Investing in mutual funds for a period of one-year needs a mix of capital safety and liquidity. You basically want to earn stable returns even if it is less than other longer-term investment plans. Obviously, when you talk of 1 year investment horizon, it cannot be an equity fund or even a hybrid fund. Even in debt funds, you cannot go for long term debt holdings since the interest rate risk would be too high in such cases. The options are limited but there still are sufficient choices available.
Here are 6 solid investment options available to mutual fund investors to invest for a period of 1 year.
1. Liquid funds
These are one of the most popular methods of parking short term funds up to one year. These liquid funds typically invest in money market instruments maturing within 90 days. Since the holding period is very short, there is no price risk in these funds and are best suited to park short term monies. Here are some top performing liquid funds in the Indian market.
| Scheme Name | NAV Direct | Return 1 Month (%) Direct | Return 3 Month (%) Direct | Return 1 Year (%) Direct |
|---|---|---|---|---|
| Aditya Birla Sun Life Liquid Fund | 342.87 | 3.69 | 3.66 | 3.48 |
| Axis Liquid Fund | 2362.39 | 3.66 | 3.62 | 3.46 |
| Baroda BNP Paribas Liquid Fund | 2,451.08 | 3.68 | 3.66 | 3.51 |
| BOI AXA Liquid Fund | 2,447.36 | 3.72 | 3.65 | 3.46 |
| Canara Robeco Liquid Fund | 2,548.13 | 3.50 | 3.48 | 3.35 |
| DSP Liquidity Fund | 3,040.88 | 3.66 | 3.63 | 3.45 |
| Edelweiss Liquid Fund | 2,745.72 | 3.59 | 3.54 | 3.54 |
| Franklin India Liquid Fund | 3,196.67 | 3.57 | 3.63 | 3.46 |
| HDFC Liquid Fund | 4,181.65 | 3.62 | 3.57 | 3.43 |
| HSBC Cash Fund | 2,118.21 | 3.60 | 3.62 | 3.45 |
2. Ultra-Short Duration Funds
These funds have also become quite popular as they invest based on duration and not the term to maturity so better suited to maturity matching. The ultra-short duration funds typically invest in debt securities maturing in 3-6 months. Here are some top performing ultra-short Duration Funds.
| Scheme Name | Return 1 Month (%) Direct | Return 3 Month (%) Direct | Return 1 Year (%) Direct |
|---|---|---|---|
| Aditya Birla Sun Life Savings Fund | 4.54 | 4.59 | 4.36 |
| Axis Ultra Short Term Fund | 4.74 | 4.50 | 4.22 |
| Baroda BNP Paribas Ultra Short Duration Fund | 4.30 | 4.34 | 4.12 |
| BOI AXA Ultra Short Duration Fund | 4.04 | 3.82 | 3.53 |
| Canara Robeco Ultra Short Term Fund | 3.92 | 3.64 | 3.35 |
| DSP Ultra Short Fund | 4.28 | 4.22 | 3.79 |
| Franklin India Ultra Short Bond Fund | 10.37 | 8.73 | 12.28 |
| HDFC Ultra Short Term Fund | 4.33 | 4.13 | 3.99 |
| HSBC Ultra Short Duration Fund | 4.18 | 4.06 | 3.86 |
| ICICI Prudential Ultra Short Term Fund | 4.17 | 4.40 | 4.55 |
3. Low Duration Funds
The low duration funds are again funds that invest in securities based on duration. They invest in securities with a duration of 6-12 months. These are also ideally suited to parking of funds of up to 1 year time frame. Here are some top performing low duration funds.
IDFC Low Duration Fund
| Scheme Name | NAV Direct | Return 1 Month (%) Direct | Return 3 Month (%) Direct | Return 1 Year (%) Direct |
|---|---|---|---|---|
| Aditya Birla Sun Life Low Duration | 577.59 | 5.74 | 4.86 | 4.78 |
| Axis Treasury Advantage Fund | 2,587.15 | 5.45 | 4.52 | 4.35 |
| Baroda BNP Paribas Low Duration | 35.14 | 4.06 | 4.76 | 4.48 |
| Canara Robeco Savings Fund | 34.81 | 3.88 | 3.88 | 3.66 |
| DSP Low Duration Fund | 16.44 | 4.38 | 4.22 | 4.04 |
| Franklin India Low Duration Fund | 28.09 | 29.00 | 14.44 | 18.12 |
| HDFC Low Duration Fund | 49.73 | 5.13 | 4.19 | 4.62 |
| HSBC Low Duration Fund | 17.92 | 4.24 | 4.36 | 4.31 |
| ICICI Prudential Savings Fund | 436.87 | 6.75 | 2.97 | 4.06 |
| IDFC Low Duration Fund | 31.83 | 3.84 | 4.05 | 3.97 |
4. Money Market Funds
These money market funds typically invest in money market instruments with maturity up to 1 year. Most money market are very liquid and are low on risk. Hence there is no credit risk unlike duration funds that have some credit risk. Here are some top performers.
