SBI Short Term Debt Fund

SBI Short Term Debt Fund is an open-ended short duration debt mutual fund scheme. It invests primarily in debt instruments maturing within a period of one to three years. It is suitable for an investment goal of one to three years in one’s fixed-income portfolio. The risk of losing capital in these funds is low, and one may expect higher returns than bank fixed deposits.

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However, unlike a bank deposit, there is no contracted interest payment or capital repayment in this fund. 

The Fund portfolio includes, among other things, 48.97% investment in sovereign GOI bonds, 31.45% in debt securities issued by financial services companies, and 9.43% in cash and cash equivalents. The Fund objective is to generate regular income through investments in a portfolio comprising money market instruments and debt instruments, which are predominantly not rated below investment grade.

SBI Short Term Debt Fund is available in four plan categories:

  • Growth - Direct
  • IDCW as and when - Direct
  • Growth - Regular
  • IDCW as and when - Regular

While Regular plans are those plans in which investors acquire mutual fund units through distributor agents, Direct plans are those plans in which investors acquire mutual fund units directly from the fund.

Investment Details

Parameter Details
Fund Name  SBI Short Term Debt Fund
Fund House SBI Mutual Fund
Launch Date  27-Jul-2007
Benchmark CRISIL Short-Term Bond TRI
Type Open-Ended; Short term debt
Minimum Investment  Rs. 5,000/- Minimum Additional Investment: Rs.1,000/- Minimum SIP Investment: 
  • Rs.500/- for Daily SIP
  • Rs.1,000/- for Weekly SIP
  • Rs.1,000/- for Monthly SIP
  • Rs.1,500/- for Quarterly SIP
  • Rs.3,000/- for Semi-Annual SIP
  • Rs.5,000/- for Annual SIP
Minimum SWP: Rs. 500/- can be withdrawn every month or quarter or weekly or half-yearly or annually
Lock-in Period None
Entry Load Not applicable
Exit Load Nil
Return Performance Average
Fund Consistency Average
Risk Level Average

Investment Objective

SBI Short Term Debt Fund aims to provide investors with an opportunity to earn regular income from investments in a portfolio comprising corporate bonds, money market instruments, government securities, treasury bills, etc., with a targeted Macaulay duration between 1 year and 3 years. Macaulay duration denotes the weighted average term to maturity of the cash flows from a debt instrument.

The scheme endeavours to constantly analyse macro-economic aspects, market subtleties and issuer-specific dynamics before investing. The scheme invests in the entire range of debt securities, intending to provide robust risk-adjusted returns to its investors by actively managing credit risk and interest rate fluctuations in its investment portfolio.

As an open-ended scheme, investors can purchase the fund units at NAV based prices on all working days. The fund returns have been average over the past ten years.

Fund Summary

    1. SBI Short Term Debt Fund Direct Plan-Growth

        • Risk level-Moderate
        • NAV-Rs. 26.3027 as of 23.05.2021
        • Expense Ratio-0.34%
      • Fund Started-27.07.2007
    2. SBI Short Term Debt Fund Direct Plan IDCW Weekly

        • Risk level-Moderate
        • NAV-Rs. 11.5213 as of 23.05.2021
        • Expense Ratio-0.34%
      • Fund Started-27.07.2007
    3. SBI Short Term Debt Fund Direct Plan IDCW Monthly

        • Risk level-Moderate
        • NAV-Rs. 14.6959 as of 23.05.2021
        • Expense Ratio-0.34%
      • Fund Started-27.07.2007
  1. SBI Short Term Debt Fund Direct Plan IDCW Fortnightly

      • Risk level-Moderate
      • NAV-Rs. 17.7163 as of 23.05.2021
      • Expense Ratio-0.34%
    • Fund Started-27.07.2007
  2. SBI Short Term Debt Fund Regular Plan-Growth

      • Risk level-Moderate
      • NAV-Rs. 25.2678 as of 23.05.2021
      • Expense Ratio-0.84%
    • Fund Started-27.07.2007
  3. SBI Short Term Debt Fund Regular Plan IDCW Weekly

