List of Best Mutual Funds for Short Term for 3 Years

The below table shows a list of the Best Mutual Funds for Short Term for 3 Years based on AUM, NAV, and minimum SIP.

Name	AUM (Cr)	NAV (Rs)	Minimum SIP (Rs)
ICICI Pru Short Term Fund	19,746.04	61.76	1,000
Kotak Bond Short Term Fund	16,078.88	54.08	100
HDFC Short Term Debt Fund	14,622.22	31.16	100
SBI Short Term Debt Fund	13,192.63	32.13	1,000
Axis Short Duration Fund	9,341.54	31.68	1,000
Aditya Birla SL Short Term Fund	8,759.95	48.46	1,000
Nippon India Short Term Fund	7,121.83	53.93	100
Tata ST Bond Fund	2,836.35	49.98	150
DSP Short Term Fund	2,824.43	47.73	100
UTI Short Duration Fund	2,567.03	31.88	500

Introduction To Top Mutual Funds for Short Term for 3 Years

ICICI Pru Short Term Fund

ICICI Pru Short Term Fund, managed by ICICI Prudential AMC, offers stability with low risk by investing in high-quality debt and money market instruments. This fund is ideal for investors seeking consistent returns without exposure to long-term market volatility.

AUM: ₹19,746.04 Crore

NAV: ₹61.76

Minimum SIP: ₹1,000

Exit Load: 0%

Expense Ratio: 0.45%

1-Y Return: 8.71%

5-Y CAGR: 7.66%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹5,000

Kotak Bond Short Term Fund

Kotak Bond Short Term Fund by Kotak Mahindra AMC focuses on moderate returns with minimal risk, investing in high-credit-quality securities. It provides a balance of safety and yield, appealing to conservative investors aiming for steady growth.

AUM: ₹16,078.88 Crore

NAV: ₹54.08

Minimum SIP: ₹100

Exit Load: 0%

Expense Ratio: 0.37%

1-Y Return: 8.91%

5-Y CAGR: 6.93%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹100

HDFC Short Term Debt Fund

HDFC Short Term Debt Fund, managed by HDFC AMC, primarily invests in short-term corporate bonds and government securities. It’s designed for risk-averse investors seeking regular income and modest capital appreciation, offering both safety and liquidity.

AUM: ₹14,622.22 Crore

NAV: ₹31.16

Minimum SIP: ₹100

Exit Load: 0%

Expense Ratio: 0.4%

1-Y Return: 8.86%

5-Y CAGR: 7.19%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹100

SBI Short Term Debt Fund

SBI Short Term Debt Fund from SBI Funds Management offers consistent returns with a moderate risk profile. By investing in top-rated securities, it balances safety and liquidity, making it ideal for conservative investors with low sensitivity to interest rate changes.

AUM: ₹13,192.63 Crore

NAV: ₹32.13

Minimum SIP: ₹1,000

Exit Load: 0%

Expense Ratio: 0.35%

1-Y Return: 8.43%

5-Y CAGR: 6.6%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹5,000

Axis Short Duration Fund

Axis Short Duration Fund, managed by Axis AMC, focuses on high-quality short-term debt instruments to provide stable returns with low risk. It’s suitable for conservative investors who prefer predictable returns without the long-term market exposure.

AUM: ₹9,341.54 Crore

NAV: ₹31.68

Minimum SIP: ₹1,000

Exit Load: 0%

Expense Ratio: 0.36%

1-Y Return: 8.84%

5-Y CAGR: 7.08%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹5,000

Aditya Birla SL Short Term Fund

Aditya Birla SL Short Term Fund, managed by Aditya Birla Sun Life AMC, is built for investors seeking stability and moderate returns within a shorter time frame. With a focus on high-credit-quality assets, it’s ideal for those looking for consistent, low-volatility income.

AUM: ₹8,759.95 Crore

NAV: ₹48.46

Minimum SIP: ₹1,000

Exit Load: 0%

Expense Ratio: 0.38%

1-Y Return: 8.94%

5-Y CAGR: 7.34%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹1,000

Nippon India Short Term Fund

Nippon India Short Term Fund, from Nippon Life India AMC, invests in quality debt instruments to deliver reliable returns with minimal risk. It’s appealing to investors who want a safe place for funds while expecting moderate growth.

