Short Duration Mutual Funds: Invest 1-3 Years
By Market Desk
Explore short duration mutual funds for 1-3 year investments. Balance risk and returns with these debt instruments, ideal for new earners. Learn top picks.
If you’re looking to invest your money for a shorter period, say between one and three years, short duration mutual funds could be a smart option for you. These funds focus on debt instruments with maturities that match your investment horizon.
Understanding Short Duration Funds
Short duration mutual funds invest in various debt instruments, aiming to provide returns while managing risk. They sit in the middle ground when it comes to interest rate risk, offering a balanced approach.
These funds are more volatile than liquid or ultra-short term funds. However, they are less volatile than medium or long-term funds. They diversify across treasury bills, commercial papers, certificates of deposits, corporate bonds, and government securities.
Top Picks for Your Portfolio by July 2026
For those considering investments through July 2026, experts recommend two specific short duration mutual funds. Always prioritize safety over chasing aggressive returns with these types of investments.
Consider the HDFC Short Term Debt Fund. Another option is the ICICI Prudential Short Term Fund.
How Fund Managers Choose These Options
The selection process for debt funds involves a careful review of several factors to ensure they meet specific criteria. Funds must also have a minimum asset size to be considered for inclusion.
Here’s what fund managers look at for funds with at least Rs 50 crore in assets. They evaluate mean rolling returns over three years, assess consistency using the Hurst Exponent, and analyze downside risk. Additionally, they check for outperformance relative to their benchmarks.
Understanding these aspects can help you make informed decisions when considering short duration mutual funds for your financial goals. They offer a balanced approach for your short-to-medium term savings.