Ultra short term debt mutual funds invest in fixed-income instruments which have short-term maturity periods and are liquid in nature.
There are some points of difference between a liquid fund and an ultra-short term fund, the latter gives better returns as compared to the former. While a liquid fund invests in securities with a residual maturity up to 91 days, an ultra-short term funds invests in securities with a maturity term beyond 91 days. Thus, if you wish to park your money for 6-12 months and earn much better interest rate than what a bank would give, opt for an ultra-short term fund. An average 1 year return would be around 7%.
Here are the top 5 ultra short term funds to invest in, for the year 2017:
- Birla SL Savings Fund – Formed on April 16, 2003, the fund has given 8.50 percent, 8.96 percent, 9.21 percent and 8.56 percent per annum in the past 1, 3, 5 and 10 years. It has returned 7.8 percent per annum since launch. The expense ratio of the fund is 0.24 percent; the fund has a total asset value of Rs. 16,222 crore. Birla SL Savings 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 Susaina Da Cunha.
- 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 8.60 percent, 8.87 percent , 9.14 percent and 8.48 percent . Launched on September 27, 2002, the fund has an asset value of Rs. 21,612 crore. The fund has returned 8.13 percent per annum since launch.
- Franklin India Ultra Short Bond Fund – Formed on December 18, 2007, the fund has delivered per annum return of 9.40 percent, 9.62 percent and 9.81 percent in the past 1, 3 and 5 years. Since launch, the fund has delivered 8.99 percent return per annum. The expense ratio for the fund is 0.30 percent and the asset size as on March 31 , 2017 is 7,909 crore. 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 8.44 percent per annum. Over the past 1, 3, 5 and 10 years, UTI Treasury Advantage Fund has delivered 8.42 percent, 8.78 percent, 9.08 percent and 8.43 percent per annum. The overall asset size for the fund is Rs. 8,861 crore and the expense ratio is 0.40 percent. The fund manager, Sudhir Agarwal, has been associated with the fund since 2012.
- HDFC Floating Rate Income Fund – Short Term Plan – Wholesale Plan – Formed on October 23, 2007, the fund has delivered 8.36 percent, 8.79 percent and 8.98 percent per annum over the past 1, 3 and 5 years. The fund has returned 8.40 percent per annum since launch. The asset size of the fund is Rs. 11, 505 crore as on March 31, 2007, with an expense ratio of 0.29 percent. The scheme aspires to generate regular income by investing a minimum of 75 percent of its assets in in floating rate debt / money market instruments or fixed rate debt / money market instruments swapped for floating rate returns, and up to 25 per cent in fixed rate debt / money market instruments. The fund manager is Shobhit Mehrotra, who has been with the fund since October 2007.