Low Duration Debt Fund

Low Duration Funds are actively managed to capitalize on short-term interest rate fluctuations and accrue income. Fund managers build a diversified portfolio with debt instruments that mature in about 6 to 12 months, allowing them to respond to changing market conditions and optimize returns.

These funds benefit both from accrual income (interest from debt securities) and capital appreciation, especially during stable or gradually declining interest rate scenarios. They carry moderate credit and interest rate risk, but are still considered less volatile than long-duration or equity-based funds.

Their relatively low sensitivity to market fluctuations makes them an ideal choice for investors seeking better returns than a savings account or fixed deposit, without locking in their capital.

Low Duration Funds are best suited for:

• Investors with a 6–12 month investment horizon
• Individuals or businesses looking to park surplus cash
• Those seeking higher post-tax returns than FDs, especially in higher tax brackets
• Investors wanting low-to-moderate risk exposure without equity market volatility
• Anyone planning to deploy capital for short- to medium-term financial goals

These funds work well during periods of stable or slightly rising interest rates. They are often chosen by corporate treasuries and conservative investors who still want their money to grow meaningfully in the short term.

• Better Returns Than Savings/FDR: Expected returns typically range between 5% and 7% per annum, depending on market conditions.
• Moderate Risk Profile: Although not entirely risk-free, the credit and interest rate risks are relatively low and well-managed.
• High Liquidity: Most funds offer T+1 redemption, making your money accessible when needed.
• No Lock-In Period: Flexibility to withdraw anytime without penalties.
• Tax Efficiency: Gains held for over 3 years qualify as long-term capital gains (LTCG) with indexation benefits, potentially reducing tax liability.
• Active Portfolio Management: Professional fund managers adjust portfolios based on evolving market conditions to enhance returns.
• Diversification: Exposure to multiple short-term instruments reduces concentration risk.