Mutual Funds

Best Short-Term Mutual Funds of 2021

What do you do with the extra money you have? Do you invest, spend or just keep it in your cupboard? Did you know that there are funds available where you can invest for a short period of time? Short term investments are viable for situations when you need money in a few days for any transactions you know beforehand which are to be paid at a later date such as paying rent or they are perfect for unexpected events such as you break your phone or medical expense.

Timing of the short term investments depends on the underlying securities of an investment product. Depending on the time frame of you needing money, you need to decide in which product you want to invest in. Mutual funds are a good option to invest for short term goals.

Due to the credit crunch and interest rate fluctuations, short term funds operate as safe haven.

Mutual funds suitable for short term investing

 As Equity funds have high volatility for short period of time, it is recommended to invest in Debt funds. Debt funds are suitable for risk averse investors.

Debt mutual funds have different fund classifications such as liquid funds, ultra short term and short term funds that invest in money market securities and debt.

Let’s look at the different short term fund offeringsand their details:

Liquid Funds

Liquid funds invests in short term, fixed income generating money market instruments such as T-bills, Commercial Papers (CP), Certificates of Deposits(CD) that matures in just 91 days. Its main agenda is to provide safety and liquidity to the investor. Liquid funds are great way to generate returns on your idle money with the option of liquidity. These funds are low risk haven that provides potentially more returns than your regular bank savings account. These funds do not have a lock-in period and the invested funds are accessible for use anytime just like you use your funds in bank savings account. For emergency fund, liquid funds is the right haven to invest.

Liquid funds to consider while investing are:

#1. ABSL Liquid Fund

Portfolio Diversification (as on 31st March, 2021)

Assets Allocation
GOI6.38%
CD19.75%
T-bills14.71%
NCD & Bonds1.39%
CP50.28%
Rating Allocation
AAA71.32%  
AA 0.15%       
Sovereign21.08%
Cash, Cash Equivalents and Net Current Assets7.44%

Top 10 Holdings on 31st March, 2021)

Government of India15.06%
Reliance Industries Limited6.90%
Reliance Jio Infocomm Limited6.34%
Bank of Baroda6.07%
Government Bond5.85%
Indian Oil Corporation Limited4.55%
The Federal Bank Limited4.54%
National Bank For Agriculture and Rural Development3.54%
Hindustan Petroleum Corporation Limited2.91%
BARCLAYS BANK PLC 10JUN21 CD2.72%

Fund Performance

Performance (as on 31st March, 2021)

 Period Fund Return Benchmark Return
 1 Y3.64%4.07%
 3 Y5.77%6.01%
 5 Y6.28%6.40%
 Since Inception7.26%6.86%

Important Measures (As on 31st March, 2021)

ComponentValue
Yield to Maturity3.39%
Modified Duration0.12 Years
Average Maturity0.12 Years
  • Benchmark Index: CRISIL Liquid Fund Index
  • Net AUM: 26702.08 Crores
  • Expense Ratio: Regular plan- 0.33% Direct plan- 0.21%
  • Entry Load: Nil
  • Exit Load:
lnvestor exit upon subscription / switch-InExit Load as a % of redemption Proceeds
Day 10.0070%
Day 20.0065%
Day 30.0060%
Day 40.0055%
Day 50.0050%
Day 60.0045%
Day 7 onwards0.0000%
  • Investment Risk: Moderately Risky
  • Minimum investment Amount: ₹ 500

#2. ICICI Prudential Liquid Fund

Portfolio Diversification (as on 31st March, 2021)

Assets Allocation
GOI6.60%
CD7.88%
T- Bills27.11%
NCD & Bonds0.00%
CP51.25%
Rating Allocation
AAA & Equivalent48.10%
Sovereign Securies25.54%
TREPS & Current Assets26.17%

Top 10 Holdings on 31st March, 2021)

