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Top Short Term Mutual Funds - Best Funds, Benefits & Risks

Short-Term Mutual Funds in India are mutual funds that invest mainly in short-duration debt instruments such as treasury bills, corporate bonds, and government securities. The goal is to offer better returns than savings accounts or fixed deposits while keeping the risk relatively low.

Top Short Term Mutual Funds in 2025

Short Term Mutual Fund Screener

Here's the list of the top short-term mutual funds in India (2025).

Created by

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Showing 1 - 20 of 49 results

last updated at 8:00 AM IST 
NameMFs (49)↓↓Sub CategorySub Category↓↓PlanPlan↓↓AUMAUM↓↓NAVNAV↓↓Absolute Returns - 3MAbsolute Ret. - 3M↓↓Absolute Returns - 1YAbsolute Ret. - 1Y↓↓CAGR 3YCAGR 3Y↓↓Expense RatioExpense Ratio↓↓Exit LoadExit Load↓↓VolatilityVolatility↓
1.ICICI Pru Short Term Fund
ICICI Pru Short Term Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
22,880.36
22,880.36
67.75
67.75
2.05
2.05
8.68
8.68
8.40
8.40
0.45
0.45
-
-
0.83
0.83
2.Aditya Birla SL Savings Fund
Aditya Birla SL Savings Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
22,389.38
22,389.38
574.76
574.76
1.69
1.69
7.86
7.86
7.74
7.74
0.34
0.34
-
-
0.41
0.41
3.HDFC Ultra Short Term Fund
HDFC Ultra Short Term Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
18,874.92
18,874.92
15.91
15.91
1.61
1.61
7.43
7.43
7.50
7.50
0.37
0.37
-
-
0.36
0.36
4.HDFC Short Term Debt Fund
HDFC Short Term Debt Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
18,411.94
18,411.94
34.07
34.07
1.97
1.97
8.39
8.39
8.17
8.17
0.40
0.40
-
-
0.87
0.87
5.Kotak Bond Short Term Fund
Kotak Bond Short Term Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
18,310.36
18,310.36
59.06
59.06
1.93
1.93
8.24
8.24
8.02
8.02
0.39
0.39
-
-
0.93
0.93
6.ICICI Pru Ultra Short Term Fund Fund
ICICI Pru Ultra Short Term Fund Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
17,841.31
17,841.31
30.83
30.83
1.66
1.66
7.65
7.65
7.64
7.64
0.39
0.39
-
-
0.37
0.37
7.SBI Short Term Debt Fund
SBI Short Term Debt Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
17,441.94
17,441.94
35.18
35.18
1.96
1.96
8.51
8.51
7.98
7.98
0.40
0.40
-
-
0.96
0.96
8.Kotak Savings Fund
Kotak Savings Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
15,148.65
15,148.65
46.17
46.17
1.61
1.61
7.41
7.41
7.47
7.47
0.36
0.36
-
-
0.38
0.38
9.SBI Magnum Ultra Short Duration Fund
SBI Magnum Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
14,505.33
14,505.33
6,247.07
6,247.07
1.58
1.58
7.27
7.27
7.39
7.39
0.35
0.35
-
-
0.34
0.34
10.Nippon India Ultra Short Duration Fund
Nippon India Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
12,640.79
12,640.79
4,571.91
4,571.91
1.67
1.67
7.70
7.70
7.75
7.75
0.38
0.38
-
-
0.37
0.37
11.Axis Short Duration Fund
Axis Short Duration Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
12,345.83
12,345.83
34.81
34.81
1.98
1.98
8.84
8.84
8.26
8.26
0.38
0.38
-
-
0.93
0.93
12.Aditya Birla SL Short Term Fund
Aditya Birla SL Short Term Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
10,962.58
10,962.58
53.15
53.15
2.16
2.16
8.68
8.68
8.29
8.29
0.37
0.37
-
-
0.94
0.94
13.Bandhan Short Duration Fund
Bandhan Short Duration Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
10,766.48
10,766.48
62.88
62.88
1.91
1.91
8.11
8.11
7.96
7.96
0.34
0.34
-
-
1.05
1.05
14.Nippon India Short Duration Fund
Nippon India Short Duration Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
9,296.65
9,296.65
59.20
59.20
2.10
2.10
8.78
8.78
8.29
8.29
0.38
0.38
-
-
0.95
0.95
15.Axis Ultra Short Duration Fund
Axis Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
6,386.46
6,386.46
16.07
16.07
1.62
1.62
7.57
7.57
7.65
7.65
0.38
0.38
-
-
0.36
0.36
16.Tata Ultra Short Term Fund
Tata Ultra Short Term Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
6,030.76
6,030.76
15.32
15.32
1.60
1.60
7.59
7.59
7.61
7.61
0.29
0.29
-
-
0.34
0.34
17.HSBC Short Duration Fund
HSBC Short Duration Fund
Short Duration Fund
Short Duration Fund
Growth
Growth
4,538.79
4,538.79
28.89
28.89
1.90
1.90
8.36
8.36
7.85
7.85
0.27
0.27
-
-
0.99
0.99
18.Bandhan Ultra Short Duration Fund
Bandhan Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
4,451.86
4,451.86
15.82
15.82
1.56
1.56
7.25
7.25
7.37
7.37
0.27
0.27
-
-
0.33
0.33
19.UTI Ultra Short Duration Fund
UTI Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
4,096.81
4,096.81
4,674.35
4,674.35
1.59
1.59
7.40
7.40
7.51
7.51
0.34
0.34
-
-
0.34
0.34
20.HSBC Ultra Short Duration Fund
HSBC Ultra Short Duration Fund
Ultra Short Duration Fund
Ultra Short Duration Fund
Growth
Growth
4,058.99
4,058.99
1,410.14
1,410.14
1.55
1.55
7.31
7.31
7.42
7.42
0.16
0.16
-
-
0.36
0.36
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Analyse Short Term Mutual Funds Further