| Scheme Name | NAV Direct | Return 1 Month (%) Direct | Return 3 Month (%) Direct | Return 1 Year (%) Direct |
|---|---|---|---|---|
| Aditya Birla Sun Life Money Manager | 298.62 | 4.45 | 4.36 | 4.09 |
| Axis Money Market Fund | 1,150.64 | 4.68 | 4.40 | 4.05 |
| Baroda BNP Paribas Money Market | 1,128.24 | 3.63 | 4.02 | 3.47 |
| DSP Savings Fund | 43.72 | 4.48 | 3.89 | 4.00 |
| Edelweiss Money Market Fund | 25.25 | 4.19 | 3.94 | 3.78 |
| Franklin India Savings Fund | 41.45 | 4.11 | 3.89 | 3.86 |
| HDFC Money Market Fund | 4,649.96 | 4.53 | 4.23 | 4.05 |
| ICICI Prudential Money Market Fund | 306.58 | 4.66 | 4.11 | 3.93 |
| IDFC Money Manager Fund | 34.88 | 4.29 | 4.12 | 3.76 |
| Invesco India Money Market Fund | 2,537.87 | 4.32 | 3.97 | 3.94 |
5. Floater funds
These floater funds are debt funds that invest at least 65% of their money in floating-rate bonds. The interest these bonds pay change as the interest rates in the economy change. A periodic resetting of rates to keep them in sync with market rates. Such funds are best suited for short term when interest rates are rising. Here are some top performers.
| Scheme Name | NAV Direct | Return 1 Year (%) Direct |
|---|---|---|
| Aditya Birla Sun Life Floating Rate Fund | 283.11 | 4.76 |
| DSP Floater Fund | 10.50 | 4.48 |
| Franklin India Floating Rate Fund | 34.57 | 4.04 |
| HDFC Floating Rate Debt Fund | 40.06 | 4.72 |
| ICICI Prudential Floating Interest Fund | 359.83 | 4.39 |
| IDFC Floating Rate Fund | 10.46 | 4.35 |
| Kotak Floating Rate Fund | 1,225.05 | 6.12 |
| Nippon India Floating Rate Fund | 37.71 | 5.00 |
| SBI Floating Rate Debt Fund | 10.64 | 4.23 |
| UTI Floater Fund | 1,257.02 | 4.04 |
6. Arbitrage funds
Arbitrage fund is a type of mutual fund that leverages the price differential in the cash and derivatives market to generate returns. The returns are dependent on the volatility of the asset. They are classified as hybrid funds but are actually akin to debt funds. They are quite popular for short term parking up to 1 year. Here are top performing arbitrage funds.
| Scheme Name | NAV Direct | Return 1 Year (%) Direct | Return 3 Year (%) Direct | Return 5 Year (%) Direct |
|---|---|---|---|---|
| Aditya Birla Sun Life Arbitrage Fund | 22.74 | 4.58 | 5.19 | 5.72 |
| Axis Arbitrage Fund | 16.17 | 4.82 | 5.23 | 5.83 |
| Baroda BNP Paribas Arbitrage Fund | 13.54 | 4.38 | 5.24 | 5.82 |
| BOI AXA Arbitrage Fund | 11.78 | 2.96 | 3.99 | |
| DSP Arbitrage Fund | 12.47 | 4.20 | 4.99 | |
| Edelweiss Arbitrage Fund | 16.47 | 4.74 | 5.42 | 5.93 |
| HDFC Arbitrage Fund | 16.07 | 4.26 | 4.80 | 5.33 |
| ICICI Prudential Equity Arbitrage Fund | 29.27 | 4.49 | 5.09 | 5.67 |
| IDFC Arbitrage Fund | 27.90 | 4.38 | 5.02 | 5.69 |
| Indiabulls Arbitrage Fund | 15.22 | 3.08 | 4.16 | 4.97 |
Investors can take a pick based on the ones best suited to risk appetite.
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