Best Short Duration Mutual Funds 2026
Short Duration funds invest in bonds with 1-3 year maturity — low risk debt option for 1-3 year investment horizon. 127 funds available on TopFund.
8.59%
Avg 3Y CAGR
What are Short Duration Mutual Funds?
Short duration funds are required to maintain a Macaulay duration of 1-3 years, which places them in a specific middle ground: more interest-rate sensitivity than liquid, overnight, or ultra-short funds, but meaningfully less than long-duration or gilt funds that can run 7+ years of duration. That duration band means the NAV does move with RBI rate changes, but the swings are moderate rather than sharp.
The category exists for investors who've moved past parking money in liquid funds and are looking for somewhat higher yield in exchange for accepting mild NAV fluctuation — typically for goals with a 1-3 year horizon where a fixed deposit's lock-in isn't ideal, but where the multi-year rate risk of a long-duration fund isn't appropriate either. Credit quality still matters within this category: two short-duration funds with the same duration mandate can carry very different credit risk depending on how much lower-rated corporate paper each holds versus government and top-rated corporate debt.
As with all debt funds since the 2023 tax law change, gains are taxed at your income slab rate regardless of holding period, which is worth factoring into the comparison against a bank FD of similar tenure — the tax treatment is now effectively the same.
Top Short Duration Funds by Star Rating
Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index fund - Regular Plan - Growth
Edelweiss Mutual Fund · Short Duration
Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index fund - Direct Plan - IDCW
Edelweiss Mutual Fund · Short Duration
Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index fund - Regular Plan - IDCW
Edelweiss Mutual Fund · Short Duration
Franklin India Short Term Income Plan - Retail Plan - Direct - Monthly - IDCW
Franklin Templeton Mutual Fund · Short Duration
Bandhan Short Duration Fund - Direct Plan - Periodic IDCW
Bandhan Mutual Fund · Short Duration
Bandhan Short Duration Fund - Regular Plan - Growth
Bandhan Mutual Fund · Short Duration
TRUSTMF Short Duration Fund-Direct Plan-Weekly Income Distribution Cum Capital Withdrawal
Edelweiss Mutual Fund · Short Duration
ICICI Prudential Short Term Fund - Monthly IDCW
ICICI Prudential Mutual Fund · Short Duration
Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index fund - Direct Plan - Growth
Edelweiss Mutual Fund · Short Duration
Edelweiss Low Duration Fund - Regular Plan IDCW Payout
Edelweiss Mutual Fund · Short Duration
Frequently Asked Questions
What are Short Duration mutual funds?
Short Duration mutual funds invest in bonds with 1-3 year maturity — low risk debt option for 1-3 year investment horizon.
What is the minimum investment in Short Duration funds?
Most Short Duration funds allow SIP starting from ₹500/month or ₹1,000 lumpsum. Some funds have lower minimums of ₹100 via SIP.
Are Short Duration mutual funds safe?
Debt funds carry lower risk than equity but are not entirely risk-free — they have credit risk and interest rate risk. They are suitable for short-to-medium term goals.
How are Short Duration fund returns taxed?
Debt fund gains are added to income and taxed per your income tax slab (post-2023 budget).
What's the difference between short duration and liquid funds?
Liquid funds hold instruments maturing within 91 days, keeping interest rate risk minimal. Short duration funds maintain a 1-3 year Macaulay duration — meaningfully more rate sensitivity in exchange for typically higher yield, suited to goals a bit further out than what a liquid fund is meant for.
Is a short duration fund better than a fixed deposit of similar tenure?
Since the 2023 tax law change removed debt funds' indexation benefit, both are now taxed at your income slab rate, removing what used to be a tax advantage for debt funds. The remaining differences are liquidity (funds are generally easier to exit early without a fixed penalty) and the fact that fund NAVs fluctuate with rates while an FD's rate is locked for its full tenure.