AUM: ₹7,121.83 Crore

NAV: ₹53.93

Minimum SIP: ₹100

Exit Load: 0%

Expense Ratio: 0.38%

1-Y Return: 8.89%

5-Y CAGR: 7.12%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹100

Tata ST Bond Fund

Tata ST Bond Fund, managed by Tata AMC, prioritizes safety and liquidity by investing in high-credit-quality instruments. This fund suits investors seeking low-risk options with stable returns, maintaining a conservative approach to market participation.

AUM: ₹2,836.35 Crore

NAV: ₹49.98

Minimum SIP: ₹150

Exit Load: 0%

Expense Ratio: 0.36%

1-Y Return: 8.64%

5-Y CAGR: 6.77%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹5,000

DSP Short Term Fund

DSP Short Term Fund, managed by DSP Investment Managers, balances safety and moderate returns by investing in top-grade debt instruments. It’s designed for those looking for a steady, low-risk income stream over a short horizon.

AUM: ₹2,824.43 Crore

NAV: ₹47.73

Minimum SIP: ₹100

Exit Load: 0%

Expense Ratio: 0.34%

1-Y Return: 8.6%

5-Y CAGR: 6.52%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹100

UTI Short Duration Fund

UTI Short Duration Fund, from UTI AMC, invests in short-duration debt securities with a focus on high-quality instruments. Ideal for conservative investors, it provides stable income without market volatility, ensuring both liquidity and reliability.

AUM: ₹2,567.03 Crore

NAV: ₹31.88

Minimum SIP: ₹500

Exit Load: 0%

Expense Ratio: 0.41%

1-Y Return: 8.82%

5-Y CAGR: 8.07%

SEBI Risk Category: Moderate

Minimum Lumpsum Investment: ₹500

What is a Short-Term Mutual Fund?

A Short-Term Mutual Fund is a type of debt fund that invests in securities with shorter maturities, typically ranging from 1 to 3 years. These funds aim to provide steady returns with lower interest rate risk than long-term debt funds.

Short-term mutual funds primarily invest in government securities, corporate bonds, and treasury bills with high credit ratings. They’re often chosen by investors looking for moderate returns without locking in their money for long periods, offering a balance between risk and return.

These funds are suitable for investors with a short to medium investment horizon who seek relatively stable returns compared to equity funds. Short-term mutual funds are also more liquid, making them accessible for those with near-term financial goals.

Features of Best Mutual Funds for Short Term for 3 Years

The main features of the best short-term mutual funds for three years include moderate returns, reduced risk exposure, high liquidity, and investments in quality debt instruments. These funds are ideal for investors seeking stability without long-term commitment.

• Moderate Returns: Short-term mutual funds generally offer moderate returns, aiming to outperform fixed deposits while maintaining low volatility, making them suitable for conservative investors.
• Reduced Risk Exposure: These funds invest in debt securities with shorter durations, which reduces sensitivity to interest rate changes, providing a more stable return.
• High Liquidity: Short-term mutual funds offer easy access to funds, allowing investors to redeem without significant penalties, making them ideal for near-term financial needs.
• Quality Debt Instruments: Investment in high-credit-quality debt securities reduces default risk, ensuring that the capital remains secure while generating steady income over three years.

Top Mutual Funds for Short Term for 3 Years Based on Expense Ratio

The table below shows the Top Mutual Funds for the Short Term for 3 Years Based on the highest to lowest expense ratio.

Name	Expense Ratio (%)	Minimum SIP (Rs)
ICICI Pru Short Term Fund	0.45	1,000
Bank of India Short Term Income Fund	0.45	1,000
UTI Short Duration Fund	0.41	500
HDFC Short Term Debt Fund	0.40	100
Aditya Birla SL Short Term Fund	0.38	1,000
Nippon India Short Term Fund	0.38	100
Baroda BNP Paribas Short Duration Fund	0.38	500
Kotak Bond Short Term Fund	0.37	100
Axis Short Duration Fund	0.36	1,000
Tata ST Bond Fund	0.36	150

Short Term for 3 Years In Mutual Fund Based on 3Y CAGR

The table below shows the Top top-performing Mutual Funds for Short Term for 3 Years Based on the Highest 3Y CAGR.

