When it comes to mutual fund investment, quite often we come across pieces of advice which says longer the investment better the returns. As a result, conservative investors run away from investment in a mutual fund, since investors like traders, or businessman or even retired persons, require funds at shorter notice and if the liquidation results into a bare minimum return on investment, they render mutual fund ineffective and useless. However, there are short term mutual fund schemes which provide safe and sound return along with a low-risk profile.
Long term mutual fund are generally equity oriented mutual fund schemes, which start to provide considerable return after 5-7 years of uninterrupted tenure. Thus, it is futile to invest in such mutual fund, instead what short term mutual fund target is the debt or money market instruments which provide guaranteed return with minimum risk. Considering the fact short term mutual fund is helpful, here are the five best short term mutual fund to invest in 2019.
- SBI Magnum Constant Maturity Fund – Direct Growth
- Franklin India Ultra-Short Bond Fund – Super Institutional Plan – Direct Plan
- Axis strategic Bond Fund – Direct Growth
- HDFC Short term Debt Fund – Direct Growth
- Kotak Savings Fund – Direct Growth
- SBI Magnum Constant Maturity Fund – Direct Growth. Gilt-edged securities are the primary target for this fund. Gilt-edged securities meaning securities issued by government or semi-government institutions to meet their financial requirements. (masalabox.com) As a result of government and RBI backed securities, this fund is very low-risk fund, with only variable interest rate a major point of concern. Following are the highlights of the fund.
| Size of Fund | 505 Cr. |
| Launch year | 2013 |
| Minimum SIP | Rs. 500 |
| Expense Ratio | 0.35% |
| Performance | Consistency in matching or outperforming CRISIL 10 Yr Gilt in every year. |
| Return | 1 Yr – 11.47%
3Yr – 9.98% 5 Yr – 10.44% |
| Risk | Moderately Low |
With more than 90% of the fund invested in debt and government securities, this fund is performing well beyond its benchmark. Investors with low-risk appetite and guaranteed returns can definitely shortlist this fund.
- Franklin India Ultra-Short Bond Fund – Super Institutional Plan – Direct Plan. With debt and money market instrument as its bread and butter, this fund has been successful in providing regular return and a high amount of liquidity. Money market instruments are short term instruments with investment tenure varying from 14 days to 1 year, comprising of Government treasury bills, Commercial papers, certificate of deposit, promissory notes etc. Following are the highlights of the fund.
| Size of Fund | 6900 Cr. |
| Launch year | 2013 |
| Minimum SIP | Rs. 1000 |
| Expense Ratio | 0.34% |
| Performance | Successful in outperforming CRISIL Liquid in every year since its start. |
| Return | 1 Yr – 9.86%
3Yr – 9.01% 5 Yr – 9.31% |
| Risk | Very Low |
With highly liquid and secured investment, this fund is ideal for a short term cash parking and stable returns. However, being low-risk profile the return might not interest investors who can trade a little risk for higher returns.
- Axis strategic Bond Fund – Direct Growth. With both the above funds, heavily government-backed investment, this fund targets a mix of corporate debentures and government securities. Corporate debentures are nothing but debt instruments which provide guaranteed returns based on the coupon rate with heavy fund security in the form of collateral assets and debenture trustees to protect the money. Let us look at the highlights of the fund.
| Size of Fund | 425 Cr. |
| Launch year | 2013 |
| Minimum SIP | Rs. 1000 |
| Expense Ratio | 0.35% |
| Performance | Consistently outperformed CRISIL short term bond liquid benchmark from its start |
| Return | 1 Yr – 6.44%
3Yr – 8.04% 5 Yr – 9.63% |
| Risk | Low |
With the right mix of corporate debentures and government securities, this fund does not fail to match the investors’ expectations. However, a corporate debenture possesses the risk of liquidation of the company and partial or total loss of fund.
- HDFC Short term Debt Fund – Direct Growth. This fund consists of a proper mixture of debt, money market as well as government securities in its fund. As the name suggests this fund does not invest in instruments with maturities of more than 30 months. As a result of all three components, this fund gives investors, everything from a regular and stable income to low risk along with a higher amount of liquidity. Let us look at the highlights
| Size of Fund | 9400 Cr. |
| Launch year | 2013 |
| Minimum SIP | 500 Rs. |
| Expense Ratio | 0.22% |
| Performance | Always beyond CRISIL Short Term Bond Liquid benchmark. |
| Return | 1 Yr – 8.96%
3Yr – 7.82% 5 Yr – 8.42% |
| Risk | Very Low |
Investors can explore this fund by using the HDFC SIP calculator to understand the returns and enjoy triple benefits from investing. One can make use of the HDFC SIP calculator to determine the right amount to invest to gain returns that meet the goals set by the investor. But on account of a mixture, one can fail to enjoy the actual benefit of any one component.
- Kotak Savings Fund – Direct Growth. One of the oldest fund in this category, and uses a different investment mechanism to above funds altogether. Unlike the above funds who tends to invest in fixed interest rate instruments, Kotak Savings fund invests in instruments with a floating interest rate, in order to explore the volatility in it. Let us look at the highlights of this unique fund.
| Size of Fund | 6600 Cr. |
| Launch year | December 2012 |
| Minimum SIP | 1000 Rs. |
| Expense Ratio | 0.25% |
| Performance | Fund has been continuously performed above its benchmark NIFTY 50 Arbitrage (75), NIFTY 50 (25) |
| Return | 1 Yr – 8.56%
3Yr – 7.83% 5 Yr – 8.31% |
| Risk | Moderately Low |
With floating interest rate, there is always a risk of unfavourable market conditions, RBI lending rates and economic condition of the state, which can easily affect the interest rate. However, at the same time, the returns can also easily outbid the fixed rate of interest instruments in favorable conditions. Thus with slight risk, this fund can be the trump card in the short term investment funds.
