Short term debt mutual funds invest in fixed-income instruments which have short-term maturity periods and are liquid in nature.
If you wish to park your money for 1-36 months and earn much better post tax interest rate than what a bank would give, opt for short term debt funds. An average 1 year return would be around 7%-7.5%.
Here are the top 5 Debt Mutual Funds to invest in, for the year 2018:
- Birla SL Short Term Fund – Formed on March 3, 1997, the fund has given 6.51, 8.55, 8.99 and 8.46 percent per annum in the past 1, 3, 5 and 10 years. It has returned 9.42 percent per annum since launch. The expense ratio of the fund is 0.35 percent; the fund has a total asset value of Rs. 21,453 crores. Birla SL Short Term Fund is a top-notch favorite for its excellent performance and is a preferred choice for anyone who would like to generate regular income from a portfolio of debt, cash and money market instruments. The fund managers are Kaustubh Gupta and Maneesh Dangi.
- ICICI Pru Flexible Income Plan – The fund has been synonymous with consistency and peak performance; the results speak for themselves. Over the period of 1, 3 5 and 10 years, the fund has delivered per annum return of 7.10, 8.33 8.82 and 8.38 percent . Launched on September 27, 2002, the fund has an asset value of Rs. 24,672 crore. The fund has returned 8.07 percent per annum since launch. The expense ratio of fund is 0.28%. Fund Managers are Rahul Goswami and Rohan Maru.
- Franklin India Ultra Short Bond Fund – Formed on December 18, 2007, the fund has delivered per annum return of 8.21 percent, 9.22 percent and 9.54 percent in the past 1, 3 and 5 years. Since launch, the fund has delivered 8.91 percent return per annum. The expense ratio for the fund is 0.41 percent and the asset size as on March 31 , 2017 is 12,177 crores. The fund managers are Sachin Padwal and Pallab Roy.
- UTI Treasury Advantage Fund – Formed on March 21, 2003, the fund has performed admirably well in the past 14 years. Since inception, this ultra short term debt fund has returned 8.33 percent per annum. Over the past 1, 3, 5 and 10 years, UTI Treasury Advantage Fund has delivered 7.05, 8.24, 8.71 and 8.33 percent per annum. The overall asset size for the fund is Rs. 12,011 crores and the expense ratio is 0.40 percent. The fund manager, Sudhir Agarwal, has been associated with the fund since 2012.
- L&T Short Term Income Fund– Formed on December 4, 2010, the fund has delivered 8.32, 9.00 and 8.98 return per annum over the past 1, 3 and 5 years. The fund has returned 8.98 percent per annum since launch. The asset size of the fund is Rs. 1,134 crores as on Dec 2007, with an expense ratio of 0.88 percent. The scheme aims to generate reasonable returns primarily through investments in fixed income securities and money market securities. The schemes take credit calls to enhance the return. The fund managers are Shriram Ramanathan and Vikas Garg.