Best Short Term Debt funds to invest in 2018

Best short term debt funds

Best Short Term Debt funds to invest in 2018

Short Term debt funds are suitable for investors looking to invest for 1-3 years. These funds invest in debt securities that mature in about a year to three years. Investors looking for an alternative of Fixed deposits can go for these funds. Let us check some of the best Short Term debt funds to invest in.

  1. Birla Sun Life Treasury Optimizer Plan

The fund currently has an average maturity of 3.73 years though in the past it has had average maturity above 6 years too. However, this is mostly a tactical call to take advantage of interest rate movements and not a long term strategy. It does not take credit risk and have around 89% of the portfolio in AAA rated instruments and rest in AA rated ones. The three year and five year performance has been good and the returns are 10.30% in 3 yrs and 10.12% in last 5 yrs.

  1. SBI Magnum Gilt Fund – Short Term

The fund is a government bond fund and hence its entire portfolio is invested in AAA rated funds. The average maturity of the fund is 2.54 years and the modified duration is 1.97 years, hence the fund is not much volatile. It has given impressive returns of 10.99% & 10.32% in last 3 years and 5 years respectively higher than that of the category returns of 9.46% & 8.89% respectively.

  1. Tata Short Term Bond fund

The fund has an average maturity of 2.79 years and modified duration of 2.13 years which shows that it is quite safe in terms of volatility. In credit risk terms also the fund is safe as it invests its entire portfolio in AAA rated securities. Due to the focus on safety the fund has suffered a bit in terms of returns as its 3 year returns are 8.75% in comparison to 9.07% of the category. However, the direct plan variant of the fund has given returns of 9.63% in last 3 years which are well above that of the category average.

Let us see some performance statistics of these funds:

Best short term debt funds

As we said earlier, these funds are suitable for investors looking for avenues to invest for 1-3 years. If held till 3 years these funds can take benefit of indexation in the tax part. While investing in short term funds, it is prudent to look for the funds which do not trade off safety in lieu of returns.

Start Investing in the above mentioned best short term debt funds on WealthTrust App.

New to Mutual Funds? Learn more about basics of mutual funds here.

Visit our website to know more about WealthTrust. Do read our blogs on Mutual funds.

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