Name	CAGR 3Y (%)	Minimum SIP (Rs)
Bank of India Short Term Income Fund	13.22	1,000
ICICI Pru Short Term Fund	7.06	1,000
Aditya Birla SL Short Term Fund	6.78	1,000
UTI Short Duration Fund	6.55	500
Sundaram Short Duration Fund	6.55	250
Axis Short Duration Fund	6.51	1,000
HDFC Short Term Debt Fund	6.46	100
Nippon India Short Term Fund	6.46	100
Mahindra Manulife Short Duration Fund	6.38	1,500
Baroda BNP Paribas Short Duration Fund	6.37	500

Top Performing Mutual Funds for Short Term for 3 Years Based on Exit Load

The table below shows the Best Mutual Funds for the Short Term for 3 Years Based on Exit Load, i.e., the fee the AMC charges investors when they exit or redeem their fund units.

Name	AMC	Exit Load (%)
Aditya Birla SL Short Term Fund	Aditya Birla Sun Life AMC Limited	0
Axis Short Duration Fund	Axis Asset Management Company Ltd.	0
Bank of India Short Term Income Fund	Bank of India Investment Managers Private Limited	0
Baroda BNP Paribas Short Duration Fund	Baroda BNP Paribas Asset Management India Pvt. Ltd.	0
DSP Short Term Fund	DSP Investment Managers Private Limited	0
HDFC Short Term Debt Fund	HDFC Asset Management Company Limited	0
ICICI Pru Short Term Fund	ICICI Prudential Asset Management Company Limited	0
Kotak Bond Short Term Fund	Kotak Mahindra Asset Management Company Limited	0
Mahindra Manulife Short Duration Fund	Mahindra Manulife Investment Management Private Limited	0
Mirae Asset Short Duration Fund	Mirae Asset Investment Managers (India) Private Limited	0

Historical Performance of Mutual Funds for Short Term for 3 Years

The table below shows the top 10 Mutual Funds for the Short Term for 3 Years to invest in India based on a 5Y return.

Name	CAGR 5Y (Cr)	Minimum SIP (Rs)
Bank of India Short Term Income Fund	8.59	1,000
UTI Short Duration Fund	8.07	500
ICICI Pru Short Term Fund	7.66	1,000
Aditya Birla SL Short Term Fund	7.34	1,000
HDFC Short Term Debt Fund	7.19	100
Nippon India Short Term Fund	7.12	100
Axis Short Duration Fund	7.08	1,000
Kotak Bond Short Term Fund	6.93	100
Sundaram Short Duration Fund	6.79	250
Tata ST Bond Fund	6.77	150

Factors To Consider When Investing In Mutual Funds for Short Term for 3 Years

The main factors to consider when investing in short-term mutual funds for three years include assessing risk tolerance, evaluating fund performance, understanding expense ratios, and ensuring portfolio diversification. These elements help investors choose funds aligned with their financial goals and risk appetite.

• Risk Tolerance: Short-term mutual funds are less volatile, but investors should assess their comfort with potential risks, as some funds may involve interest rate or credit risks that could impact returns.
• Fund Performance: Reviewing past performance over similar timeframes can provide insights into a fund’s stability and reliability, though it’s essential to remember that past returns don’t guarantee future performance.
• Expense Ratio: The cost of managing the fund affects returns. Lower expense ratios generally maximize gains, as less of the investment is spent on fees, which is critical for short-term goals.
• Portfolio Diversification: Choosing funds with a mix of quality debt securities spreads risk, ensuring that returns aren’t heavily impacted by the performance of a single investment type or issuer.

How To Invest In Mutual Funds for Short Term for 3 Years?

Listed below are the steps for investing in the best Mutual Funds for Short Term for 3 Years:

• Research and find out the top-performing funds in the market.

• Evaluate and assess your risk appetite and fix your financial goals.