Reserve Bank of India 364-D 22/04/20216.61%
Reserve Bank of India 364-D 15/04/20215.00%
Reserve Bank of India 91-D 20/05/20214.43%
Reserve Bank of India 91-D 13/05/20214.41%
7.94% GOI 24/05/20214.34%
SIDBI 69-D 24/05/20213.95%
BPCL 52-D 26/04/20212.42%
National Bank Agr. Rur. Devp 91-D 22/04/20211.98%
NLC India 91-D 20/05/20211.71%
Indian Oil Corp. 63-D 12/04/20211.59%

Fund Performance(as on 31st March,2021)

 Period Fund Return Benchmark Return
 1 Y3.60%4.07%
 3 Y5.73% 6.01%
 5 Y6.24% 6.40%
 Since Inception 7.48% 7.13%

Important Measures (As on 31st March,2021)

ComponentValue
Yield to Maturity3.39%
Modified Duration37.91 Days
Average Maturity40.17 Days
  • Benchmark Index: Crisil Liquid Fund Index
  • Net AUM: Rs. 37,776.99 crores
  • Expense Ratio: Regular plan- 0.32% Direct plan-0.20%
  • Entry Load: N/A
  • Exit Load:
lnvestor exit upon subscription / switch-InExit Load as a % of redemption Proceeds
Day 10.0070%
Day 20.0065%
Day 30.0060%
Day 40.0055%
Day 50.0050%
Day 60.0045%
Day 7 onwards0.0000%

NAV (in Rs)*as per fund fact sheet 31st March, 2021

Growth Option303.0432
Direct Plan Growth Option304.7364
  • Investment Risk: Moderately Risky
  • Minimum investment Amount: ₹ 99

#3. SBI India Liquid Fund

Portfolio Diversification(as on 31st March,2021)

Assets Allocation
Commercial Papers47.58%
Treasury Bills22.47%
Certificate Of Deposits12.00%
Government Securities9.66%
Cash, Cash Equivalents And Others8.29%
Rating Allocation
Sovereign32.13%
A1+59.58%
Cash, Cash Equivalents and Net Current Assets8.29%

Top 10 Holdings (as on 31st March, 2021)

Reliance Retail Ventures Ltd.6.59%
Indian Oil Corporation Ltd.5.89%
NABARD5.29%
HDFC Ltd.4.44%
Reliance Jio Infocomm Ltd.3.60%
Nabha Power Ltd.2.64%
Reliance Industries Ltd2.40%
NLC Tamil Nadu Power Ltd.2.40%
Export-Import Bank Of India2.40%
NTPC Ltd.1.80%

Fund Performance(as on 31st March,2021)

 Period Fund Return Benchmark Return
 1 Y3.54%4.07%
 3 Y5.65%6.01%
 5 Y6.15%6.4%
 Since Inception7.23%7.23%

Important Measures (As on 31st March,2021)

ComponentValue
Yield to Maturity3.36%
Modified Duration0.11 years
Average Maturity0.11 years
  • Benchmark Index: CRISIL Liquid Fund Index
  • Net AUM: 41,490.61 Crores
  • Expense Ratio: 0.26%
  • Entry Load: N/A
  • Exit Load:
lnvestor exit upon subscription / switch-InExit Load as a % of redemption Proceeds
Day 10.0070%
Day 20.0065%
Day 30.0060%
Day 40.0055%
Day 50.0050%
Day 60.0045%
Day 7 onwards0.0000%
  • Investment Risk: Moderately Risky
  • Minimum investment Amount: ₹ 500
  • Minimum SIP Amount: ₹ 500

Short term debt fund

Short term funds are low risk investment vehicle. When a person invests in these funds, the fund lends the money to the quality companies for time period of 1-3 years and this is how returns are earned. These funds have a potential to deliver better returns than bank deposits. It is an ideal destination for investors who want to invest with lower risk and for a short period of time.

