Ultra Short Funds
Last Updated on 12 May 2026
3 Year Average Returns
6.40%
Funds on Anand Rathi
111
Ultra Short Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| Aditya Birla SL Savings Fund - Retail (IDCW-W) | 11.04% | 10.55% | 8.14% |
| Aditya Birla SL Savings Fund - Retail (IDCW-D) | 9.11% | 8.89% | 7.29% |
| Nippon India Ultra Short Duration Fund (IDCW-D) | 6.07% | 7.01% | 6.86% |
| Nippon India Ultra Short Duration Fund (G) | 6.17% | 6.79% | 6.71% |
| Nippon India Ultra Short Duration Fund (IDCW-M) | 6.15% | 6.78% | 6.71% |
| Nippon India Ultra Short Duration Fund (IDCW-W) | 5.99% | 6.62% | 6.61% |
| Aditya Birla SL Savings Fund - Regular (IDCW-W) | 7.06% | 7.80% | 6.54% |
| UTI-Ultra Short Duration Fund - Inst (G) | 5.89% | 6.79% | 6.46% |
| Invesco India Ultra Short Duration Fund (IDCW-Q) | 9.37% | 7.94% | 6.44% |
| Bandhan Ultra Short Duration Fund - Reg (IDCW-D) | 6.30% | 7.62% | 6.42% |
| Nippon India Ultra Short Duration Fund (IDCW-Q) | 6.17% | 6.79% | 6.41% |
| HSBC Ultra Short Duration Fund (IDCW-W) RI | 6.38% | 7.58% | 6.40% |
| UTI-Ultra Short Duration Fund (IDCW-D) | 5.89% | 6.69% | 6.34% |
| Aditya Birla SL Savings Fund - Retail (G) | 6.48% | 7.27% | 6.33% |
| Aditya Birla SL Savings Fund - Regular (G) | 6.48% | 7.27% | 6.33% |
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What are Ultra Short Duration Mutual Funds?
Ultra Short Duration Fund is a sub-category of a debt fund that invests in debt securities for a period of 3 to 6 months. It usually includes short-term fixed-income assets with a limited maturity.
Since the tenure is short, your money stays liquid and relatively safe. Also, the fund manager tries to provide returns relatively better than a regular savings account or fixed deposit. Hence, it serves as a smart choice for investors who desire to park their funds for a limited time.
Benefits of Investing in Ultra Short Duration Funds
Ultra-short-term funds have numerous advantages, and here are a few of them to benefit from:
High Liquidity
As the securities have short-term maturity, investors can redeem the units anytime and fulfill their emergency needs, usually receiving money within a day.
Yield potential
These schemes aim to provide higher growth potential than savings accounts or short-term fixed deposits.
Low Interest Rate Sensitivity
Since these investments are for a short-term period, the influence of interest rates is minimal.
Diversification
These funds lessen overall investment risk by investing in a variety of securities, such as commercial papers, treasury bills (T-bills), and certificates of deposit.
How Do Ultra Short Duration Funds Work?
Similar to liquid funds, the fund manager invests pooled money (from investors) into debt and money market securities with maturities between three and six months. This strategy helps the ultra short duration funds operate effectively.
As the maturity date draws closer, the fund manager actively reinvests the capital into other debt securities with the same maturity range. And this process continues, thus maintaining the NAV (Net asset value) of the debt fund.
Who Should Invest in Ultra Short-Duration Funds?
Generally, ultra short term funds are suitable for:
- Investors with short-term goals: Those who seek to save money for a few weeks to a few months.
- Conservative Investors: Those looking for rates higher than savings accounts without running major risk.
- Emergency Fund Allocation: Investors seeking to maintain an emergency fund with decent growth and get quick redemption access.
How to Invest in Ultra Short Duration Funds with Anand Rathi
Looking to invest in ultra short duration funds? Here's how you can invest in Ultra Short Term Funds with Anand Rathi online platforms:
Seamless Onboarding
Open your mutual fund account on the ARInvest / Anand Rathi Mutual Funds app in minutes. (Already KYC’d? You’re ready to go.)
Choose Ultra Short Duration Funds
Click on "Invest" and explore the list of "Ultra Short Duration Funds."
Invest Your Way
Start with a lump sum or set up a recurring investment (SIP) – whichever fits your cash flow.
Watch Your Investment Grow
Log in to your dashboard and see your fund earns interest daily, reflected in the NAV.
Redeem Anytime
Need cash? Redeem your units quickly and receive proceeds, often by the next business day. No long lock-ins, no hassle.
Factors to Consider Before Investing in Ultra Short Duration Funds
Before investing in any debt fund or ultra short fund specifically, do consider the following factors:
Interest Rate Risk
While it's minimal, there is still some sensitivity to interest rate changes if they are announced during that period.
Credit Risk
To mitigate the risk of default, ensure the fund manager invests in high-quality instruments with good credit ratings.
Expense Ratio
Lower expense ratios can enhance net yields, so compare them across different funds.
Investment Horizon
If you have a short, conservative investment horizon, these funds can meet your requirements.
Taxation Rules on Ultra Short Duration Funds
Any investor who has invested or will invest in ultra short term funds falls into two categories:
Before April 1, 2023, but sold before July 23, 2024: LTCG (20% with indexation benefit), STCG (Slab rate).
Before April 1, 2023, but sold after July 23, 2024: LTCG (12.5% - without indexation), STCG (slab rate).
On or after April 1, 2023: Irrespective of the holding period, gains are taxed at the individual's slab rate.
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The information provided on this page is for informational purposes only and should not be construed as investment advice, recommendation, or solicitation to buy or sell any securities or financial pr...
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