Union Mutual Fund launches 'low risk', short-term debt investment scheme

Fund is a flexible and structured alternative to traditional savings instruments, says company

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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

 

Fund type: Open-ended low duration debt scheme

 

NFO dates: June 26 – July 10, 2025

 

Ideal 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.

 

Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully.