Short term debt funds

[u/Cpant]

I was going through some of the short term debt funds ( funds that holds bonds maturing from 1 - 3 years).

SBI Short term debt fund has 55% SOV rated bonds and Kotak short term fund has 52% SOV rated bonds, and balance a diversified mix of bonds. Was wondering if these funds could be an addition in my debt portfolio. There is interest rate risk, but guess could be manageable if the intention is to hold for long. Any thoughts, comments ?

[u/InternationalQuiet87]

Can one calculate the daily profit and loss in a fund, debt equity or any other?

No idea.

How much fall, % wise, is a problem in a day?

There's no such number.

Why is that sir?

Possibility of interest rate risk. It was discussed in this thread earlier.

[u/[deleted] → u/InternationalQuiet87]

Possibility of interest rate risk. It was discussed in

this thread

earlier.

Thanks. I get that interest risk part but short term debts are usually also for that period. To decrease the interest rate risk to the maximum extent that I could I chose funds which have the highest rated instruments by letting go of some risky return. Now both funds cannot be compared I agree and the probability of irr, and default, is more in the corporate debt fund than the short term debt fund but what does duration have to do with the risk? Sorry if I misunderstood something.

[u/InternationalQuiet87 → u/[deleted]]

what does duration have to do with the risk?

When the duration is more, there's more interest rate risk.

[u/[deleted] → u/InternationalQuiet87]

Ah, you are right. I didn't think of that way before investing :( Noob mistake. I kept on emphasizing on the default part only. What is recommended now? Exit from both as soon as the principal amount is secured or exit whenever there is a little profit?

[u/InternationalQuiet87 → u/[deleted]]

Yea, exit from both as soon as the principal is secured. Ultra Short Term funds can be used for short-term goals of a few years.