Low duration funds are debt funds that invest in short term debt securities, such that the duration of the fund portfolio is between 6 to 12 months. As compared to overnight or liquid funds, low duration funds hold assets of longer maturity and/or lower credit quality; therefore, they have a relatively higher interest rate risk and credit risk.
Low duration funds are considered as one of the best investment options for investors who are not willing to risk their investments. Investors having any kind of repugnance for volatile funds should invest in these funds for a short-term and still earn better returns on investment than savings accounts.
The minimum investment varies from scheme to scheme. It could range between Rs.100/ – to Rs.5,000/ -.