Funds to consider while investing in short term debt fund:

#4. HDFC Short Term Debt Fund

Portfolio Diversification (as on  31/03/2021)

Assets Allocation
Bonds80.62%
Cash19.38%
Rating Allocation
AAA81.44%
AA18.56%
A and below0

Top 10 Holdings on o 31/03/2021)

5.77% GOI 20302.20%
Housing Development Finance.2.14%
6.79% Govt Stock 20271.87%
Housing Development Finance.1.86%
Indinfravit Trust1.75%
State Bank of India1.71%
Rural Electrification1.54%
State Bank of India1.51%
Motherson Sumi Systems Limited1.50%
182 DTB 190820211.47%

Fund Performance

Performance (as on 30th Sept, 2020)

 Period Fund Return Benchmark Return
 1 Y9.29%7.80%
 3 Y8.84%8.39%
 5 Y8.23%8.08%

Important Measures (As on 30th June, 2020)

ComponentValue
Yield to Maturity5.51%
Modified Duration2.08 Years
  • Benchmark Index: CRISIL Short Term Bond Fund TR INR
  • Net AUM: ₹ 16,804.8crores
  • Expense Ratio: Direct plan 0.76%
  • Entry Load: N/A
  • Exit Load: 0.00% – >0 days

NAV (in Rs)*as per fund fact sheet 30thSept, 2020

Direct planINR 24.73
  • Investment Risk: Moderately Risky
  • Minimum investment Amount: ₹ 5000
  • Minimum SIP Amount: ₹ 500

#5. IDFC Bond Fund – Short Term

Portfolio Diversification (as on o 31/03/2021)

Assets Allocation
Bonds91.71%
Cash8.29%
Rating Allocation
AAA100.0%
AA and below0

Top 10 Holdings on ( 31/03/2021)

Reliance Industries Limited7.11%
8.24% Govt Stock 20273.65%
Housing Development Finance.3.36%
National Bank For3.22%
Power Finance Corporation3.03%
Indian Railway Finance2.89%
LIC Housing Finance Limited2.65%
6.79% Govt Stock 20272.58%
LIC Housing Finance Limited2.47%
Small Industries Development2.35%

Fund Performance

Performance (as on o 31/03/2021)

 Period Fund Return Benchmark Return
 1 Y7.82%7.80%
 3 Y8.41%8.39%
 5 Y7.66%8.08%

Important Measures (As on 31/03/2021)

ComponentValue
Yield to Maturity4.83%
Modified Duration1.88 Years
  • Benchmark Index: NIFTY AAA Short Duration Bond TR INR
  • Net AUM: ₹12,981.4crores
  • Expense Ratio: Direct plan 0.78%
  • Entry Load: N/A
  • Exit Load: 0.00% – >0 days

NAV (in )*as per 31/03/2021 fund fact sheet

Direct planINR 44.92
  • Investment Risk: Low to Moderate
  • Minimum investment Amount: ₹ 5000
  • Minimum SIP Amount: ₹ 1000

#6. Kotak Bond Short term plan

Portfolio Diversification (as on 31/03/2021)

Assets Allocation
Bonds87.34%
Cash12.66%
Rating Allocation
AAA100.0%
AA and below0

Top 10 Holdings (as on 31/03/2021)

6.79% Govt Stock 20275.40%
State Bank Of India4.49%
5.09% Govt Stock 20224.17%
7.59% Govt Stock 20263.54%
GOVT STOCK3.49%
Housing Development Finance2.76%
7.33% Govt Stock 20312.62%
National Bank For2.56%
Bajaj Finance Limited2.24%
8.79% Govt Stock 20212.14%

Fund Performance

Performance (as on o 31/03/2021)

 Period Fund Return Benchmark Return
 1 Y8.27%7.80%
 3 Y9.15%8.39%
 5 Y8.54%8.08%

Important Measures (As on 31/03/2021)

ComponentValue
Yield to Maturity5.17%
Modified Duration1.68 Years
  • Benchmark Index: Nifty Short Duration Debt TR INR
  • Net AUM: ₹16,608.1 crores
  • Expense Ratio: Direct plan 0.34%
  • Entry Load: N/A
  • Exit Load: 0.00% – >0 days

NAV (in Rs)*as per 31/03/2021 fund fact sheet

Direct planINR 43.73
  • Investment Risk: Low to Moderate
  • Minimum investment Amount: ₹ 5000
  • Minimum SIP Amount: ₹ 1000

Ultrashort-term funds

Ultra short-term funds are debt funds that invest in fixed income earning instruments of maturities up to 6 months. These funds offer liquidity benefit. Difference between liquid funds and ultra short-term fund is that the liquid fund invests in securities that have maturity of no more than 91 days. Whereas, ultra short-term funds can invest in securities with maturity period lower or higher than 91 days.