• Shortlist the funds based on your fundamental and technical analysis.

• Find reliable stockbrokers like Alice Blue to open a demat account.

• Invest in the shortlisted funds and monitor them regularly.

Impact of Government Policies on Mutual Funds for Short Term for 3 Years

Government policies greatly influence short-term mutual funds, as interest rate adjustments and taxation changes can directly impact fund returns and risks. Rate hikes typically lower returns for short-term debt funds, while rate cuts can improve yields for investors.

Additionally, regulatory reforms and economic measures shape fund stability and liquidity. For instance, changes in capital gains taxes affect net returns, while new regulations on debt instruments may impact fund strategies, influencing risk levels for short-term mutual fund investors.

How Mutual Funds for Short Term for 3 Years Perform in Economic Downturns?

During economic downturns, short-term mutual funds often show resilience due to their investments in high-quality debt instruments with shorter durations. These funds are less sensitive to market volatility, making them a safer option compared to equity-based funds.

However, interest rate cuts during downturns may reduce yields on short-term funds. While they may offer lower returns in such times, their stability and lower risk exposure make them suitable for conservative investors seeking capital preservation over rapid growth.

Advantages of Investing In Mutual Funds for Short Term for 3 Years?

The main advantages of investing in short-term mutual funds for three years include capital preservation, lower interest rate sensitivity, quick liquidity, and competitive returns. These benefits make short-term funds suitable for investors seeking moderate growth without a long-term commitment.

• Capital Preservation: Short-term mutual funds focus on high-quality debt instruments, ensuring capital safety, which is ideal for conservative investors who prioritize security over aggressive growth.
• Lower Interest Rate Sensitivity: With shorter maturity periods, these funds are less affected by interest rate fluctuations, resulting in more stable returns compared to longer-term funds.
• Quick Liquidity: Short-term mutual funds offer high liquidity, allowing investors to access their funds with ease, making them suitable for those with near-term financial goals.
• Competitive Returns: While conservative, these funds often yield better returns than traditional savings accounts, providing a moderate growth potential without significant risk exposure, which is ideal for short-term financial planning.

Risks of Investing In Mutual Funds for Short Term for 3 Years?

The main risks of investing in short-term mutual funds for three years include credit risk, interest rate risk, lower return potential, and inflation risk. While relatively stable, these funds still carry risks that can affect returns and capital safety.

• Credit Risk: Investments in corporate debt carry the risk of default if issuers face financial trouble, potentially impacting fund returns. Funds with higher-rated securities mitigate this risk, but it remains a factor for investors to consider.
• Interest Rate Risk: Changes in interest rates can influence bond values in the fund. If rates rise, bond prices may fall, impacting fund value, though short-term funds are generally less sensitive than long-term ones.
• Lower Return Potential: Compared to equity or long-term funds, short-term mutual funds typically offer moderate returns. This conservative approach may limit potential gains, making them less suitable for aggressive growth-oriented investors.
• Inflation Risk: Short-term funds may not always outpace inflation, leading to reduced purchasing power over time. This risk affects investors seeking real growth, as returns may not fully offset inflation rates in a three-year horizon.

Short-Term Mutual Fund GDP Contribution

Short-term mutual funds contribute to GDP by supporting liquidity in the financial market, enabling companies and governments to access short-term capital. These funds enhance market stability, providing financing options that stimulate business growth and economic activity.

Additionally, short-term mutual funds attract investors, promoting capital flow within the economy. By fostering investments in corporate and government bonds, these funds indirectly support infrastructure development, job creation, and consumer spending, thus positively impacting GDP growth.

Who Should Invest in Mutual Funds for Short Term for 3 Years?

Investors with a low-risk appetite and a short investment horizon, typically around three years, may find short-term mutual funds suitable. These funds are ideal for those seeking moderate returns without significant exposure to market volatility or long-term commitments.

Additionally, individuals with near-term financial goals, such as planning for a down payment or emergency fund, can benefit from the liquidity and stability of short-term mutual funds. These funds offer easy access to capital, making them a practical choice for conservative, goal-oriented investors.

Best Mutual Funds for Short Term for 3 Years – FAQs  

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.