Debt Short Term

Short Duration

Get Modest Returns with Least Risk Exposure

  • Total Funds 24
  • Average annual returns 21.25%

money-icon Debt Short Term

Short Duration

Get Modest Returns with Least Risk Exposure. More

  • Total Funds : 24
  • Average annual returns 21.25%

What is Short Duration Mutual Fund?

Debt Funds- Providing Stability and Income Growth

The short term debt mutual funds are those funds which have primary investments in the money market instruments of high quality and lower risk. The short term debt funds are for the investment goals which are to be acquired by the investors in a short span of time. By providing higher returns in a very short period, the best short term debt mutual funds help in fulfilling the instant financial needs.

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Short Term Debt Funds : Let your First Investment Begin With

Short term debt mutual funds are the schemes which allow the clients to invest their money in a shielded manner and take the maximum output of their invested amount. A short term Debt funds are best suited for the investors who are new to mutual funds. When a child learns to ride, he doesn’t directly start with a geared bike. A toddler’s first vehicle is a tricycle, on which the child learns to paddle. If given a bike straight away, can you imagine the scene? It will generate humor for sure. But, on the serious side, it can be dangerous for the child and the risk of toppling over increases. Thus, all parents make it a point to ensure the safety of their child. So that you must take care and choose short term debt mutual funds accordingly.

In the same way, the novice investors can have the flavor of investing by parking their surplus for a very short span with short term debt funds and then eventually graduate to equity or any other scheme. Keeping the short term needs of the clients, mutual fund experts have come up with the option of short term debt funds. This particular category of mutual fund invests in the money market instruments with a maturity period of less than one year. The ultra short term debt funds were initially known as liquid plus funds owing to their early maturity period. The investment is usually made in the government or corporate treasury bills. The short term debt funds investment is secure and gives the client an excellent overview of dealing with mutual fund industry.

Short Term Mutual Funds - Understand the concept

Let us understand the concept of short term debt funds in india with the help of the following example. Rakesh is having an extra amount of Rs. 50,000 due to the maturity of an RD. He would not be requiring the amount for the next 3-5 years, but is not willing to invest in the equity schemes owing to their risky profile. Also, the investment perspective will not provide the required returns to him if he invests in any plans other than short term debt funds. The maturity period of a short term debt funds may vary from 3 to 5 years, depending on the portfolio of a particular company’s debt funds asset allocation. Thus, the time duration coincides with the time constraint requirements of Rakesh. In addition, to the time, he would get a return on his debt mutual funds online investment which would amount to near about 10-12% annually which is far more than any bank can offer.

How to Choose the Best Debt Funds in India?

The short term debt funds are suitable for the investors who are looking for regular income and have an investment goal of a shorter tenure. Although all the short term debt funds in India are influential and helpful in gaining the financial objectives, one must analyse the schemes as per one’s requirement and opt for the best-suited one. There are some simple ways with which you can make the best choice of debt mutual funds.

  • Match the Tenure with Maturity Profile: It is important to ascertain the time period for which you wish to invest online in the short term debt funds and identify the maturity period of the scheme to match with your investment tenure.
  • Match the Risk Tolerance with Credit Profile: The debt funds invest in various instruments which include the risk-free government securities or corporate bonds. These instruments are assigned rating as per their credibility by the credit rating agencies which indicates the creditworthiness of the borrower or issuer of such securities. Higher the ratings, safer the investments in them.
  • Ascertain the Different Types of Risks Involved: There are several risk factors which are related to the short term debt funds investments, like interest rate risk, liquidity risk, or credit risk. You must analyse all the related risk factors to determine the scheme which suits your risk appetite the best.

This way, you can choose the best suitable short term debt funds to invest online in India. MySIPonline provides the convenience of investing online in short term debt mutual funds. You can avail our services anytime for no cost.

