One of the most common bits of advice that investment experts tend to offer new mutual fund investors is to keep a long term investment horizon of 5 years or more. However mutual funds are an extremely flexible investment tools hence investors do have quite a few options if they are seeking short term investment options ranging from a year to less than 5 years. At present, HDFC Mutual Fund AMC offers investors a range of debt funds that investors – both retail and institutional can choose from. The following is a short list of HDFC debt funds that can offer investors high ROI in case they choose to make a short term investment.
HDFC Regular Savings Fund
Launched in 2013, this relatively new debt fund from HDFC Mutual Funds AMC has offered investors with returns of close to 9.5% since its launch. Officially, the fund seeks to provide investors with regular income through investments made into a range of money market and debt investments. Officially designated as a short term debt fund, you have to consider the fund’s an exit load of 0.75% of total amount redeemed in case unit redemption is made within 180 days of unit allotment. This exit load is however not applicable in case the redemption is less than 15% of total units allocated. As per recent portfolio records, the fund has invested around 86% of its available capital in high quality bonds with money market instruments accounting for the rest of this fund’s investment portfolio.
HDFC Corporate Debt Opportunities Fund
The HDFC Corporate Debt Opportunities Fund is a scheme focused on providing investors with capital appreciation as well as income generation through investments focused primarily on corporate bonds. Historically most analysts have designated this fund to have an overall medium quality portfolio which includes both high quality AAA-rated bonds along with relatively lower quality BBB– rated bonds. The higher quality bonds provide stability to the overall fund portfolio while the lower quality bonds feature a higher coupon rate which helps the fund generate higher accrual income. In case you plan to invest in this debt fund, you should be aware of exit loads that are applicable in case you redeem your investments prior to completion of 540 days from the unit allotment date. The fund’s exit load is 1% for redemptions made within 365 days of unit allotment and 0.5% for redemptions made between 366 and 540 days. Your redemptions will however be exempt from exit load in case you are redeeming less than 15% of total units held in the scheme.
HDFC Cash Management Fund – Treasury Advantage Plan
This HDFC mutual fund is specifically designed to fulfill the short to medium term investment objectives of investors. In order to provide a viable alternative to traditional investments such as fixed deposits and savings accounts, the HDFC Cash Management Fund – Treasury Advantage Plan primarily invests in various corporate debt as well as money market investments. Classified as an ultra short term debt fund, this scheme does not have any exit load no matter how long or short a period you remain invested in scheme. Launched in 1999, this scheme has gone through multiple economic cycles and has provided returns of close to 7.5% since its launch. In terms of investment quality, this scheme primarily invests in high quality bonds with residual maturity of less than a year which is a key reason for the low interest rate sensitivity of this scheme. What’s even better for you in case you decide to invest in this scheme is the fact that it features a low expense ratio of less than 1% which sets it apart from many of its peers. In case you are interested in purchasing units of this fund, as a new investor, the minimum lump sum investment amount is fixed at Rs. 5000.
HDFC Short Term Opportunities Fund
This HDFC mutual fund scheme is designed to provide investors with regular income by making investments in various money market instruments and debt securities. Since its launch in 2013, this fund has emerged as one of the most popular short term investment options offered by HDFC Mutual Fund AMC. If you are investing in HDFC Short Term Opportunities Fund, you should know that this scheme is mostly invested in short term corporate debt securities along with a smaller portion of capital invested in sovereign debt instruments. The average residual maturity of this scheme’s investments ranges from 1.4 year to 1.7 year which leads to most of these investments being held till maturity. Thus the overall portfolio of this fund features high credit quality along with relatively low levels of interest rate sensitivity. This has promoted the fund’s overall perception of a low volatility investment alternative making it one of the largest funds (in terms of AUM) within its category. In case you are new investor in this scheme, the minimum initial lump sum deposit amount required is Rs. 5000.
HDFC Cash Management Fund – Savings Plan
The HDFC Cash Management Fund – Savings Plan is a specialized investment option for investors seeking short term or medium term debt investment. This HDFC mutual fund scheme is mainly focused on making money market and corporate debt securities. As per its stated objective, this scheme endeavors to provide regular dividends from the income generated by the fund’s investments. Historically, this scheme has featured low levels of volatility and relatively consistent returns which have made this fund a popular investment choice among retail as well as institutional investors with short term investment horizons. Designated as a liquid fund, this scheme has zero entry and exit loads. It is mainly invested in money market instruments such as commercial papers, certificate of deposit and treasury bills that feature maturities of 90 days or less. In case you invest in this scheme, you will also receive the benefit of its extremely low expense ratio which was recorded at 0.30% on October 31, 2017.
Conclusion
The above funds have all been chosen on the basis of their ability to offer a balance between returns and risk in case an investor is seeking a short term solution in a HDFC Mutual Fund. Though these investments have historically been quite consistent over the years, you must always bear in mind that past performance does not guarantee future performance in any way. That said, these HDFC debt funds on average have historically offered better capital appreciation to investors as compared to traditional short term investments such as fixed deposits, recurring deposits and savings accounts.
Table1. Comparison of select HDFC Mutual Funds across key criteria*
| Fund Name | 1 Year Returns | 3 Year Returns | 5 Year Returns | Expense Ratio | AUM (crores) |
| HDFC Regular Savings Fund | 6.44% | 8.92% | 9.01% | 1.81% | Rs. 5446 |
| HDFC Corporate Debt Opportunities Fund | 6.16% | 9.22% | N/A | 1.95% | Rs. 13,580 |
| HDFC Cash Management Fund – Treasury Advantage Plan | 6.28% | 7.69% | 7.96% | 0.97% | Rs. 12,774 |
| HDFC Short Term Opportunities Fund | 6.61% | 8.34% | 8.80% | 0.37% | Rs. 10,215 |
| HDFC Cash Management Fund – Savings Plan | 6.43% | 7.46% | 8.13% | 0.30% | Rs. 7117 |
*The data provided is for illustrative purposes only and subject to periodic change. Expense Ratio and AUM data is as per fund information provided on 31st October 2017.
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