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6 Best Ultra Short Term Mutual Funds 2025
Ultra short term funds are very short term Mutual Funds that invest in a combination of debt instruments including treasury bills, certificate of deposits, commercial papers and corporate Bonds. Generally, these funds have a residual maturity ranging from 6 months to 1 year.
Ultra short bond funds generally offer good returns with very less Market Volatility. These funds are for investors who seek to invest money for say a month to a couple of months. Investors who are looking for better returns than Liquid Funds should prefer Investing in Ultra Short Term fund. But before investing in these funds, take a look at the best ultra short term funds for the financial year 2025-2026.
Why Best Ultra Short Term Funds over Savings Account?
Conventional investors often restrict themselves from investing in Mutual Funds due to the market risks involved. They prefer Savings Account as they offer good returns with no volatility. Let's look at the illustration below to analyse the returns of both savings account and ultra short term funds to understand which is a better investment to choose.
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Illustration:
An investor invests INR 40,00,00 in both ultra short term funds and savings account with the interest rate 3.5% p.a. and 8% p.a. respectively. See how the returns differ-
| Saving Account | Ultra Short Funds |
|---|---|
| Amount Invested | 40,00,00 |
| Interest Earned (Profit) | 14,000 |
Taxation Breakup (Saving Account) @ 3.5%
| Tax Bracket | Tax | Net Income (Profit) |
|---|---|---|
| 5% | 200 | 13,800 |
| 20% | 800 | 13,200 |
| 30% | 1200 | 12,800 |
Taxation Breakup (Ultra Short Funds) @ 8%
| Tax Bracket | Tax | Net Income (Profit) |
|---|---|---|
| 5% | 3200 | 28,800 |
| 20% | 6400 | 25,600 |
| 30% | 9600 | 22,400 |
The above table clearly portrays the difference in the net income from savings accounts and ultra short term funds. Even the investors falling under the maximum tax bracket of 30% can avail returns of INR 22,400 by investing in ultra short term funds, which is much more than INR 12,800 offered by a savings account.
Top 6 Ultra Short Term Funds for Investments in India FY 25 - 26
The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on (Erstwhile SBI Magnum InstaCash Fund) To provide the investors an opportunity to earn returns through investment in
debt & money market securities, while having the benefit of a very high degree of liquidity. SBI Magnum Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 21 May 99. It is a fund with Low risk and has given a Below is the key information for SBI Magnum Ultra Short Duration Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Regular Income Fund) The fund’s objective is to generate regular income through investments primarily in debt and money market instruments. As a secondary objective, the Scheme also seeks to generate long term capital appreciation from the portion of equity investments under the Scheme. ICICI Prudential Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 3 May 11. It is a fund with Moderate risk and has given a Below is the key information for ICICI Prudential Ultra Short Term Fund Returns up to 1 year are on (Erstwhile Invesco India Medium Term Bond Fund) The objective is to generate regular income and capital appreciation by investing in a portfolio of medium term debt and money market instruments. Invesco India Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 30 Dec 10. It is a fund with Moderate risk and has given a Below is the key information for Invesco India Ultra Short Term Fund Returns up to 1 year are on (Erstwhile Reliance Liquid Fund - Cash Plan) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Nippon India Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 7 Dec 01. It is a fund with Low risk and has given a Below is the key information for Nippon India Ultra Short Duration Fund Returns up to 1 year are on (Erstwhile Kotak Treasury Advantage Fund) The investment objective of the Scheme is to generate returns through investments in debt and money market instruments with a view to reduce the interest rate risk. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. Kotak Savings Fund is a Debt - Ultrashort Bond fund was launched on 13 Aug 04. It is a fund with Moderately Low risk and has given a Below is the key information for Kotak Savings Fund Returns up to 1 year are on Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹532.521
↑ 0.12 ₹16,798 1.8 3.8 7.8 6.7 7.9 7.84% 5M 19D 7M 20D SBI Magnum Ultra Short Duration Fund Growth ₹5,813.58
↑ 1.14 ₹12,091 1.7 3.5 7.4 6.4 7.4 7.56% 4M 20D 7M 20D ICICI Prudential Ultra Short Term Fund Growth ₹26.9379
↑ 0.01 ₹13,813 1.7 3.5 7.4 6.4 7.5 7.75% 5M 12D 6M Invesco India Ultra Short Term Fund Growth ₹2,625.45
↑ 0.56 ₹1,391 1.7 3.5 7.2 6.2 7.5 7.59% 5M 19D 6M 2D Nippon India Ultra Short Duration Fund Growth ₹3,922.37
↑ 0.72 ₹7,666 1.7 3.5 7.2 6.3 7.2 7.81% 5M 12D 6M 12D Kotak Savings Fund Growth ₹41.7233
↑ 0.01 ₹13,151 1.6 3.4 7.2 6.3 7.2 7.53% 5M 23D 6M Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 21 Feb 25 500 Crore and sorted on last 1 Year Return.
1. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2024 was 7.9% , 2023 was 7.2% and 2022 was 4.8% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (21 Feb 25) ₹532.521 ↑ 0.12 (0.02 %) Net Assets (Cr) ₹16,798 on 31 Jan 25 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.54 Sharpe Ratio 3.7 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.84% Effective Maturity 7 Months 20 Days Modified Duration 5 Months 19 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,653 31 Jan 22 ₹11,095 31 Jan 23 ₹11,642 31 Jan 24 ₹12,487 31 Jan 25 ₹13,460 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.8% 1 Year 7.8% 3 Year 6.7% 5 Year 6.1% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.9% 2022 7.2% 2021 4.8% 2020 3.9% 2019 7% 2018 8.5% 2017 7.6% 2016 7.2% 2015 9.2% 2014 8.9% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 20 Jun 14 10.63 Yr. Kaustubh Gupta 15 Jul 11 13.56 Yr. Monika Gandhi 22 Mar 21 3.87 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 49.01% Debt 50.74% Other 0.26% Debt Sector Allocation
Sector Value Corporate 54.57% Cash Equivalent 36.83% Government 8.35% Credit Quality
Rating Value AA 31.44% AAA 68.56% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Housing Bank 7.83%
Debentures | -5% ₹820 Cr 82,000 Shriram Finance Company Limited
Debentures | -4% ₹602 Cr 60,000 Nirma Limited
Debentures | -3% ₹486 Cr 48,500 364 DTB
Sovereign Bonds | -3% ₹466 Cr 47,500,000
↑ 47,500,000 National Housing Bank
Debentures | -2% ₹400 Cr 40,000 Tata Realty And Infrastructure Limited
Debentures | -2% ₹360 Cr 36,000 7.3% Govt Stock 2028
Sovereign Bonds | -2% ₹316 Cr 31,500,000 Bajaj Housing Finance Ltd. 8%
Debentures | -2% ₹300 Cr 30,000 Avanse Financial Services Ltd 9.40%
Debentures | -2% ₹299 Cr 30,000 ICICI Home Finance Company Limited
Debentures | -2% ₹270 Cr 27,000 2. SBI Magnum Ultra Short Duration Fund
CAGR/Annualized return of 7.1% since its launch. Return for 2024 was 7.4% , 2023 was 7% and 2022 was 4.5% . SBI Magnum Ultra Short Duration Fund
Growth Launch Date 21 May 99 NAV (21 Feb 25) ₹5,813.58 ↑ 1.14 (0.02 %) Net Assets (Cr) ₹12,091 on 31 Jan 25 Category Debt - Ultrashort Bond AMC SBI Funds Management Private Limited Rating ☆☆☆ Risk Low Expense Ratio 0.54 Sharpe Ratio 2.41 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.56% Effective Maturity 7 Months 20 Days Modified Duration 4 Months 20 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,548 31 Jan 22 ₹10,922 31 Jan 23 ₹11,432 31 Jan 24 ₹12,237 31 Jan 25 ₹13,140 Returns for SBI Magnum Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.6% 3 Month 1.7% 6 Month 3.5% 1 Year 7.4% 3 Year 6.4% 5 Year 5.6% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.4% 2022 7% 2021 4.5% 2020 3.4% 2019 5.9% 2018 8% 2017 7.9% 2016 6.6% 2015 7.7% 2014 8.3% Fund Manager information for SBI Magnum Ultra Short Duration Fund
Name Since Tenure Rajeev Radhakrishnan 27 Dec 24 0.1 Yr. Ardhendu Bhattacharya 1 Dec 23 1.17 Yr. Pradeep Kesavan 1 Dec 23 1.17 Yr. Data below for SBI Magnum Ultra Short Duration Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 50.36% Debt 49.38% Other 0.26% Debt Sector Allocation
