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. They do not typically carry an exit load.
3. Moderate Returns
Ultra-Short Duration Funds aim to provide slightly higher returns than liquid funds while maintaining a low-risk profile. It is a low risk, low return product.
Ultra Short-Term Debt Funds are well-suited for temporarily parking surplus funds in the short term.
Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
