Best Ultra Short Term Debt Funds To Invest In FY 2018 – 2019

Best ultra short term debt funds

Best Ultra Short Term Debt Funds To Invest In FY 2018 – 2019

Ultra Short Term debt funds are suitable for investors looking to invest for around 1 year. These funds can invest in debt instruments having average maturity longer than 91 days (which is maximum average maturity of an instrument in which a liquid fund can invest). These are more volatile than liquid funds but provide better returns than them.

There are many such funds available in the market which adopt different investment strategies. In this article we will focus on three best ultra short term debt funds which are relatively safe and have provided good returns.

Best Ultra Short Term Debt Funds

  1. Birla Sun Life Floating Rate Fund – Long Term

Do not get confused by the name, it says long term but the fund have an average maturity of 1.33 years only. The fund does not take unnecessary risk by investing in low credit bonds and have more than 80% of its portfolio invested in AAA credit rating category, rest being in the AA credit rating category bonds. The fund has given better returns than the benchmark (CCIL T Bill Liquidity Weight) and the Ultra short term category in every year since its launch in 2009. The one year return of the fund is at 8.11% which is higher than that of the benchmark’s returns of 7.33%.

  1. ICICI Prudential Flexible Income

The fund currently has an average maturity of 0.97 years and duration of 0.83 years but at times of a favorable interest-rate scenario, it may increase the portfolio maturity little above one year, keeping in mind the safety and liquidity. The fund has invested almost 80% in AAA rated bonds while the rest of the portfolio is invested in AA rated bonds which may increase the yield without taking much credit risk. The fund has beaten the benchmark (CCIL T Bill Liquidity Weight) and the category every time in last 10 years. The 1 year returns of the fund are 8.17% which is higher than that of the benchmark’s returns of 7.33%.

  1. SBI Savings Fund

The fund has its foremost focus on safety of the capital and hence it has invested more than 90% of its portfolio in AAA rated securities and the rest is in AA rated ones. In last 10 years the fund has beaten the benchmark (CCIL T Bill Liquidity Weight) every time though it has been able to beat the category only 5 times due to its investment in safer funds. It has a low standard deviation of 0.51 while its average maturity is 0.93 years. The 1 year return of the fund is 1.18% slightly below the category return of 7.33%. However, the direct plan variant of the fund has given 7.94% returns which are higher than that of the Category returns.

Here are some key performance parameters of the funds#:

Best ultra short term debt funds

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While selecting Ultra short term debt funds, the volatility of the funds is more important to be considered than the returns as safety of the capital is the main concern while investing for short duration. Hence go for the funds which do not trade safety in favor of returns.

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

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

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