If you're searching for a mutual fund that can balance potential returns and reduce interest rate risk, then a short-duration mutual fund could be a good choice. Explore the mutual fund Calculator for calculating your returns.
Short-duration mutual funds are a type of debt fund that mainly invests in fixed-income securities with shorter maturity periods. Usually, these funds have a portfolio of bonds and other debt instruments with a maturity duration of one to three years. These funds aim to provide investors with a steady income stream while decreasing risk.
Shorter durations can help reduce the impact of interest rate fluctuations. Hence, it makes them less vulnerable to changes in market rates when compared to debt funds with longer terms.
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Here are a few benefits of investing in short-duration mutual funds:
As previously stated, short-duration funds invest in securities that have shorter maturity periods, making them a low-risk investment option. Investing in them is considered relatively safe because they are less susceptible to fluctuations in interest rates.
Most short-term funds are classified as debt funds based on how long they are held. If you're looking for a reliable investment option, you might want to consider debt funds. These funds invest your money in fixed-income securities like Corporate Bonds, Government Securities, Treasury Bills, and Money Market Instruments, among others.
Hence, Short-duration debt mutual funds have the potential to produce a fixed rate of return for a specific maturity date. In addition, India's top short-term funds are typically unaffected by fluctuations in the capital market.
Investing in short-term debt funds can be beneficial for diversifying and balancing your investment portfolio. Short-duration funds are a great option for those who don't want to invest for a long time.
Short-duration mutual funds can be a great option if you're looking to invest your fund for a short period, whether shorter than twelve months or up to three years. They offer good returns and are well-suited for short-term investment plans.
So this is all about Short-duration mutual funds. Short-duration funds may prove an ideal choice for investments for those seeking a safe investment with a possibility of regular income. If you wish to invest in these funds, you can start easily with Motilal Oswal. Open a DEMAT Account, and you are ready to go!