Ultra-Short Duration Funds invest in short-term debt securities with a Macaulay's duration between 3 to 6 months. They may offer slightly higher returns than liquid funds with a low-risk approach, subject to market risks. Their main goal is to generate returns over a short time frame and minimize the risk of capital losses due to interest rate changes. Compared to long-term bond or equity funds, they are considered less risky as they invest in shorter-maturity debt securities.
Characteristics of Ultra-Short Duration Funds
1. Investment In Short-Term Debt Securities
Ultra-Short Duration Funds are short-term mutual funds that invest primarily in debt securities such as commercial papers, certificates of deposits and other money market instruments with a Macaulay’s duration of up to six months.
2. High Liquidity
These funds offer easy entry and exit for short-term fund management.
