{"id":1990,"date":"2023-11-18T11:14:48","date_gmt":"2023-11-18T11:14:48","guid":{"rendered":"https:\/\/www.swinxpress.com\/?p=1990"},"modified":"2023-11-18T11:14:50","modified_gmt":"2023-11-18T11:14:50","slug":"how-to-choose-the-best-short-term-mutual-fund","status":"publish","type":"post","link":"https:\/\/www.swinxpress.com\/how-to-choose-the-best-short-term-mutual-fund\/","title":{"rendered":"How to choose the best short-term mutual fund?"},"content":{"rendered":"\n

Short-term mutual funds<\/strong>, also known as short-term debt funds in India, help investors balance higher returns and lower risk. Short-term funds<\/a> invest in debt instruments with maturities ranging from one to three years, making them an ideal option for investors with short-term financial goals. This article will define the concept of short-term mutual funds and enlist the advantages they offer. You will also find a detailed explanation of the types of short-term debt funds<\/strong> in this article. <\/p>\n\n\n\n

What are short-term debt funds?<\/strong> <\/p>\n\n\n\n

Short-term debt funds are mutual funds that invest in fixed-income securities with relatively shorter maturities. While the investment horizon of these funds is shorter as compared to medium-term income funds, it is longer than the investment horizon of liquid funds. Short-term funds offer stability and potentially higher returns over a short period.

Investors can also consider the following types of debt funds that have short maturity periods:<\/p>\n\n\n\n

    \n
  1. Liquid funds:<\/strong> Liquid funds are the most conservative short-term debt funds. They invest in money market instruments and debt securities with very short maturities, usually not exceeding ninety-one days. Due to their short duration and high-quality holdings, liquid funds offer high liquidity and low risk. They are suitable for investors looking to park surplus funds for a short period without risk.<\/li>\n\n\n\n
  2. Ultra-short-term debt funds:<\/strong> Ultra-short-term debt funds have slightly longer maturities compared to liquid funds, usually ranging from three to six months. These funds invest in a mix of money market instruments, commercial papers, certificates of deposit, and short-term government securities. While they offer slightly higher returns than liquid funds, they still maintain a focus on capital preservation and liquidity.<\/li>\n\n\n\n
  3. Low duration funds:<\/strong> Low duration funds have a longer investment horizon, with maturities typically ranging from six months to a year. They invest in a combination of short-term government securities, corporate bonds, and money market instruments. These funds aim to strike a balance between generating returns and managing interest rate risks.<\/li>\n<\/ol>\n\n\n\n

    What are the advantages of investing in short-term mutual funds?<\/strong><\/p>\n\n\n\n

      \n
    1. Lower risk:<\/strong> Investors consider short-term debt funds to be less risky than equity funds since they primarily invest in debt and money market instruments as well as government securities.<\/li>\n\n\n\n
    2. Stability and liquidity:<\/strong> Short-term debt funds<\/a> offer high liquidity, allowing investors to access their funds quickly without any exit loads. <\/li>\n\n\n\n
    3. Attractive returns:<\/strong> While short-term debt funds may not offer the same potential for high returns as equities, they can still provide attractive returns. <\/li>\n\n\n\n
    4. Diversification:<\/strong> Including short-term debt funds in your investment portfolio can enhance diversification. If you have several equity-related investments, a short-term debt fund can help you balance your portfolio.<\/li>\n<\/ol>\n\n\n\n

      Short-term mutual fund investments<\/a> pose the risk of interest-rate fluctuations and credit quality of the underlying debt instruments. As interest rates change, the value of these funds’ holdings may be impacted, affecting the overall returns. Before investing in a short-term mutual fund, you must consider your overall investment horizon and the returns that you wish to earn through your investment. <\/p>\n","protected":false},"excerpt":{"rendered":"

      Short-term mutual funds, also known as short-term debt funds in India, help investors balance higher…<\/p>\n","protected":false},"author":1,"featured_media":1991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[585],"_links":{"self":[{"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/posts\/1990"}],"collection":[{"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/comments?post=1990"}],"version-history":[{"count":1,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/posts\/1990\/revisions"}],"predecessor-version":[{"id":1992,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/posts\/1990\/revisions\/1992"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/media\/1991"}],"wp:attachment":[{"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/media?parent=1990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/categories?post=1990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swinxpress.com\/wp-json\/wp\/v2\/tags?post=1990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}