Short duration mutual funds invest in treasury bills, commercial papers, certificates of deposits and so on to take care of their liquidity needs. They also invest in corporate bonds, government securities, among others.According to the Sebi mandate, short duration funds can invest in debt instruments which have maturity between one and three years. That means these schemes are meant for short-term investments of up to three years or more. They are somewhat in the middle when it comes to interest rate risk. They are riskier than liquid, ultra short term, and low duration funds. However, they have a lower risk compared to medium duration and long-term funds.Also Read | Should you switch your mutual funds after a few months? Expert offers a reality check These schemes invest in both short term bonds and very short term instruments. They invest in treasury bills, commercial papers, certificates of deposits and so on to take care of their liquidity needs. They also invest in corporate bonds, government securities, etc.In short, if you are looking for debt schemes to invest for one to three years without much volatility, you may check out short duration funds. However, make sure to choose schemes that do not take extra risk for extra returns. Safety should be your prime concern when it comes to debt investments.There is no change in the list. All recommended schemes have performed well. Follow our monthly updates to keep track of the performance of your schemes.Also Read | HDFC Mid Cap Fund hits Rs 1 lakh crore AUM milestone; delivers 17% CAGR since inception Best short duration funds to invest in June 2026HDFC Short Term Debt FundICICI Prudential Short Term FundAxis Short Term FundMethodology:ETMutualFunds.com has employed the following parameters for shortlisting the debt mutual fund schemes.1. Mean rolling returns: Rolled daily for the last three years.2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.i)When H = 0.5, the series of returns is said to be a geometric Brownian time series. This type of time series is difficult to forecast.ii)When H <0.5, the series is said to be mean reverting.iii)When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.X =Returns below zeroY = Sum of all squares of XZ = Y/number of days taken for computing the ratioDownside risk = Square root of Z4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.Asset size: For debt funds, the threshold asset size is Rs 50 crore(Disclaimer: past performance is no guarantee for future performance.)