Bandhan Short Duration Fund recorded a 2.7% return over the past three months, outpacing peers like ICICI Prudential and Axis, which posted 2.5%. While the fund leads in this short window, investors should look at longer-term results and risk factors before deciding. Comparing funds across different timeframes is essential to understand consistency.
What Happened
Bandhan Short Duration Fund has recorded a 2.7% return over the three months ending June 29, 2026. This performance places it ahead of other major funds in the short-duration category, such as ICICI Prudential Short Term Fund and Axis Short Duration Fund, which both delivered 2.5% during the same period. This data is based on industry figures tracking funds with assets under management (AUM) exceeding Rs 1,500 crore.
Comparing Performance and Size
When looking at these funds, it is important to note the difference in scale. ICICI Prudential Short Term Fund is significantly larger, managing Rs 21,228.5 crore in assets. A larger fund size often suggests a wider reach and longer track record, but it does not always guarantee top-tier returns in every short-term window.
While Bandhan Short Duration Fund led the three-month and six-month return charts, performance trends differ when the period is extended. For example, ICICI Prudential Short Term Fund showed stronger consistency over one-year (6.0%) and three-year (7.4%) periods. This demonstrates that a fund which performs well in a short three-month burst may not necessarily lead over a full market cycle.
Why Time Horizon Matters
The difference in rankings across one-month, three-month, and multi-year timeframes highlights why investors should not rely solely on short-term data. Debt funds often hold various types of bonds with different maturities. A fund might perform better in a three-month window if its underlying bonds benefit from a specific move in interest rates, while another fund might focus on safer, steadier assets that provide better returns over several years.
Understanding the Risks in Debt Funds
Short-duration funds are not risk-free. When investing, it is important to understand that returns are influenced by two main risks:
Interest Rate Risk: If interest rates in the economy change, the value of the bonds held by the fund will change. Funds with higher duration—meaning they hold bonds that mature further out in time—are more sensitive to these rate changes.
Credit Risk: This is the risk that a company or entity which issued the bond may not pay back the interest or principal on time. Some funds may take on more credit risk to chase higher returns, while others prioritize safety by investing in government securities or high-rated corporate bonds.
What Investors Should Track
Before choosing a fund, investors should look beyond the recent percentage return. The most important factors include the fund’s credit quality (how safe the underlying bonds are), the average maturity of the portfolio, and the fund's expense ratio. Investors should also match the fund's objective with their own investment timeline. If your goal is to hold money for one to three years, the short-term ranking of a fund is less important than its long-term record of managing risk and delivering stable, predictable outcomes.