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Disclaimer: Please note that the above table is for informational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Mutual Fund Screener and is subject to real-time updates.

Selection criteria: Category: Debt Fund | Sub-category: Short-Duration Fund, Ultra Short-Duration Fund | AUM: Sorted from Highest to Lowest

What are Short Term Mutual Funds?

Short-term mutual funds are a type of debt mutual fund that invests money for a short period, usually between 1 and 3 years. They focus on low-risk, high-quality securities like government bonds, corporate bonds, and treasury bills. These funds mainly choose companies or institutions that have a good record of repaying loans on time and maintain steady cash flows.



How Do Short Duration Funds Work?

Short duration funds pool money from investors and invest it in short-term debt instruments like government securities, corporate bonds, and money market instruments. The fund manager selects and manages these investments to align with the fund’s objective and control risk.
These funds usually hold securities with a maturity of one to three years, making them less volatile than long-term or equity funds. Investors can buy or sell units at the fund’s Net Asset Value (NAV), which changes daily based on market movements.

Overview of the Top Short Term Mutual Funds?

ICICI Pru Short Term Fund

ICICI Prudential Short Term Fund invests in debt and money market instruments. It keeps its portfolio maturity between one and three years to provide stability and predictable income.

Kotak Bond Short Term Fund

Kotak Bond Short Term Fund invests in high-quality debt securities and money market instruments. The fund focuses on maintaining a portfolio maturity between one and three years.

HDFC Short Term Debt Fund

HDFC Short Term Debt Fund invests in a mix of debt and money market instruments from reliable issuers. Its portfolio maturity remains between one and three years.

SBI Short Term Debt Fund

SBI Short Term Debt Fund invests in short-term debt and money market instruments. The portfolio maturity stays between one and three years.

