A Low Duration Fund is a category of debt mutual fund that primarily invests in short-term fixed-income instruments with an average maturity of 6 to 12 months. These funds aim to provide stable and predictable returns while keeping interest-rate risk relatively low. They are commonly used for short-term financial goals or parking surplus funds.

1. Better returns than savings accounts
2. Lower risk than long-duration debt funds
3. An option for short-term goals (6-12 months)
4. Flexibility and easy access to funds

1. Investors with short-term financial goals
2. Individuals seeking low volatility debt options
3. Those looking to park surplus funds efficiently
4. Conservative investors prioritizing capital preservation

• Interest rate sensitivity due to short maturity
• Credit quality of underlying securities
• Investment horizon (ideal for short-term needs)
• Expense ratio, which impacts net returns
• Liquidity, as funds can be redeemed easily

1. Lower interest-rate risk
2. Stable and consistent returns
3. High liquidity
4. Portfolio diversification
5. Efficient alternative to traditional short-term instruments

• Not completely risk-free
• Limited capital appreciation
• Returns may not always beat inflation
• Impact of expense ratios on overall gains

Capital gains are taxed as per the investor's income tax slab, irrespective of holding period

Indexation benefit is not available

Dividends are taxed at slab rates, with TDS applicable above ₹5,000