Low duration funds fall under the category of debt funds, and they invest in short-term debt securities, where the duration of the fund portfolio is between a period of 6 months to 12 months.
When these funds are compared to overnight or even liquid funds, Low duration funds will hold assets for a longer time period and lower credit quality. This means they have a higher interest rate risk and credit risk in comparison. You can take a look at the best low duration funds given in the table below.
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| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
Sundaram Low Duration Fund | Debt | Low to Moderate | 7.3% | 5 | ₹514 |
UTI Low Duration Fund | Debt | Low to Moderate | 7.2% | 5 | ₹2,629 |
Aditya Birla Sun Life Low Duration Fund | Debt | Moderate | 7.6% | 4 | ₹12,149 |
Nippon India Low Duration Fund | Debt | Low to Moderate | 7.4% | 4 | ₹5,804 |
Axis Treasury Advantage Direct Fund | Debt | Low to Moderate | 7.4% | 4 | ₹5,464 |
HSBC Low Duration Fund | Debt | Low to Moderate | 7.7% | 4 | ₹418 |
Mahindra Manulife Low Duration Fund | Debt | Moderate | 7.6% | 4 | ₹561 |
SBI Magnum Low Duration Fund | Debt | Moderate | 7.4% | 4 | ₹10,285 |
PGIM India Low Duration Fund | Debt | Low to Moderate | 7.2% | 4 | ₹103 |
HDFC Low Duration Fund | Debt | Moderate | 7.8% | 3 | ₹16,714 |
Baroda BNP Paribas Low Duration Fund | Debt | Moderate | 7.5% | 3 | ₹227 |
Mirae Asset Low Duration Fund | Debt | Moderate | 7.4% | 3 | ₹594 |
Tata Treasury Advantage Fund | Debt | Low to Moderate | 7.3% | 3 | ₹2,349 |
LIC MF Low Duration Fund | Debt | Low to Moderate | 7.3% | 3 | ₹1,415 |
JM Low Duration Fund | Debt | Low to Moderate | 7.3% | 3 | ₹250 |
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The investors who can comfortably invest in these funds are:
Low duration funds are found to be the most suitable for investors with an investment horizon of over three months. Investors who have a very short investment horizon are better off making investments in overnight or liquid funds.
The 3-month holding period ensures the best returns and performance of the fund. Investors could use them to temporarily park surpluses from property sales, annual bonuses, and so on or to accumulate cash for short-term financial purposes.
Low duration funds generate consistent income through a combination of interest and capital gains. Investors with a moderate risk tolerance can devote a portion of their portfolio to these funds and use a SWP to generate an income stream.
Low duration funds may be more appealing to investors with a modest risk appetite than bank deposits because they provide better liquidity and have the potential to achieve larger market-linked returns.
The major factors to be considered when finding the top low duration funds for investment are-
Here are some major advantages of investing in top low duration mutual funds –
Active risk management: Fund managers actively optimise portfolios as per market conditions to offer optimal returns.
Higher returns: The best low duration mutual funds generate higher returns than few other types of debt funds. They take on greater credit risk and invest in shorter maturity bonds that offer better performance.
Moderate risk: Low duration funds involve moderate risk as they do not hold securities for more than 6 – 12 months. Hence, these funds are notably less vulnerable to inflation risks and interest rate risks.
Mode of investment: There are two investing methods for low duration mutual funds, lump sum, and SIP. The former is self-explanatory, and the latter is an instalment scheme via which you can deposit funds in regular intervals.
Being a debt fund, the best low duration mutual funds have a lower risk-return ratio than equity funds. However, it may invest in low-rated debt securities to yield higher returns, making it more risk-prone than other types of debt funds.
The risks to consider while finding and investing in the top low duration mutual funds for your portfolio are-
Low duration funds are investment schemes ranging from 6 to 12 months. They are a little volatile in nature when compared to ultra-short funds but are relatively much safer than equity funds.
These funds are beneficial when there are falling interest rates, and in the case of rising interest rates, these funds cut the duration period to reduce capital losses and earn higher interest rates through new purchases. These funds are deemed to be the most suitable for investors who have a medium risk appetite.
If you have the investment horizon of staying invested for a period of 6 to 12 months, you can benefit from investing in these funds. Also, given that they have a lower volatility, they can be a good alternative to bank accounts.
Yes, these funds have low risks and are also known to provide better returns than bank fixed deposits for the same tenure.
These funds invest in a broad variety of assets, such as money market securities, government securities, hybrid instruments, corporate bonds, and more.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Now let us jump and check about these top 15 mutual fund schemes.
