Meeting short-term financial objectives necessitates a strategic approach. Short-term debt funds stand out as a choice, offering a diverse array of options finely tailored for varying investment horizons. These funds, based on time frames, present a decent avenue for investors seeking safety, returns, and liquidity.
Murthy Nagarajan, Head of Fixed Income at Tata Asset Management, recently shared insights on the same in an exclusive interaction with CNBC-TV18.com, where he laid out a strategic roadmap aligned with varying time horizons.
Short-term investments (1-2 months):
Liquid funds emerge as the optimal choice, assuring investors of both liquidity and stability within this brief timeframe. These funds invest in debt or money market instruments that mature within 91 days. Investors can park their surplus funds for a few weeks to a few months.
Here's a look at 1-month return of some of the liquid funds:
| Scheme Name | 1-month |
| TRUSTMF Liquid Fund - Direct Plan - Growth | 0.62% |
| Mahindra Manulife Liquid Fund - Direct Plan - Growth | 0.60% |
| Bank of India Liquid Fund - Direct Plan - Growth | 0.60% |
| Union Liquid Fund - Direct Plan - Growth | 0.60% |
| Axis Liquid Fund - Direct Plan - Growth | 0.59% |
| Edelweiss Liquid Fund - Direct Plan - Growth | 0.59% |
| Kotak Liquid Fund - Direct Plan - Growth | 0.61% |
| PGIM India Liquid Fund - Direct Plan - Growth | 0.60% |
| Aditya Birla Sun Life Liquid Fund - Direct Plan - Growth | 0.59% |
(Source: Moneycontrol)
Mid-term investments (three months): Nagarajan recommended ultra money market funds, a balanced option offering security and promising returns for investors eyeing a slightly longer horizon.
Money market funds are
debt funds that lend to companies for a period of up to one year. These funds are designed in a manner that allows the fund manager to generate higher returns while keeping risk under control through adjustment of lending duration.
Here's a look at the 3-month return of some of the money market funds:
| Scheme Name | 3-month return |
| SBI Savings Fund - Direct Plan - Growth | 1.75% |
| Nippon India Money Market Fund - Direct Plan - Growth | 1.78% |
| Union Money Market Fund - Direct Plan - Growth | 1.69% |
| Union Money Market Fund - Direct Plan - Growth | 1.69% |
| Aditya Birla Sun Life Money Manager Fund - Direct Plan - Growth | 1.78% |
| Edelweiss Money Market Fund - Direct Plan - Growth | 1.70% |
| Kotak Money Market Fund - Direct Plan - Growth | 1.75% |
| ICICI Prudential Money Market Fund - Direct Plan - Growth | 1.75% |
(Source: Moneycontrol)
Medium-term investments (5-6 months): Highlighting treasuries, specifically low-duration funds, Nagarajan emphasised their stability and potential gains, making them an attractive proposition for this timeline.
These funds lend to companies for a period of 6-12 months. Their relatively longer lending duration makes them a little more volatile than liquid or ultra short duration funds, but they do not have any stock market instrument and hence are relatively safer funds to invest.
Here's a look at 6-month return of some of the low duration funds:
| Scheme Name | 6-month |
| SBI Magnum Low Duration Fund - Direct Plan - Growth | 3.52% |
| HSBC Low Duration Fund - Direct Plan - Growth | 3.70% |
| Aditya Birla Sun Life Low Duration Fund - Direct Plan - Growth | 3.62% |
| Axis Treasury Advantage Fund - Direct Plan - Growth | 3.43% |
| Kotak Low Duration Fund - Direct Plan - Growth | 3.60% |
| Nippon India Low Duration Fund - Direct Plan - Growth | 3.47% |
(Source: Moneycontrol)
Longer-term Investments ( one year+): Corporate bond funds were suggested, offering a platform for consistent growth and reduced risk over a more extended period.
Corporate bond funds are debt funds that lend at least 80% of their money to companies with the highest possible credit rating. This rating is given only to companies that are financially strong and have a high probability of paying lenders on time.
(Edited by : Shoma Bhattacharjee)
