8,792.20708.4
Stock Analysis, IPO, Mutual Funds, Bonds & More

Best short duration or short term mutual fund schemes to invest in 2020

Mutual fund managers and advisors recommend short duration mutual fund schemes to conservative investors looking to invest in debt mutual funds for a year or two.

ET Online|
Last Updated: Feb 18, 2020, 10.07 AM IST
0Comments
iStock
15
Here is an update on our recommended short duration funds or short term mutual funds. There is no change in our list of recommended schemes in February. That means you may continue to invest and hold on to your investments in these schemes. The short duration fund category has offered 5.51% in one year.

Mutual fund managers and advisors recommend short duration mutual fund schemes to conservative investors looking to invest in debt mutual funds for a year or two.

According to the Sebi mandate, short duration schemes or erstwhile short term funds are open-ended short-term debt schemes that invest in instruments with macaulay duration of between one and three years. This means investors can consider investing in these schemes with a horizon of a few years.

Most debt mutual fund managers and advisors have been asking investors to stick to short duration schemes for a while now. Even after the Reserve Bank of India started cutting rates regularly and changed its monetary stance to accommodative from neutral, the advice hasn't changed. Even now, most fund managers and advisors are asking their clients to play it safe and stick to short duration schemes.

So, if you are planning to invest for a few years, short duration schemes must be your choice. To make your selection process easier, ETMutualFunds.com has put together a list of short duration schemes. Here are our recommended short duration debt mutual funds:

Best short duration funds to invest in 2020
  • HDFC Short Term Debt Fund
  • ICICI Prudential Short Term Fund
  • Axis Short Term Fund

Methodology:
ET.com Mutual Funds has employed the following parameters for shortlisting the debt mutual fund schemes.
1. Mean rolling returns: Rolled daily for the last three years.

2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
i)When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
ii)When H <0.5, the series is said to be mean reverting.
iii)When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
X =Returns below zero
Y = Sum of all squares of X
Z = Y/number of days taken for computing the ratio
Downside risk = Square root of Z

4. Outperformance:
Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

Asset size: For Debt funds, the threshold asset size is Rs 50 crore
Click here for all the information and analysis you need for tax-saving this financial year
Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service