List of Top Short Term Mutual Funds in India 2025: 1-Year Returns (2025)
Short-term mutual funds are mutual funds that have performed exceptionally well in the short period of 1 to 3 years. Investors with a short term investment horizon looking to gain from the short term market movements can consider these funds. In this article, we will explore a list of the top short term mutual funds and discuss their features, factors and how to invest in these short term funds in India.
Top 10 Short Term Mutual Funds in India
The following are the top 10 mutual funds for short term investment:
| Fund Name | Sub Category | AUM (in Cr.) | CAGR 3Y (%) | Expense Ratio | Absolute Returns - 1Y (%) |
|---|---|---|---|---|---|
| Nippon India Taiwan Equity Fund | Thematic Fund - Global | 389.09 | 39.58 | 1.04 | 47.62 |
| ICICI Pru NASDAQ 100 Index Fund | Thematic Fund - Global | 2,192.27 | 34.96 | 0.61 | 32.83 |
| Aditya Birla SL Intl. Equity Fund | Thematic Fund - Global | 249.75 | 21.18 | 2.07 | 27.25 |
| Motilal Oswal S&P 500 Index Fund | Thematic Fund - Global | 3,886.69 | 26.63 | 0.61 | 24.61 |
| DSP Credit Risk Fund | Credit Risk Fund | 207.38 | 15.72 | 0.4 | 22.51 |
| HSBC Credit Risk Fund | Credit Risk Fund | 584.01 | 12.09 | 0.96 | 21.31 |
| Motilal Oswal Nifty India Defence Index Fund | Index Fund | 3,417.71 | 0.00 | 0.43 | 20.60 |
| Aditya Birla SL Nifty India Defence Index Fund | Index Fund | 651.03 | 0.00 | 0.31 | 20.08 |
| Nippon India US Equity Opp Fund | Thematic Fund - Global | 713.51 | 24.00 | 1.26 | 17.37 |
| Aditya Birla SL Credit Risk Fund | Credit Risk Fund | 1,023.30 | 11.69 | 0.67 | 17.15 |
Note: The data on the list of the top performing short term mutual funds is from 29th September, 2025. This data is derived from the Tickertape Mutual Funds Screener.
- Plan: Growth
- Category: Debt & Equity
- Absolute Returns-1Y: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of the Best Short Term Mutual Funds
Nippon India Taiwan Equity Fund
Nippon India Taiwan Equity Fund invests in companies listed in Taiwan, offering exposure to one of the world’s major technology and semiconductor markets. The fund provides diversification beyond domestic equities through overseas allocation in a specialised international market.
ICICI Prudential NASDAQ 100 Index Fund
ICICI Prudential NASDAQ 100 Index Fund tracks the NASDAQ-100 Index, giving investors access to large-cap, non-financial companies listed on the NASDAQ exchange. The portfolio includes global leaders in technology, healthcare, and consumer sectors, reflecting U.S. growth-oriented businesses.
Aditya Birla Sun Life International Equity Fund
Aditya Birla SL International Equity Fund invests in global markets through overseas equity and fund allocations. It seeks diversification by spreading exposure across geographies and industries outside India, enabling participation in international equity opportunities.
Motilal Oswal S&P 500 Index Fund
Motilal Oswal S&P 500 Index Fund tracks the performance of the S&P 500 Index, one of the most widely followed benchmarks in the U.S. market. It invests in 500 leading U.S. companies across multiple sectors, offering broad global equity exposure.
DSP Credit Risk Fund
The DSP Credit Risk Fund allocates a significant portion of its portfolio to lower-rated corporate bonds, capturing higher yields. As a credit risk category fund, it balances return potential with the additional risk associated with lower-rated debt instruments.
HSBC Credit Risk Fund
The HSBC Credit Risk Fund primarily invests in bonds and debentures rated below the top safety level, seeking to achieve enhanced yields. The fund carries credit exposure, and its returns are tied to the performance and repayment ability of the underlying issuers.
Motilal Oswal Nifty India Defence Index Fund
Motilal Oswal Nifty India Defence Index Fund tracks the Nifty India Defence Index, comprising listed companies engaged in defence and aerospace manufacturing. It reflects the increasing emphasis on self-reliance and growth in India’s defence sector.
Aditya Birla SL Nifty India Defence Index Fund
Aditya Birla SL Nifty India Defence Index Fund replicates the Nifty India Defence Index, which comprises stocks of companies related to the defence sector. The scheme provides exposure to firms engaged in indigenous defence production, aligned with government initiatives for sectoral growth.
Nippon India US Equity Opportunities Fund
Nippon India US Equity Opportunities Fund invests in U.S.-based equities through active management or feeder structures. The portfolio provides exposure to American companies across various sectors, offering diversification benefits and access to one of the world’s largest global equity markets.
