What are Ultra Short-Term Mutual Funds?
Ultra Short Term Mutual Funds are defined as a type of fund that caters to investors looking for a low-risk option to temporarily invest their funds (typically 91 days or less). The main goal of these funds is to generate returns while safeguarding the invested capital and ensuring liquidity. These funds are less vulnerable to interest rate fluctuations compared to debt funds with durations. As a result, these funds attract investors who seek a balance between the safety provided by savings instruments and the higher returns associated with long-term debt or equity funds. Investors often turn towards USTMFs for reasons such as parking cash managing short-term liquidity requirements or even as an alternative to traditional savings accounts due to their potential, for slightly higher returns.
Table of Content
- Features of Ultra Short-Term Mutual Funds
- Purpose of Ultra Short-Term Mutual Funds
- How do Ultra Short-Term Funds Work?
- Who Should Invest in Ultra Short-Term Mutual Funds?
- Factors to Consider Before Investing in Ultra Short-Term Mutual Funds
- Advantages of Ultra Short-Term Mutual Funds
- Disadvantages of Ultra Short-Term Mutual Funds