Investment Objective :
Aiming to offer an incremental return over liquid funds due to moderate exposure to MTM assets. These are ideal solutions for investors with investment horizon greater than three months.
"Chhota saving Bade Sapne"
Known as Ultra-short-term mutual fund schemes they are debt schemes which invest in fixed income generating instruments up to maturities of six months.
As per SEBI, an ultra-short-term fund is open-ended debt scheme with Macaulay duration of about three to six months. While being closely similar to liquid funds, the best ultra-short-term funds can provide higher returns with comparable liquidity.
These funds serve as an investment instrument of choice for anyone look to park their money for shorter durations and earn reasonable dividends from it.
The best ultra-short-term funds in India are comparatively immune to interest rate risks due to shorter maturity of the underlying assets when compared with the other debts funds.
Many investors use liquid funds to alter their investments through Systematic Transfer Plans (STP), but UST funds can serve as a better option to start an STP. These funds are tailor-made for conservative investors.
These funds can also be used to park a portion of the retirement corpus to generate regular income via a systematic withdrawal plan. The ultra-short-term funds in India serves as a substitute for short-term bank deposits and can generate higher returns. These funds can also be used in combination with liquid funds to build an emergency fund.