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Fund categories
Equity
Debt
Fund categories
Equity
Debt
Low Duration Funds
Fund categories
HSBC Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
9.37%Min. Invest
₹5,000
AUM
₹1,182.48 Cr
Aditya Birla SL Low Duration Fund-Dir (G)
Equity | Low Duration Fund
1Y returns
8.14%Min. Invest
₹100
AUM
₹14,919.95 Cr
Nippon India Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
8.13%Min. Invest
₹500
AUM
₹11,185.93 Cr
Kotak Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
8.11%Min. Invest
₹100
AUM
₹14,356.72 Cr
AXIS Treasury Advantage Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
8.09%Min. Invest
₹100
AUM
₹7,856.78 Cr
Mirae Asset Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
8.06%Min. Invest
₹5,000
AUM
₹2,675.90 Cr
Mahindra Manulife Low Duration Fund - Dir (G)
Equity | Low Duration Fund
1Y returns
8.01%Min. Invest
₹1,000
AUM
₹613.76 Cr
HDFC Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
8.00%Min. Invest
₹100
AUM
₹25,493.10 Cr
ICICI Pru Savings Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.99%Min. Invest
₹100
AUM
₹28,908.38 Cr
Sundaram Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.92%Min. Invest
₹1,000
AUM
₹397.37 Cr
Baroda BNP Paribas Low Duration Fund-Dir (G)
Equity | Low Duration Fund
1Y returns
7.91%Min. Invest
₹5,000
AUM
₹282.97 Cr
JM Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.90%Min. Invest
₹1,000
AUM
₹177.15 Cr
LIC MF Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.90%Min. Invest
₹5,000
AUM
₹1,687.29 Cr
UTI-Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.89%Min. Invest
₹500
AUM
₹2,813.98 Cr
Invesco India Low Duration Fund-Dir (G)
Equity | Low Duration Fund
1Y returns
7.78%Min. Invest
₹1,000
AUM
₹1,641.29 Cr
SBI Magnum Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.78%Min. Invest
₹5,000
AUM
₹16,746.15 Cr
Canara Robeco Savings Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.76%Min. Invest
₹5,000
AUM
₹1,464.38 Cr
Tata Treasury Advantage Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.76%Min. Invest
₹5,000
AUM
₹3,356.62 Cr
Bandhan Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.72%Min. Invest
₹100
AUM
₹6,868.26 Cr
DSP Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
7.72%Min. Invest
₹100
AUM
₹5,872.05 Cr
Franklin India Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
%Min. Invest
₹5,000
AUM
₹417.88 Cr
Edelweiss Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
%Min. Invest
₹100
AUM
₹542.31 Cr
Union Low Duration Fund - Direct (G)
Equity | Low Duration Fund
1Y returns
%Min. Invest
₹1,000
AUM
₹795.47 Cr
What are Low Duration Mutual Funds?
Low Duration Mutual Funds are a type of debt mutual fund that invests in fixed-income securities with a relatively short maturity period, typically between 6 to 12 months. These funds aim to provide stable and moderate returns while having low interest rate sensitivity. They invest in a mix of government securities, corporate bonds, and money market instruments.Low Duration Funds are designed to balance the need for liquidity and capital preservation. They also have returns that are slightly higher than traditional savings accounts. This makes them suitable for short-term investment horizons.
Features of Low Duration Funds
These funds balance liquidity and returns in debt markets, offering investors a strategic option for their short-term money management and investment goals.- Low Interest Rate Risk: These funds maintain shorter portfolio duration between 6-12 months, making them less sensitive to interest rate changes versus longer-duration funds.
- Stable Returns: By investing in debt securities with short maturity periods, they provide relatively consistent returns while managing volatility compared to equity funds.
- Credit Risk Management: Fund managers carefully select bonds with good credit ratings, balancing the need for returns with preservation of investor capital.
- Liquidity Advantage: These funds typically invest in highly liquid securities, allowing investors to enter and exit positions easily without significant impact on returns.
How does Low Duration Funds Work?
The best Low Duration Funds work by investing in short-term debt securities that mature under 12 months. Fund managers actively manage the portfolio, buying and selling securities to keep the target duration. They aim to balance yield and risk by reinvesting maturing securities. This helps them have stable returns while minimizing interest rate risk and preserving capital.Why Invest in Low Duration Funds?
These funds offer a balance between liquidity and returns, making them ideal for short-term financial goals. They typically provide better yields than savings accounts while being lower risk compared to other types of debt funds.Low Duration Funds are less sensitive to interest rate fluctuations, offering good returns. This makes them suitable for conservative investors or those looking to park surplus funds for short periods.
Additionally, these funds can serve as a good alternative to traditional fixed deposits. They can offer tax advantages and greater flexibility in terms of investment and withdrawal options.
Factors to consider while investing in Low Duration Fund Schemes
Before investing in these funds, investors must evaluate several critical aspects that influence fund performance and align with their financial objectives.- Interest Rate Sensitivity: Assess the fund's reaction to rate changes. Lower sensitivity generally means less risk.
- Credit Quality: Examine underlying securities' creditworthiness. Higher quality typically offers lower risk but potentially lower yields.
- Expense Ratio: Compare fund costs. Lower expenses can positively impact overall returns, especially in low-yield environments.
- Fund Manager's Track Record: Evaluate the manager's experience and past performance. Skilled management can add value through portfolio decisions.
Risk Involved with Low Duration Mutual Fund Schemes
Though considered relatively stable, these funds carry certain inherent risks that investors should understand before committing their money to these investment vehicles.- Credit Risk: It has the potential to default or lose its underlying securities. This can then impact the fund's performance and NAV.
- Interest Rate Risk: Even Though it takes less time than longer-duration funds, there could be some major changes in interest rates that can affect the returns.
- Liquidity Risk: In stressed market conditions, selling underlying securities can quickly become challenging, affecting redemptions.
Taxation Rules when You Invest in Low Duration Mutual Funds
Taxation of these funds depends on the holding period. If redeemed within 3 years, gains are treated as short term capital gains and taxed at your income tax slab rate. For holdings beyond three years, gains are considered long term capital gains and taxed at 20% with indexation benefits. Additionally, dividends from these funds are taxable in the hands of investors at their applicable tax rate.FAQ’s
How long should I stay invested in the best Low Duration Mutual Funds?
They are suitable for short-term investments typically, with a duration of 6-12 months. However, holding periods can vary based on individual short term financial goals.
Where do the best Low Duration Funds invest?
They invest in debt securities with short maturities, usually up to 12 months. These include government securities, corporate bonds, and money market instruments.
Are the best Low Duration Mutual Funds a high risk investment?
No, they are generally considered great for investors with low to moderate risk appetite. This is due to their short-term nature and investment in high-quality debt instruments.
What kind of returns can I earn from Low Duration?
Returns are typically slightly higher than savings accounts. However, they are still lower than longer-duration funds, usually ranging from 5-8% annually.
Who can invest in mutual funds with low duration?
Anyone can invest, but they are particularly suitable for conservative investors. This means they are best for those seeking stability and slightly better returns than savings accounts.
When should I invest in a Low duration mutual fund?
They are ideal for parking short-term surplus funds during uncertain interest rate environments. Otherwise, you can invest when you need liquidity within 6-12 months.
What are the underlying assets of Low duration funds?
Underlying assets include short-term debt securities like Treasury Bills, Commercial Papers, Certificate of Deposits, and short-term corporate bonds.