      • Risk level-Moderate
      • NAV-Rs. 11.4565 as of 23.05.2021
      • Expense Ratio-0.84%
    • Fund Started-27.07.2007
  4. SBI Short Term Debt Fund Regular Plan IDCW Monthly

      • Risk level-Moderate
      • NAV-Rs. 13.9697as of 23.05.2021
      • Expense Ratio-0.84%
    • Fund Started-27.07.2007
  5. SBI Short Term Debt Fund Regular Plan IDCW Fortnightly

      • Risk level-Moderate
      • NAV-Rs. 11.4453 as of 23.05.2021
      • Expense Ratio-0.84%
    • Fund Started-27.07.2007

    Fund Manager

    • Mr Rajeev Radhakrishnan (since January 2013)

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Fund Returns Summary

SBI Short Term Fund Direct Plan Growth-Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.44%
1 year 6.45%
2 years 8.87%
3 years 8.75%
5 years 8.18%
Since Inception 8.55%

SBI Short Term Fund Direct Plan IDCW Weekly- Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.44%
1 year 6.45%
2 years 7.27%
3 years 6.77%
5 years 6.15%
Since Inception 6.46%

SBI Short Term Fund Direct Plan IDCW Monthly- Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.48%
1 year 6.50%
2 years 8.23%
3 years 7.93%
5 years 7.00%
Since Inception 6.59%
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

SBI Short Term Fund Direct Plan IDCW Fortnightly- Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.44%
1 year 6.44%
2 years 8.87%
3 years 8.75%
5 years 8.18%
Since Inception 8.45%

SBI Short Term Fund Regular Plan Growth-Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.18%
1 year 5.92%
2 years 8.33%
3 years 8.18%
5 years 7.58%
10 years 8.29%
Since Inception 6.93%

SBI Short Term Fund Regular Plan IDCW Weekly- Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.18%
1 year 5.92%
2 years 6.82%
3 years 6.34%
5 years 5.70%
10 years 6.48%
Since Inception 5.82%

SBI Short Term Fund Regular Plan IDCW Monthly- Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 1.18%
1 year 5.92%
2 years 7.74%
3 years 7.37%
5 years 6.40%
10 years 6.46%
Since Inception 6.52%

Summative Pros and Cons Table

Pros Cons
The fund is suitable for investment horizons of one to three years. One may expect to earn higher returns than a typical bank fixed deposit without a lock-in period. The fund has underperformed its Scheme Benchmark: CRISIL Short-Term Bond TRI, since inception.
In comparison to a fixed deposit, the fund investor gets indexation benefit for computing income tax if units are held for more than three years. There is no contracted interest payment or repayment of capital similar to a bank deposit.

Benefits of SBI Short Term Debt Fund

Investment in SBI Short Term Debt Fund provides the following benefits to the investors.

  • Successful Track Record: SBI Mutual Fund has a successful track record of over thirty years, with significant investing experience through various business cycles. Apart from investing in government securities, the strength of the debt fund managers of the Fund House is investing in rated papers of companies having a sound background, strong fundamentals, superior management quality and robust financial strength.
  • Stable Returns: The fund's investment portfolio includes debt securities that provide a fixed rate of return along with a pre-defined maturity date. If held till maturity, these securities are not severely impacted by interest rate fluctuations and provide stable returns.
  • Maintaining a Balanced Portfolio: Short term debt funds serve as a substitute to balanced funds, which have a mix of equity and debt instruments. Since the equity component in a balanced fund carries an element of risk, short term debt funds play a pivotal role in asset allocation. Given the moderate risk and stable returns, short-term debt funds help harmonise the portfolio's risk.
  • Meeting Short-Term Goals: Owing to its stable characteristic, short-term debt funds help investors achieve short-term goals. Due to their low average maturity period, these funds are significantly immune from price movements due to interest rate fluctuations.

Fund House Details

SBI Short Term Debt Fund is a scheme managed by SBI Mutual Fund. It is set up by SBI Mutual Fund Trustee Company Private Limited as the Trustee of the Fund. The AMC of the Fund is SBI Funds Management Private Limited which SEBI licenses.