Sector Value Corporate 46.19% Cash Equivalent 33.46% Government 20.09% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity 7.3% Govt Stock 2028
Sovereign Bonds | -9% ₹1,130 Cr 112,500,000 National Bank For Agriculture And Rural Development
Debentures | -3% ₹420 Cr 4,250 Power Finance Corporation Limited
Debentures | -3% ₹384 Cr 3,850 INDIA UNIVERSAL TRUST AL2
Unlisted bonds | -3% ₹380 Cr 400 Axis Bank Ltd.
Debentures | -3% ₹353 Cr 7,500 Hdb Financial Services Limited
Debentures | -3% ₹345 Cr 34,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹300 Cr 3,000 Rec Limited
Debentures | -2% ₹241 Cr 2,450 Tata Capital Housing Finance Limited
Debentures | -2% ₹220 Cr 2,200 08.18 HR UDAY 2025
Domestic Bonds | -2% ₹211 Cr 21,000,000 3. ICICI Prudential Ultra Short Term Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 27 in Ultrashort Bond category. Return for 2024 was 7.5% , 2023 was 6.9% and 2022 was 4.5% . ICICI Prudential Ultra Short Term Fund
Growth Launch Date 3 May 11 NAV (21 Feb 25) ₹26.9379 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹13,813 on 31 Jan 25 Category Debt - Ultrashort Bond AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆ Risk Moderate Expense Ratio 0.86 Sharpe Ratio 1.99 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Months (0.5%),1 Months and above(NIL) Yield to Maturity 7.75% Effective Maturity 6 Months Modified Duration 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,606 31 Jan 22 ₹11,043 31 Jan 23 ₹11,567 31 Jan 24 ₹12,379 31 Jan 25 ₹13,297 Returns for ICICI Prudential Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.6% 3 Month 1.7% 6 Month 3.5% 1 Year 7.4% 3 Year 6.4% 5 Year 5.9% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.5% 2022 6.9% 2021 4.5% 2020 4% 2019 6.5% 2018 8.4% 2017 7.5% 2016 6.9% 2015 9.8% 2014 9.1% Fund Manager information for ICICI Prudential Ultra Short Term Fund
Name Since Tenure Manish Banthia 15 Nov 16 8.22 Yr. Ritesh Lunawat 15 Jun 17 7.64 Yr. Data below for ICICI Prudential Ultra Short Term Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 59.1% Debt 40.64% Other 0.26% Debt Sector Allocation
Sector Value Corporate 48.15% Cash Equivalent 45.77% Government 5.82% Credit Quality
Rating Value AA 18.39% AAA 81.61% Top Securities Holdings / Portfolio
Name Holding Value Quantity LIC Housing Finance Limited
Debentures | -3% ₹434 Cr 4,350 364 Days T - Bill- 06/02/2025
Sovereign Bonds | -3% ₹399 Cr 40,000,000 364 DTB 13032025
Sovereign Bonds | -3% ₹396 Cr 40,000,000 Small Industries Development Bank Of India
Debentures | -3% ₹374 Cr 3,750 Bharti Telecom Limited
Debentures | -2% ₹326 Cr 32,500 L&T Metro Rail (Hyderabad) Limited
Debentures | -2% ₹298 Cr 3,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹254 Cr 25,500 Rural Electrification Corporation Limited
Debentures | -2% ₹235 Cr 2,350 LIC Housing Finance Limited
Debentures | -2% ₹225 Cr 2,250 Power Finance Corporation Limited