Aditya Birla SL Credit Risk Fund
Aditya Birla SL Credit Risk Fund focuses on bonds and debentures with lower credit ratings, aiming to generate higher yields compared to safer debt categories. Its strategy involves additional credit exposure to benefit from relatively higher interest accruals.
What are Short Term Mutual Funds?
Short-term mutual funds are mutual funds that generated the highest returns in the short period. These funds primarily invest in high-quality stocks to build a sectoral or thematic fund which is bound to rebound during the season.
Features of Short Term Mutual Funds
- Low-Risk: Short term mutual funds investments are typically low-risk, high-quality funds based on thematic scheme, which are bound to grow during the season. Ultra short duration funds includes gold funds which grow exceptionally during the festive season.
- Higher Returns: Short duration mutual funds usually offer higher returns compared to Fixed Deposits and Savings accounts. Investors benefit from a more profitable alternative without significantly increasing their risk exposure.
- High Liquidity: One of the primary features of the best mutual funds for short term growth is their high liquidity. Investors can quickly access their short duration mutual funds, often without significant penalties or restrictions, making these funds suitable for those needing rapid access to their capital.
- Investment Period: Short-term mutual funds help investors align their investment strategies with the time horizons of their financial goals. They are ideal for short-term investment horizons, typically ranging from 1 to 3 years.
- Stable NAV: The best mutual fund for short term aims to maintain a stable Net Asset Value (NAV), often set at a fixed value to ensure minimal fluctuations. This stability is a significant advantage for investors seeking consistent returns.
- Diversification: Diversification is another critical feature, as these short duration mutual funds invest across different issuers, sectors, and types of debt instruments. This diversification helps mitigate risk and maintain the fund’s stability.
Who Can Consider Short Term Mutual Funds?
- Investors with an investment horizon of at least one year: Short-term funds are designed to generate higher returns, but they come with increased volatility. If this aligns with your risk tolerance and fits your investment strategy—such as a plan to remain invested for at least a year—short-term mutual funds can be a good match for your investment mindset.
- Institutional investors: Pension funds, endowments, and insurance companies may allocate part of their portfolios to short term funds. These funds help manage cash flows, meet short-term obligations, and provide portfolio stability.
- Thematic Investors: Short term mutual funds can be preferred by investors who want to capitalise on seasonal trends.
- Sectoral Investors: Investors who want to explore in the seasonal sectors in India can also consider investing in short term investment mutual funds.
How to Invest in Short Term Mutual Funds?
You can easily invest in short term mutual funds by following these steps:
- To invest in very short term mutual funds, you can visit an equity investment platform such as smallcase or Tickertape.
- The next step would be to research and identify the top short term mutual funds that align with your investment thesis. You can easily select and learn more about the best short term funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
- Once you have selected the funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. To start SIP in mutual funds, you can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade model portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered investment experts (also known as smallcase managers)
- smallcase offers over 500+ stock portfolios, created by 200+ managers
Here are a few popular smallcases among new investors:
Disclosures for aforementioned smallcases
How to Identify the Best Short Term Mutual Funds?
- Expense Ratio: Lower expense ratios can significantly impact your returns over time. Look for the best ultra short term funds with lower expense ratios, as they can minimise the drag on your investment.
- Fund Performance: Review the historical performance of short term mutual funds, focusing on their consistency and returns over different time frames. Look for ultra short duration funds that have outperformed their benchmarks. Investors can explore tools like the Tickertape Mutual Fund Screener to check fund performance.
- Fund Manager’s Track Record: The fund manager’s experience and track record are crucial. A seasoned manager with a history of making prudent investment decisions can enhance the fund’s performance.
- Credit Quality: If you’re considering debt-oriented short-term funds, pay attention to the credit quality of the portfolio. Funds with higher credit ratings tend to be safer investments.
- Exit Load: Be aware of any exit loads that might apply. Some funds charge a fee if you withdraw your investment before a specified period. Choose funds with favourable exit load structures.
- Tax Implications: Understand the tax implications of your investment. Short-term capital gains tax rates may apply, and the choice of funds can impact your tax liability.
Advantages of Investing in Short Term Mutual Funds
Investing in short term mutual funds offers several advantages listed below:
- Safety: The best mutual fund for short term primarily invests in low-risk securities, aiming to preserve your capital while generating modest returns. This focus on low-risk investments makes them a secure option for those seeking to protect their initial investment.
- Liquidity: Short-term mutual funds are highly liquid, allowing you to access your money quickly and without significant penalties. This makes them ideal for emergency funds or achieving short-term financial goals, providing the flexibility to meet unexpected expenses.