The fund takes pride in launching and maintaining more than 60 dynamic market schemes. They vary across the debt and equity investment instruments. The efficient management of all schemes is done by fund managers under Mr Rajeev Radhakrishnan (CIO – Fixed Income) and Mr R. Srinivasan (CIO – Equity).

Further details of the Fund House stakeholders are:

  1. State Bank of India: 63% holdings

    State Bank of India (SBI) is India's largest public sector bank. It has its headquarters in Mumbai. With a massive branch network of 22,000 plus banks and 58,500 ATMs nationwide, the SBI needs no introduction. It has a market share of 23% by assets and 25% by way of loan and deposits. 

  2. Amundi India Holding: 37% holdings

    Amundi India Holding is a completely owned subsidiary of Amundi Asset Management, France. It is the second-largest asset manager in Europe with an AUM worth €1.729 trillion at the end of 2020. It is among the top ten largest investment managers by AUM in the world.

Who Should Invest in SBI Short Term Debt Fund?

SBI Short Term Debt Fund invests in debt instruments. Trading volumes and settlement periods inherently restrict the liquidity of the scheme’s investments. The fund is suitable for investors with investment horizons of 1 to 3 years. One may expect to earn higher returns than a typical bank fixed deposit in a rising interest rate scenario. A short-term change in interest rate, although the occurrence is few and far between, may impact the return generated by a short term debt fund.

These funds have an indexation benefit available and a lower rate of taxation (20%) for units held for more than 3 years. So, the investors whose income is taxed in the highest tax slab are recommended to continue their investment for at least 3 years to avoid Short Term Capital Gains taxation.

Conclusion

SBI Short Term Debt Fund has several distinct characteristics: stable returns, immunity from long-term interest rate movements, shorter duration of underlying debt securities, and long-term indexation benefits for taxation. They are an ideal alternative to bank fixed deposits for investors searching for stable returns over a 1 to 3 year period.

FAQ's

  • Q: Is SBI Short Term Debt Fund a high-risk investment?

    Ans: Being a short term debt fund, the fund primarily invests in government securities and debt securities of companies with a proven credit track record. The instruments would typically not have a long tenure. Although one may see volatility in NAV in the short-term, the fund is a good option for a 1-2 year investment horizon.
  • Q: Will I get better returns from the SBI Short Term Debt Fund through a SIP or as a lump sum?

    Ans: SBI Short Term Debt Fund is a fixed income fund, which assists investors to generate regular income. This is done through investments in a portfolio comprising debt instruments such that the Macaulay duration of the portfolio is between 1 year and 3 years. An investor looking to invest money for 1 to 3 years can invest as a lump sum in the fund. In such plans, a systematic investment plan may not yield optimum returns.
  • Q: How will I get to know the performance of the SBI Short Term Debt Fund?

    Ans: Investors may visit the SBI Mutual Fund website. The link provides details such as the Current Value of Standard Investment of Rs.10,000/- over 1/3/5 years and since inception. It also provides the performance of the SBI Short Term Debt Fund in comparison to its benchmark, the CRISIL Short Term Bond TRI Fund Index.
  • Q: What are the income tax implications of money earned from the SBI Short Term Debt Fund?

    Ans: If the fund units are sold within 3 years from the investment date, then the capital gain is added to the investor's taxable income, and tax is payable as per the applicable slab rate. If the fund units are sold after 3 years from the investment date, then capital gains are taxed @ 20% after considering inflation indexation. IDCW distributed will be taxable in the hands of the investor as per slab applicable tax rates.
  • Q: Is SBI Short Term Debt Fund a good tool for long term wealth creation?

    Ans: The fund is designed to deliver steady and low to moderate returns. Unlike equity funds, returns from a short term debt fund may not be significantly higher than inflation. Such funds are not suitable for long term build wealth creation, as they typically invest in underlying debt instruments only for a period of 1 to 3 years.
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