Debentures | -2% ₹224 Cr 2,250 4. Invesco India Ultra Short Term Fund
CAGR/Annualized return of 7.1% since its launch. Ranked 40 in Ultrashort Bond category. Return for 2024 was 7.5% , 2023 was 6.6% and 2022 was 4.1% . Invesco India Ultra Short Term Fund
Growth Launch Date 30 Dec 10 NAV (21 Feb 25) ₹2,625.45 ↑ 0.56 (0.02 %) Net Assets (Cr) ₹1,391 on 31 Jan 25 Category Debt - Ultrashort Bond AMC Invesco Asset Management (India) Private Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.74 Sharpe Ratio 1.44 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.59% Effective Maturity 6 Months 2 Days Modified Duration 5 Months 19 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,474 31 Jan 22 ₹10,807 31 Jan 23 ₹11,274 31 Jan 24 ₹12,031 31 Jan 25 ₹12,935 Returns for Invesco India Ultra Short Term Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.7% 3 Month 1.7% 6 Month 3.5% 1 Year 7.2% 3 Year 6.2% 5 Year 5.3% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.5% 2022 6.6% 2021 4.1% 2020 3% 2019 5.1% 2018 7.6% 2017 7.3% 2016 7.1% 2015 9.1% 2014 8.3% Fund Manager information for Invesco India Ultra Short Term Fund
Name Since Tenure Krishna Cheemalapati 4 Jan 20 5.08 Yr. Vikas Garg 27 Jul 21 3.52 Yr. Data below for Invesco India Ultra Short Term Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 69.18% Debt 30.52% Other 0.3% Debt Sector Allocation
Sector Value Cash Equivalent 52.54% Corporate 42.79% Government 4.37% Credit Quality
Rating Value AA 15.26% AAA 84.74% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 DTB 18102024
Sovereign Bonds | -7% ₹84 Cr 8,500,000 364 Days T - Bill- 06/02/2025
Sovereign Bonds | -3% ₹40 Cr 4,000,000
↑ 4,000,000 Ongc Petro Additions Limited
Debentures | -2% ₹30 Cr 3,000,000 364 DTB
Sovereign Bonds | -2% ₹30 Cr 3,000,000 Export Import Bank Of India
Debentures | -2% ₹30 Cr 3,000,000 Bharti Telecom Limited
Debentures | -2% ₹25 Cr 2,500,000 Bharti Telecom Limited
Debentures | -2% ₹25 Cr 2,500,000 Power Grid Corporation Of India Limited
Debentures | -2% ₹25 Cr 2,500,000 Tata Realty And Infrastructure Limited
Debentures | -2% ₹25 Cr 2,500,000 National Housing Bank
Debentures | -2% ₹25 Cr 2,500,000 5. Nippon India Ultra Short Duration Fund
CAGR/Annualized return of 6.1% since its launch. Ranked 62 in Ultrashort Bond category. Return for 2024 was 7.2% , 2023 was 6.7% and 2022 was 4.6% . Nippon India Ultra Short Duration Fund
Growth Launch Date 7 Dec 01 NAV (21 Feb 25) ₹3,922.37 ↑ 0.72 (0.02 %) Net Assets (Cr) ₹7,666 on 31 Jan 25 Category Debt - Ultrashort Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Low Expense Ratio 1.14 Sharpe Ratio 1.07 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.81% Effective Maturity 6 Months 12 Days Modified Duration 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,438 31 Jan 22 ₹11,269 31 Jan 23 ₹11,799 31 Jan 24 ₹12,599 31 Jan 25 ₹13,507 Returns for Nippon India Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.6% 3 Month 1.7% 6 Month 3.5% 1 Year 7.2% 3 Year 6.3% 5 Year 6.2% 10 Year 15 Year Since launch 6.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.2% 2022 6.7% 2021 4.6% 2020 7.8% 2019 4.9% 2018 0.9% 2017 7.3% 2016 5.8% 2015 6.8% 2014 7.6% Fund Manager information for Nippon India Ultra Short Duration Fund