- Steady returns: Short term mutual funds with high returns offer stability and consistency. Investors can expect reasonable returns with minimal volatility, making them a reliable choice for those seeking predictable income.
- Diversification: Low duration funds spread investments across various instruments, reducing the risk associated with a single asset. Diversification helps protect your investment from significant downturns, offering a balanced approach to risk management.
- Low minimum investment: Short-term mutual funds typically have low minimum investment requirements, making them accessible to a wide range of investors, including those with limited funds. This allows more people to take advantage of the benefits these funds offer.
Risks of Investing in Short Term Mutual Funds
Short Term mutual funds have attractive benefits. Nevertheless, there are a few challenges and risks associated with investing in the best short term funds:
- Underperforming Sectors: During particular seasons, some sectors fail to ride the momentum, thus generating lower returns in even the best short term debt funds.
- Market Fluctuations: Since they are based on thematic scheme, the overall market fluctuation halt the growth of these funds.
- Sector Aligned: These funds invests in one theme/sector, which might not be in the government’s vision during the budget. Therefore, the probablity of generating high returns on investment closely related to the economy’s vision.
What are Ultra Short Term Funds?
Ultra Short Term Mutual Funds are tailored for conservative investors with a 3-6 month investment horizon. These funds strategically invest in debt securities and money market instruments to maintain a Macaulay Duration within the 3-6 month range.
This makes them ideal for those looking to achieve specific financial goals within a 6-month timeframe. With average returns typically ranging between 7% and 9%, these funds offer a balanced blend of security and potential growth for short-term objectives.
Difference Between Short Term and Long Term Mutual Funds
The differences between Short Term Mutual Funds and Long Term Mutual Funds have been listed below:
| Points of Difference | Long-Term Mutual Funds | Short-Term Mutual Funds |
| Time | Typically 10 years or more, suited for extended objectives. | Generally three years or less, suitable for shorter-term goals. |
| Risks Associated | Exposure to market fluctuations over extended periods. | Vulnerability to shorter-term market volatility |
| Investing Goals | Aligned with long-term objectives like retirement and education. | Tailored for shorter-term goals such as vacations, weddings, or home improvements. |
Factors to be Considered Before Investing in Short Term Mutual Funds
- Defining Investment Goals: The best short term investment instrument should align with the investor’s specific financial objectives, whether short-term or long-term, making goal congruence crucial.
- Determining Investment Duration: The timeframe an investor intends to maintain their investments impacts their selection. Investment options vary based on horizons, with short-term mutual funds, for instance, tailored for durations of up to three years.
- Embracing Portfolio Diversification: A well-balanced portfolio is essential for optimal growth. Effective diversification involves segmenting goals by time horizon and allocating investments across appropriate instruments. The best mutual funds for 1 month offer an excellent option for diversifying short-term holdings.
- Tax Considerations: Investors must factor in tax implications when making investment choices. Taxation varies based on the chosen investment vehicle, with the growth option of short-term mutual funds subject to taxation at the investor’s applicable slab rate.
To Wrap It Up…
In conclusion, the best mutual funds for short term investments offer a flexible and effective way to meet your immediate financial goals while managing risk. Whether you’re planning a vacation, a wedding, or home improvements, these funds can provide stability and competitive returns over a shorter investment horizon. However, it’s crucial to carefully assess your specific needs, risk tolerance, and objectives before diving in. By understanding the dynamics of short-term investments and considering factors like your time horizon, market risk, and goals, you can make informed decisions to optimise your financial journey.
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Frequently Asked Questions (FAQs) on Short Term Mutual Funds
The key lesson for investors is that not all investments are suitable for everyone. Short-term mutual funds best fit those with shorter investment horizons, offering potential for higher returns compared to traditional bank savings accounts while maintaining liquidity.
Here are the top short term mutual funds based on their 3-month absolute returns:
– Nippon India Taiwan Equity Fund
– ICICI Pru NASDAQ 100 Index Fund
– ICICI Pru Nifty Auto Index Fund
– Tata Nifty Auto Index Fund
– Nippon India Nifty Auto Index Fund
Note: This data has been taken on 29th September, 2025.
Here are the best mutual funds to invest in for short term, based on their 6-month absolute returns:
– Nippon India Taiwan Equity Fund
– HDFC Transportation and Logistics Fund
– ICICI Pru NASDAQ 100 Index Fund
– Bandhan Transportation and Logistics Fund
– UTI Transportation & Logistics Fund
Note: This data has been taken on 29th September 2025.
Short-term investments offer stability by reducing risk and diversifying income sources in times of market volatility. However, as all mutual funds, short term debt funds are also subject to market risks and short term market fluctuations.
Investors often opt for short term investments that minimise their capital risk. This is crucial because, within a tenure of up to 1 year, you may not have adequate time to recover from potential losses.
