to read through the necessary documents prior to investing in any scheme in a mutual fund portfolio.

	3 Years	5 Years
Aditya Birla SL Savings Fund(G)	8.02%	8.64%
ICICI Pru Savings Fund(G)	7.85%	8.52%
UTI Treasury Advantage Fund-Inst(G)	7.80%	8.43%
ICICI Pru Short Term Fund(G)	7.79%	8.01%
Aditya Birla SL Short Term Opp Fund(G)	7.66%	8.37%
Reliance Prime Debt Fund	7.60%	8.09%

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