Funds to consider while investing in ultra short-term funds are:

#7. HDFC Ultra Short-Term Fund

Assets Allocation

G-Sec, T-Bills14.49
CP33.22
CD3.99
Credit Exposure34.79
Cash, Cash Equivalents and Net Current Assets13.51

Ratings Allocation

Sovereign14.49%
 AAA/AAA(SO)/A1+/A1+(SO) & Equivalent72%
Cash, Cash Equivalents and Net Current Assets13.51%

Top-10 Holdings: (As on 31-3-2021):

Housing Development Finance Corporation Ltd9.20%
Reliance Industries Ltd6.19%
National Bank For Agriculture and Rural Development4.72%
Aditya Birla Finance Ltd3.78%
REC Ltd3.495
8.35 GOI 20223.43%
8.2 GOI 20223.37%
IRFC Ltd2.90%
182 Day T-Bill2.90%
364 days T-Bill2.90%

Fund Performance

Performance (as on 31st March,2021)

PeriodFund ReturnBenchmark Return
1Y5.72%5.41%
Since Inception6.97%6.94%

Important Measures (As on 31st March, 2021)

ComponentValue
Yield to Maturity4.03%
Modified Duration181 Days
Average Maturity201 Days
  • Benchmark Index: CRISIL Ultra Short-Term Debt Index
  • Net AUM: 17220.82 Crores
  • Expense Ratio: 0.24%
  • Entry Load: N/A
  • Exit Load: Nil

NAV (in Rs) as per fund factsheet as on 31st March, 2021:

Direct Plan (Growth)11.9394
Regular Plan (Growth)11.8462
  • Investment Risk: Moderate
  • Minimum Investment Amount:  Rs.5000

#8. IDFC Ultra Short-Term Fund – Direct Plan (G)

Assets Allocation

G-Sec, T-Bills20.55%
CP26.12%
CD9.78%
Corporate Bond16.79%
Cash, Cash Equivalents and Net Current Assets26.76%

Ratings Allocation:

AAA/AAA(SO)/A1+/A1+(SO) & Equivalent100%

Top-10 Holdings: (As on 31-3-2021):

364 Day T-Bill7.94%
Kotak Mahindra Investments CP7.87%
Axis Bank CD7.86%
LIC Housing Finance CP7.36%
7.94% 2021 G-Sec4.71%
Indian Oil Corporation CP4.96%
HDFC CP3.95%
LIC Housing Finance2.95%
NABARD2.33%
6.92% Maharastra SDL 20222.24%

Fund Performance

Performance (as on 31st March, 2021)

PeriodReturnsBenchmark Returns
1 Year4.79%4.91%
2 Year6.15%NA
Since Inception6.71%6.69%

Important Measures (As on 31st March, 2021)

ComponentValue
Yield to Maturity3.59%
Modified Duration115 days
Average Maturity122 days
  • Benchmark Index: NIFTY Ultra Short Duration Debt Index
  • Net AUM: 5019.95 Crores
  • Expense Ratio: 0.26%
  • Entry Load: N/A
  • Exit Load: Nil

NAV (in Rs) as per fund factsheet as on 29th April , 2021:  Rs. 12.0056

  • Investment Risk:  Low Risk
  • Minimum Investment Amount:  Rs.100
  • Net AUM: 5019.95 Crores
  • Expense Ratio: 0.26%
  • Entry Load: N/A
  • Exit Load: Nil

NAV (in Rs) as per fund factsheet as on 29th April,2021:  Rs. 12.0056

  • Investment Risk:  Low Risk
  • Minimum Investment Amount:  Rs.100

Conclusion:

It is very important to know your risk appetite, your financial goals and time period for which you want to invest for. This will give you a clarity in taking an investment decision.

Tarrakki – Towards prosperity

Pin It