There are funds devoted to loaning money to companies within a 3 to the 6-month period that is called Ultra Short Duration Funds.
Although they are considered low-risk schemes owing to their low lending duration, this means that they are less risky compared to liquid funds.
Nevertheless, they are still included in the list even though they are at the bottom of it. Invested funds and money market instruments are among the investments that fund managers make with their capital.
In regards to their investment maturity periods, liquid funds and ultra-short-term mutual funds are different.
Unlike liquid funds, which cannot invest in securities with a Macaulay duration of more than 3 months, the latter can invest in securities with a maturity period longer than 91 days.
Investors should be aware of the best ultra-short mutual funds before investing in them, to help them make an informed decision.
10 Best Ultra Short Term Funds to Start Investing in 2022
1. L&T Ultra Short Term Fund - Direct Plan-Growth
- In order to make sense of the fund's investment portfolio, it can be seen that 95.38% of it is composed of debt and that 41.42% of it is invested in government securities.
- Meanwhile, 53.96 percent of the funds that we are investing in are funds that invest in shares that are low risk.
Taxability - Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
It's currently considered as the best mutual fund for short term.
Advantage
2. Canara Robeco Ultra Short Term Fund - Direct Plan-Growth
- The fund has an investment in government bonds worth 24.63%, and 64.35% of it is in low-risk securities.
The fund has an investment in debt worth 88.98%.
Taxability - Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
It's presently being considered as one of the best mutual funds for short term.
Advantage
3. Nippon India Ultra Short Duration Fund - Direct Plan-Growth
- This fund has been invested in Debt for 89.13% of its total assets, of which 14.18% was invested in government bonds and 74.95% in very low-risk securities.
- They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
- Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
4. BOI AXA Ultra Short Duration Fund - Direct Plan-Growth
- 89.51 percent of the Fund's assets are held in the form of debt securities, which consists of 18.55 percent sovereign debt, and 70.96 percent very low-risk securities.
- They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability - Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
5. ICICI Prudential Ultra Short Term Fund - Direct Plan-Growth
- 97.99% of the fund is invested in Government Securities, 30.58 % in funds invested in low-risk securities, and 67.40 % in funds invested in investments of very low risk.
- They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
- Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
6. Tata Ultra Short Term Fund - Direct Plan-Growth
- As of December 31, 2018, the fund has invested 88.63% in debt; 9.52% of which were government securities, and 78.24% of which were classified as extremely low-risk investments.
- They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
- Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
7. Baroda BNP Paribas Ultra Short Duration Fund - Direct Plan-Growth
- In allocations to Debt securities, the fund invests 98.11% of its assets; 24.33% of these are invested in Government securities, and 73.78% in investments in low-risk securities.
- They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
- Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
8. Axis Ultra Short Term Fund - Direct Plan-Growth
- There are 88.46% of the fund's investments in debt securities of which 22.19% are government securities.
68.27% of the fund's portfolio consists of very low-risk securities invested in. - They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
- Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
9. Kotak Savings Fund - Direct Plan-Growth
- There are 96.62% of the Fund's assets invested in debt, of which 24.58% are invested in government securities, and 72.04% are invested in low-risk securities.
Taxability - Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
- The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
10. DSP Ultra Short Fund - Direct Plan-Growth
- 87.19% of the fund's investment is in debt securities, with 13.47% allocated to government securities.
Of the remaining funds, 73.72% are allocated to securities that carry very low risk. - They are suitable for you to store any funds you have set aside and are not likely to need for the next six months up to one and a half years to cover any emergency needs.
Taxability
Upon the sale of the house after three years from the date of the purchase, a long-term capital gain tax will be imposed.
The current tax rate is calculated either as 10% of the profit or as 20% of the profit determined after indexation benefits have been taken into consideration.
Who are these suited for
These investors are looking for an alternative to bank accounts and bank deposits which they can invest in the very short term.
Advantage
Conclusion
Funds that are offered on an ongoing basis with a maturity of 3 months to 3 years are called ultra-short duration funds.
It is known that these funds offer a predictable return on investment and they pose a relatively low risk compared to long-term debt funds.
In addition, these funds offer the best returns for investors with short-term goals.
The Scripbox platform, which is an online platform for mutual funds, provides investors with the possibility of investing in ultra short-duration funds.
frequently asked question
Q1. which mutual fund is best for short term?
Ans. ICICI Prudential Short Term Fund - Direct Plan-Growth is the best fund as it has provided a 7.59% return in the next five years.
Q2. Is it good to invest in ultra short term funds?
Ans. Compared to ultra-short-term funds which are able to invest from 7 days to 18 months, ultra-short-term funds have a much broader range.
Q3. Which is the best mutual funds for short term investment?
Ans. A stock market with 10% to 100% returns is the best investment for investing in the short term.
Q4. Is the Ultra-short Term fund better than FD?
Ans. In general, ultra short-term funds tend to have higher liquidity than fixed deposit accounts, as compared to fixed deposit accounts.
As compared to a fixed deposit, the procedure to withdraw money from these kinds of schemes is relatively simpler.