Name Since Tenure Vivek Sharma 1 Oct 13 11.35 Yr. Kinjal Desai 25 May 18 6.7 Yr. Akshay Sharma 1 Dec 22 2.17 Yr. Data below for Nippon India Ultra Short Duration Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 65.7% Debt 34.04% Other 0.26% Debt Sector Allocation
Sector Value Corporate 47.14% Cash Equivalent 44.02% Government 8.57% Credit Quality
Rating Value AA 14.99% AAA 85.01% Top Securities Holdings / Portfolio
Name Holding Value Quantity National Bank For Agriculture And Rural Development
Debentures | -4% ₹309 Cr 3,100 182 D Tbill Mat - 14/02/2025
Sovereign Bonds | -4% ₹289 Cr 29,000,000 182 DTB 12062025
Sovereign Bonds | -3% ₹239 Cr 24,500,000 PNb Housing Finance Limited
Debentures | -3% ₹225 Cr 22,500 Small Industries Development Bank Of India
Debentures | -3% ₹199 Cr 2,000 HDFC Credila Financial Services Ltd
Debentures | -2% ₹190 Cr 19,000 Indinfravit Trust
Debentures | -2% ₹187 Cr 19,500 Rec Limited
Debentures | -2% ₹182 Cr 1,850 Piramal Capital & Housing Finance Ltd
Debentures | -1% ₹100 Cr 10,000 Nuvama Wealth Finance Limited
Debentures | -1% ₹100 Cr 10,000 6. Kotak Savings Fund
CAGR/Annualized return of 7.2% since its launch. Ranked 44 in Ultrashort Bond category. Return for 2024 was 7.2% , 2023 was 6.8% and 2022 was 4.5% . Kotak Savings Fund
Growth Launch Date 13 Aug 04 NAV (21 Feb 25) ₹41.7233 ↑ 0.01 (0.02 %) Net Assets (Cr) ₹13,151 on 31 Jan 25 Category Debt - Ultrashort Bond AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.8 Sharpe Ratio 1 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.53% Effective Maturity 6 Months Modified Duration 5 Months 23 Days Growth of 10,000 investment over the years.
Date Value 31 Jan 20 ₹10,000 31 Jan 21 ₹10,545 31 Jan 22 ₹10,902 31 Jan 23 ₹11,407 31 Jan 24 ₹12,194 31 Jan 25 ₹13,072 Returns for Kotak Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 21 Feb 25 Duration Returns 1 Month 0.6% 3 Month 1.6% 6 Month 3.4% 1 Year 7.2% 3 Year 6.3% 5 Year 5.5% 10 Year 15 Year Since launch 7.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.2% 2022 6.8% 2021 4.5% 2020 3.2% 2019 5.8% 2018 7.8% 2017 7.4% 2016 6.7% 2015 8.2% 2014 8.6% Fund Manager information for Kotak Savings Fund
Name Since Tenure Deepak Agrawal 15 Apr 08 16.81 Yr. Manu Sharma 1 Nov 22 2.25 Yr. Data below for Kotak Savings Fund as on 31 Jan 25
Asset Allocation
Asset Class Value Cash 63.5% Debt 36.22% Other 0.28% Debt Sector Allocation
Sector Value Corporate 44.32% Cash Equivalent 41.37% Government 14.03% Credit Quality
Rating Value AA 9.21% AAA 90.79% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 DTB 15052025
Sovereign Bonds | -4% ₹489 Cr 50,000,000 364 Days T - Bill- 06/02/2025
Sovereign Bonds | -3% ₹399 Cr 40,000,000 Rural Electrification Corporation Limited
Debentures | -3% ₹374 Cr 37,500
↑ 30,000 Axis Bank Ltd.