Axis Short Duration Fund

Axis Short Duration Fund invests in debt and money market instruments with a portfolio maturity between one and three years. It focuses on stable and consistent income generation.

How to Invest in Short Term Mutual Funds?

Here’s how you can identify and invest in top short term mutual funds with Tickertape Mutual Fund Screener -

  1. Launch Tickertape Mutual Fund Screener.
  2. Under the Category select Debt and then Short Duration Funds
  3. Sort out the short term mutual funds based on over 50 fundamental and technical filters.
  4. After identifying the short term mutual fund that aligns with your investment thesis, click on “Place Order” to invest in the mutual fund.

With Tickertape Mutual Fund Screener, you can invest via ‘lumpsum’ or start a ‘SIP’ in short term mutual funds. Moreover, by connecting your portfolio,you can do a deep analysis of your portfolio and assess its performance.

Taxation of Short Term Mutual Funds

Short-term mutual funds fall under the category of debt funds, and their gains are taxed based on how long you hold the investment. The taxation rules apply differently for short-term and long-term capital gains, as shown below.

Capital Gains Tax Description
Short-Term Capital Gains (STCG) If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab.
Long-Term Capital Gains (LTCG) For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits.

Types of Short-Term Debt Mutual Funds

Liquid Funds

Liquid funds invest in short-term debt and money market instruments that mature within 1 to 91 days. They are designed for short-term parking of surplus funds and offer high liquidity with relatively low risk.

Ultra Short Duration Funds

These funds invest in debt instruments with a maturity of 3 to 6 months. They aim to provide slightly higher returns than liquid funds while keeping price fluctuations limited.

Low Duration Funds

Low duration funds invest in securities that mature between 6 months and 1 year. They carry moderate interest rate risk and generally provide steady income.

Money Market Funds

Money market funds invest in instruments such as treasury bills, commercial papers, and certificates of deposit, with maturities up to one year. They focus on capital preservation and liquidity.

Short Duration Funds

Short duration funds invest in government bonds, corporate bonds, and debentures with maturities of 1 to 3 years. They balance moderate risk with stable income potential.

Who Should Explore the Best Short-Term Funds in India?

Investors with Short-term Financial Goals

Short-term mutual funds are structured for time horizons of one to three years. They are commonly used to manage funds earmarked for upcoming expenses such as tuition payments, travel costs, or property-related payments.

Individuals with Surplus Cash

These funds are used to deploy idle money that would otherwise remain in low-yield accounts. Their structure allows for efficient short-term utilisation of surplus funds while maintaining accessibility and liquidity.

Conservative Investors

Short-term mutual funds cater to investors who prefer limited exposure to market volatility. By investing in high-quality debt instruments, these funds maintain stability while generating returns linked to short-term market movements.

Portfolio Diversifiers

Those who are already investing in equity instruments may consider exploring short-term funds to diversify their portfolios. These funds act as a debt component, helping mitigate overall risk and maintain liquidity.

Advantages of Investing in Short Term Mutual Funds

Lower Risk

Short term mutual funds invest in government securities, corporate bonds, and other high-quality debt instruments. These are generally safer than equity investments as they face less market volatility. However, they can still be affected by changes in interest rates or credit ratings.

High Liquidity

Investors can redeem their investments easily without a fixed lock-in period, and the money is usually credited within one working day. However, some funds may charge a small exit load if withdrawn within a short time.

Professional Management:

Qualified fund managers track market trends, manage interest rate risks, and choose securities carefully. However, fund performance can still vary based on market factors and fund management strategies.

Risks of Investing in Short-Term Mutual Funds in India

Interest Rate Risk

The value of debt securities falls when interest rates rise. Since these funds invest in short-term bonds, they are less affected than long-duration funds but still face some impact from rate changes.

Credit Risk

These funds may invest in corporate bonds or securities issued by companies. If a company fails to repay its debt or delays payments, the fund’s value can decline.

