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Ch.2 · Advantages and Limitations of Mutual Funds · hard

What is a Short Duration Fund as per SEBI categorisation?

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EXPLANATION

As per SEBI categorisation, a Short Duration Fund invests in debt and money market instruments with a Macaulay duration of 1–3 years. It is suitable for investors with a 1–3 year investment horizon seeking returns higher than liquid funds with moderate interest rate risk.

A.A debt fund with portfolio duration of 1–3 years [✓ Correct]

B.A debt fund with portfolio duration of 6 months to 1 year

C.A debt fund investing in instruments maturing within 90 days

D.A debt fund with portfolio duration of 3–6 months

EXPLANATION

As per SEBI categorisation, a Short Duration Fund invests in debt and money market instruments with a Macaulay duration of 1–3 years. It is suitable for investors with a 1–3 year investment horizon seeking returns higher than liquid funds with moderate interest rate risk.

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