Low duration mutual fund

Mon, 18 May 2026 00:00:00 +0000

A low duration mutual fund is a SEBI-categorised debt mutual fund scheme that maintains a Macaulay duration of 6 to 12 months. The category was defined under the SEBI October 2017 categorisation framework as one of the 16 debt scheme sub-categories, positioned between ultra short duration funds (3-6 months Macaulay duration) and short duration funds (1-3 years Macaulay duration).

For Indian retail investors, low duration funds offer:

Short-to-medium horizons (6-18 months): Suitable for deployments where liquid or money-market funds are too short.
Modest yield premium over money market and liquid funds.
Low interest-rate sensitivity: Modest NAV reaction to rate changes.
Good credit quality: Typically AAA/AA+ rated holdings.

This article covers the SEBI category framework, the role in cash management, the major schemes, the comparison with neighbouring categories, and the post-2023 tax treatment.

Low Duration on WebNotes

Low duration mutual fund