Best Short Term Debt Funds Online in India: Must Include Scheme

Short term mutual funds should be involved in the portfolio of every investor as they help in providing a safety feature. It means that similar to debt mutual funds, this category also allows the clients to invest in the money market instruments and ensure a fixed income for their investments. Short term debt mutual funds are also a beneficial scheme for the novice investors as it gives them the chance to observe the working of debt funds carefully without fearing the loss of their money. The clients based on their investment needs can alter the sum and time span of the scheme.

  1. Ideal for first-time investors:- The plan can prove to be a learning curve for the new investors. Best short term debt funds in india can teach them the rules governing the mutual fund industry and hence prepare them for further investments. The short term debt funds, as we can say, is the snapshot of the much bigger picture. Even though it does not invest in the equity but it gives a good taste of how the returns from mutual funds can overshadow any other saving source. The clients who want first to test the principles of the industry should invest in the short term mutual funds scheme. But, it is no benchmark that only newbies can invest in the fund.
  2. Security of the funds:- As the online investment under the short term debt funds is not realized through stock market investing the scope of suffering from the market fluctuations is zeroed. The short term mutual funds invest in the fixed income generating instruments like treasury bills, commercial papers, certificate of deposits of corporate as well as government entities. Thus, even if they provide fewer returns than any of the equity-oriented schemes they are safer than any of them.
  3. Tenure of investment:- The shorter duration of investment in short term debt funds facilitates the investors to make investment frequently. The increased rate of return than any other investing options over a reduced spell of time magnetizes the clients to invest without the fear of investing in the scheme. Due to the ease of investment and withdrawal in debt mutual funds, it was given the name of liquid plus funds. But, then changed to short term debt funds later on.

The points mentioned above make short term debt mutual funds charms the investors having a very short term investment perspective and at the same time it is suitable for the beginners in getting used to the investment strategies followed in the mutual fund industry. Thus, if you have an additional amount that you will not require for some time you can surely invest it in short term debt funds. Our site My SIP Online offers the best options available under debt funds category. The clients have to just determine the amount and leave the rest to us.

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Frequently Asked Questions

Who should invest in Short Duration Mutual Funds?

Short Duration funds are suitable for the investors who can digest high risk in search for higher returns. Moreover, these funds are not suitable for the investors who are stepping in the finance market with a short term investment perspective as they might end up delivering negative returns.

What is the minimum investment required for investing in Short Duration funds?

The minimum investment depends from one scheme to another. In general, for lumpsum investment the minimum investment can range from Rs. 500 to Rs. 5000. Whereas, in case of SIP, the range may vary between Rs. 500 to Rs. 1000. For authentic information, never forget to check the scheme related documents.

What is the investment philosophy followed by Short Duration companies?

The fund manager of Short Duration fund targets the best small sized companies having the potential to generate excellent gains in the future. Such companies do not have much resources as the large cap or mid cap companies but have high potential to outperform many big companies.

Why to invest in Short Duration funds?

Short Duration funds have more tendency of providing exceptional returns than the other categories of funds. Moreover, they can also be a suitable option for providing diversification to your portfolio.

How risky are Short Duration funds?

Short Duration funds are one of the riskiest mutual funds. But at the same time rewards are also high. Therefore, an investor who is willing to expose his corpus towards risk for fetching higher returns should invest in Short Duration funds.

Are Short Duration Funds for long term investment?

Yes, Short Duration funds are a suitable choice for generating long term capital appreciation. Moreover, in short term these funds can cause double digit losses to the investors. Thus, always maintain a long term investment perspective while investing in Short Duration mutual funds.

What is the benchmark of Short Duration Fund?

Benchmark is a standard with which a mutual fund competes in terms of growth & performance. Different Short Duration funds have different benchmark. Thus, read the mutual fund document carefully to know the benchmark.

What are the taxes applied on Short Duration Mutual Funds?

Short Duration funds are eligible for two types of taxes- STCG (Short Term Capital Gain) and LTCG (Long Term Capital Gain). STCG is the capital gain generated on the units which are hold for up to 1 year. The STCG tax imposed by the Government of India is 15%. LTCG is the profit generated on the units which are hold for more than one years. The LTCG levied is 10% for the profit above Rs. 1 Lakh.

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