Fund Performance: The Sundaram Low Duration Fund has given 8.43% annualized returns in the past three years and 5.28% in the last 5 years. The Sundaram Low Duration Fund comes under the Debt category of Sundaram Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Sundaram Low Duration Fund via lump sum is ₹1,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹514Cr |
| 1Y Returns | 7.3% |
Fund Performance: The UTI Low Duration Fund has given 7.49% annualized returns in the past three years and 4.78% in the last 5 years. The UTI Low Duration Fund comes under the Debt category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Low Duration Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹2,629Cr |
| 1Y Returns | 7.2% |
Fund Performance: The Aditya Birla Sun Life Low Duration Fund has given 6.18% annualized returns in the past three years and 6.84% in the last 5 years. The Aditya Birla Sun Life Low Duration Fund comes under the Debt category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Low Duration Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹12,149Cr |
| 1Y Returns | 7.6% |
Fund Performance: The Nippon India Low Duration Fund has given 6.06% annualized returns in the past three years and 6.36% in the last 5 years. The Nippon India Low Duration Fund comes under the Debt category of Nippon India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Nippon India Low Duration Fund via lump sum is ₹500 and via SIP is ₹100.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,804Cr |
| 1Y Returns | 7.4% |
Fund Performance: The Axis Treasury Advantage Direct Fund has given 5.91% annualized returns in the past three years and 6.46% in the last 5 years. The Axis Treasury Advantage Direct Fund comes under the Debt category of Axis Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Axis Treasury Advantage Direct Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹5,464Cr |
| 1Y Returns | 7.4% |
Fund Performance: The HSBC Low Duration Fund has given 5.9% annualized returns in the past three years and 5.98% in the last 5 years. The HSBC Low Duration Fund comes under the Debt category of HSBC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HSBC Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹418Cr |
| 1Y Returns | 7.7% |
Fund Performance: The Mahindra Manulife Low Duration Fund has given 5.87% annualized returns in the past three years and 6.29% in the last 5 years. The Mahindra Manulife Low Duration Fund comes under the Debt category of Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Mahindra Manulife Low Duration Fund via lump sum is ₹1,000 and via SIP is ₹500.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹561Cr |
| 1Y Returns | 7.6% |
Fund Performance: The SBI Magnum Low Duration Fund has given 5.81% annualized returns in the past three years and 6.28% in the last 5 years. The SBI Magnum Low Duration Fund comes under the Debt category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Magnum Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹10,285Cr |
| 1Y Returns | 7.4% |
Fund Performance: The PGIM India Low Duration Fund has given 5.27% annualized returns in the past three years and 2.06% in the last 5 years. The PGIM India Low Duration Fund comes under the Debt category of PGIM India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in PGIM India Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹103Cr |
| 1Y Returns | 7.2% |
Fund Performance: The HDFC Low Duration Fund has given 6.12% annualized returns in the past three years and 6.76% in the last 5 years. The HDFC Low Duration Fund comes under the Debt category of HDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HDFC Low Duration Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹16,714Cr |
| 1Y Returns | 7.8% |
Fund Performance: The Baroda BNP Paribas Low Duration Fund has given 5.83% annualized returns in the past three years and 6.35% in the last 5 years. The Baroda BNP Paribas Low Duration Fund comes under the Debt category of BNP Paribas Mutual Funds.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹227Cr |
| 1Y Returns | 7.5% |
Fund Performance: The Mirae Asset Low Duration Fund has given 5.75% annualized returns in the past three years and 5.8% in the last 5 years. The Mirae Asset Low Duration Fund comes under the Debt category of Mirae Asset Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹594Cr |
| 1Y Returns | 7.4% |
Fund Performance: The Tata Treasury Advantage Fund has given 5.71% annualized returns in the past three years and 5.07% in the last 5 years. The Tata Treasury Advantage Fund comes under the Debt category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Treasury Advantage Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,349Cr |
| 1Y Returns | 7.3% |
Fund Performance: The LIC MF Low Duration Fund has given 5.66% annualized returns in the past three years and 5.61% in the last 5 years. The LIC MF Low Duration Fund comes under the Debt category of LIC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in LIC MF Low Duration Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,415Cr |
| 1Y Returns | 7.3% |
Fund Performance: The JM Low Duration Fund has given 5.62% annualized returns in the past three years and 5.42% in the last 5 years. The JM Low Duration Fund comes under the Debt category of JM Financial Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in JM Low Duration Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹250Cr |
| 1Y Returns | 7.3% |
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