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Union Mutual Fund launches 'low risk', short-term debt investment scheme
Union Mutual Fund has a new debt scheme for investors wanting to park surplus money for a short period: from three to 12 months. The New Fund Offer (NFO) opened on Thursday and will close on July 10, 2025.
Union Low Duration Fund is a flexible and structured alternative to traditional savings instruments, especially at a time when short-term debt instruments are offering relatively attractive yields, said the company.
The fund will invest in a mix of debt and money market instruments while maintaining a Macaulay Duration of six to 12 months.
What is Macaulay Duration
Macaulay Duration is a way to measure how long, on average, it takes for an investor to recover their money from a bond or debt investment, including both interest and principal. A shorter duration (like six to 12 months) means:
The fund is less affected by changes in interest rates.
It is better suited for short-term investors.
It has lower risk compared to longer-duration debt funds.
Key features of the fund
NFO dates: June 26 – July 10, 2025
I deal investment period: 3 to 12 months
Investment focus: High-quality debt and money market instruments
Liquidity: Open-ended structure allows entry and exit after NFO
Management's words
'This scheme is not about chasing high yields. It's about structure, timing, and giving purpose to your short-term money,' said Madhu Nair, chief executive officer, Union Asset Management Company.
He added that in the current environment of evolving interest rates and surplus liquidity, the fund offers a pragmatic solution for idle cash.
Parijat Agrawal, head of fixed income at Union AMC, said, 'We're tracking liquidity, interest rate curve movements, and broader macro trends. A low duration strategy gives us the flexibility to act swiftly.'
Opportunities and Risks
Opportunities
-Potentially better returns than savings accounts or ultra-short FDs
-Actively managed to respond to rate changes
-Low duration reduces volatility and interest rate risk
Risks
-Returns are market-linked and not guaranteed
-Some exposure to credit and reinvestment risk
-Not ideal for long-term goals
Who Should Consider This Fund?
Individuals with idle funds for a few months
Conservative investors looking for stable, low-risk returns
Those looking to temporarily park money instead of keeping it in a bank
Before investing, it's best to consult a financial advisor to understand whether this fund fits your needs. Detailed information is available in the Scheme Information Document on www.unionmf.com.
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