Debentures | -2% ₹342 Cr 35,000 Mankind Pharma Ltd
Debentures | -2% ₹300 Cr 30,000 Nirma Limited 0.083%
Debentures | -2% ₹250 Cr 25,000 National Bank For Agriculture And Rural Development
Debentures | -2% ₹249 Cr 25,000
↑ 22,500 National Bank For Agriculture And Rural Development
Debentures | -2% ₹229 Cr 2,300
↑ 2,000 Bharti Telecom Limited
Debentures | -2% ₹226 Cr 2,250 INDIA UNIVERSAL TRUST AL1
Unlisted bonds | -1% ₹188 Cr 220
Features Of Ultra Short Term Funds
Fund Type: Open-ended
Fund Category: Debt fund
Minimum Amount: INR 5,000 - 10,000
Risk Involved: Low -risk
Redemption: T+1, meaning that if you register the Redemption request before 3 PM, you shall get the redemption amount after a day. However, if the redemption request is sent after 3 PM, the redemption request shall be processed day after.
Things to Consider as an Investor
1. Risk
Unlike other debt funds, the ultra-short term funds are somewhat immune to interest rate risks because of the short maturity of their Underlying assets. However, as compared to liquid funds, these funds are pretty risky. The investment strategy of the fund manager may introduce credit risk when he incorporates low-credit rated securities in the expectation of an upgrade in future. Moreover, the introduction of government securities may increase the volatility of the fund more than expected.
2. Return
An investor can expect returns of around 7-9% from this fund in a stable interest rate environment. This return is moderately higher than what a liquid fund offers. However, even though these funds are fixed-income havens, they may not offer guaranteed returns. You need to look at Yield to Maturity (ytm) to understand what to expect with the investments at the time of investment.
3. Cost
Ultra short-term funds charge a fee to manage your money called an expense ratio. Till now the Securities and Exchange Board of India (SEBI) had mandated the upper limit of expense ratio to be 2.25% (might change time to time). Considering the overall returns generated by these funds as compared to liquid funds, a long-term holding period and lower expense ratio would help in recovering the money gone out by way of interest rate fluctuations.
4. Investment Horizon
Ultra short-term funds earn from the coupon of short-term instruments. The prices of these securities may change on a day-to-day Basis and have a relatively longer maturity. These are much more volatile than liquid funds and a short time frame may seem inadequate to generate sufficient returns. As compared to liquid funds, you need to hold these funds for comparatively longer horizon owing to a higher average maturity of the underlying securities.
5. Financial Goals
You may use these funds for a variety of purposes. If you need to park money for a period of 3 months to a year, then these funds may come handy. Additionally, you may want these to transfer your funds to a riskier haven like Equity Funds. Put a lump sum in these funds and initiate a Systematic Transfer Plan (STP) to equity funds. You may look at them as an additional haven to be used as an emergency fund. If you need monthly income, then invest a portion of your superannuation Portfolio in these and initiate a systematic withdrawal plan (SWP).
6. Taxation
Dividends of ultra short term funds in India are tax-free in the hands of the investor. The AMC deducts a Dividend Distribution Tax (DDT) on behalf of the investor before it sends the dividend to the investor. If the investor has invested in a growth fund and redeemed his/her investment within 1 year, he/she may have to pay Short Term Capital Gains Tax (STCG).
How to Invest in Ultra Short Term Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
Conclusion
In today’s time, people face financial insecurities every now and then. In such a case, smart investments made in mutual funds help. Ultra short term funds are one such Smart investment that offers good returns to investors in order to manage financial insecurities. So, invest in the best ultra short term funds today!
The way to wealth is easy, spend less than you earn and INVEST the difference wisely!
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well explained and got to know which one i need to pick it p
Get deep insight of the funds. Better than moneycontrol and valuereserach sort of sites.
Very good information
Presentation is very good