According to the Sebi mandate, short duration funds They can invest in debt instruments with maturities of between one and three years. This means that these schemes are meant for short-term investments of up to three years or more. They fall somewhere in the middle when it comes to interest rate riskThey are riskier than liquid, ultra-short-term and low-duration funds. However, they have a lower risk compared to medium- and long-term funds.
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These schemes invest in both short-term bonds and very short-term instruments. They invest in Treasury bills, commercial papers, certificates of deposit, etc. to meet their liquidity needs. They also invest in corporate bonds, government securities, etc.
In short, if you are looking for debt schemes to invest in for one to three years without much volatility, you can look for short duration funds. However, make sure you choose schemes that do not take on additional risks to earn additional returns. Safety should be your primary concern when it comes to debt investments.
Read also | Radhika Gupta is surprised by the frenzy of SME listings, calling it a bull market sinThere are no changes to the list. All recommended schemes have performed well. Please follow our monthly updates to track the performance of your schemes.
Best short-term funds to invest in August 2024
Methodology:
ETMutualFunds.com has used the following parameters to select the debt mutual fund schemes.
1. Moving average returns: Filmed daily for the past three years.
2. Consistency over the last three years: The Hurst exponent, H, is used to calculate the consistency of a fund. The exponent H is a measure of the randomness of a fund’s NAV series. Funds with a high H tend to exhibit low volatility compared to funds with a low H.
i) When H = 0.5, the return series is said to be a geometric Brownian time series. This type of time series is difficult to forecast.
ii)When H < 0.5, the series is said to have mean reversion.
iii) When H > 0.5, the series is said to be persistent. The higher the value of H, the stronger the trend of the series.
3. Downside risk: For this measure we have only considered the negative returns contributed by the mutual fund.
X = Returns below zero
Y = Sum of all squares of X
Z = Y/number of days needed to calculate the relationship
Downside risk = square root of Z
4. Superior performance: Fund performance: benchmark performance. Daily cumulative returns are used to calculate the fund and benchmark performance and subsequently the fund’s active performance.
Asset size: For debt funds, the limit asset size is Rs 50 crore.
(Disclaimer: Past performance is no guarantee of future performance.)
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