Reinvestment Risk

When bonds mature, fund managers reinvest the proceeds. If interest rates are lower at that time, the fund may earn less from new investments.

Market and Economic Factors

Events like policy changes, inflation, or economic slowdowns can affect interest rates, borrowing costs, and bond yields, which in turn impact fund performance.

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Factors to Consider Before Investing in Short-Term Mutual Funds

Investment Horizon

Short-term mutual funds are structured to hold securities with maturities of one to three years. Their performance can vary depending on how long the underlying instruments are held.

Interest Rate Movements

The value of bonds in a fund’s portfolio changes when interest rates move. Rising rates may reduce bond prices, while falling rates can increase them. This movement affects the fund’s net asset value (NAV).

Credit Quality of Portfolio

The fund’s portfolio includes securities with different credit ratings. Higher-rated securities indicate stronger repayment capacity, while lower-rated instruments may carry higher default risk.

Expense Ratio

The expense ratio represents the annual fee charged by the fund for management and operations. It directly impacts the overall returns generated by the fund.

Taxation

Gains from short-term debt funds held for less than three years are taxed according to the investor’s income slab. Investments held for over three years are taxed at 12.5% without indexation.

Conlcusion

Short-term mutual funds invest mainly in high-quality debt and money market instruments that may offer steady returns. However, these funds also carry certain risks. Interest rate movements, credit quality changes, or broader economic factors can affect their performance. Understanding both the benefits and risks helps investors to make informed choices and see how short-term mutual funds fit into their overall financial plans.

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Frequently Asked Questions About Short Term Mutual Funds

  1. What are short-term mutual funds?

    Short-term mutual funds are debt funds that invest in fixed-income securities such as government bonds, corporate debt, and money market instruments with maturities between one and three years.

  2. What are the best short-term mutual funds in India?

    Here are the top short term mutual funds based on their 5Y CAGR:

    1. Bank of India Short Term Income Fund
    2. UTI Short Duration Fund
    3. ICICI Pru Short Term Fund
    4. Aditya Birla SL Short Term Fund
    5. Nippon India Short Duration Fund

    Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.

  3. How can you invest in short-term mutual funds?

    Here’s how you can start investing in short term mutual funds:

    1. Launch the Tickertape Mutual Fund Screener.
    2. Select the short term mutual fund that matches your investment goals and risk appetite.
    3. Click on “Place Order” and choose the “SIP” option. Enter your preferred SIP amount and confirm “OK”.

    Your order will be placed

  4. Who should invest in short-term mutual funds?

    Investors who want to invest their money for a short period may explore short-term mutual funds.
    Disclaimer: However, investors must understand the associated risks, such as interest rate or credit risk, do thorough research, and consult a financial advisor before making any investment decisions.

  5. What are the potential risks of investing in short-term mutual funds?

    Short-term mutual funds face risks such as interest rate changes, credit defaults, and reinvestment challenges. These factors can affect fund performance and returns over time.

  6. Can I invest in short-term mutual funds through SIPs?

    Investors can start a Systematic Investment Plan (SIP) in short-term mutual funds where the option is available. SIPs allow regular, smaller investments over time instead of a one-time lump sum.
    Disclaimer: Please note that this is not a recommendation. Please do your own research or check the SID of the specific fund to know more about SIP plans they offer.

  7. Where do short term funds invest?

    Short-term mutual funds primarily invest in fixed-income securities like treasury bills, commercial papers, certificates of deposit, and short-duration corporate bonds. These instruments typically have maturities ranging from a few months to 3 years, aiming to offer stable returns with lower interest rate risk.

Disclaimer: This article is for informational purposes only. The content of the article including securities/investment products mentioned if any, should not in any manner be construed as an investment advice, recommendation, offer, solicitation to buy/hold/sell any securities/investment products. The securities quoted if any, are for illustration only and are not recommendatory. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Please consult a SEBI-registered financial advisor before investing.