ICICI Prudential Short Term Fund: NAV, Returns, Portfolio & Review (2026)

The fixed-income investment field requires investors to achieve their primary goal of attaining equilibrium among three essential factors, which include liquidity, safety, and returns. The short-term debt mutual funds have become a powerful replacement for traditional bank deposits because they provide investors with better returns that exceed inflation rates. The ICICI Prudential Short Term Fund stands out as a prominent option which operates by establishing income through investments in various debt and money market assets.

The ICICI Prudential Short Term Fund brings together investors who want to achieve stable returns through mutual fund investments, which do not require them to lock their money away for fixed periods. Investors contribute their funds to short-term debt funds, which use those resources to build a specific collection of fixed-income investments.

The review evaluates important aspects of the fund, including its performance and portfolio quality, and its appropriateness for different types of investors. The fund can be a vital tool for the financial planning process, and an understanding of its functions is required as a retiree who needs a steady income and as a salaried worker who creates a fund for medium-term expenses.

How Short-Term Debt Funds Work

Short-term debt funds establish their own unique position within the mutual fund system. Debt funds use their capital to provide loans, which they give to governments and corporations in return for receiving interest payments. The ICICI Prudential Short Term Fund operates on this fundamental principle, but with specific constraints regarding the duration.

Current NAV and Performance

The performance of a debt fund is best evaluated through its Net Asset Value (NAV) and historical returns relative to its benchmark and category peers. As of 28 January 2026, the fund demonstrates a substantial Asset Under Management (AUM) of ₹23,473 crores, indicating significant investor trust.

NAV Figures (as of 28 January 2026):

• Direct Plan: ₹68.02
• Regular Plan: ₹62.14

The returns profile of the ICICI Prudential Short Term Fund highlights its consistency over various time horizons. The data below reflects the performance of the Direct Plan, which typically yields higher returns due to a lower expense ratio.

The ICICI Prudential Short Term Fund Direct Plan Growth option has achieved better investment results than its category benchmark because it produced an 8.86% return during the previous year. This outperformance is significant in the debt category, which typically demonstrates tight competition between different financial products.

Portfolio Composition & Safety

A debt fund achieves its safety level through the credit quality assessment of its portfolio holdings. The ICICI Prudential Short Term Fund maintains a high-quality portfolio which achieves an ICRA AAAmfs credit rating. This rating indicates the highest degree of safety regarding the timely receipt of payments from the investments held in the portfolio.

The fund manager Manish Banthia implements an investment approach which balances profit generation against potential credit risks.

Asset Allocation Breakdown:

Corporate Debt: 65.41%

Government Securities (G-Secs): 25.46%

Secured Debt + CDs/CPs: 14.10%

The portfolio concentration provides a focus on maintaining financial stability. Approximately 57% of the portfolio is invested in securities rated AA or higher (including Sovereign G-Secs). The main holdings of the fund usually include strong companies, such as LIC Housing Finance, NABARD, and various state government securities. The fund uses corporate bonds together with sovereign paper to create a protection against credit failures while it benefits from the higher interest rates that corporate borrowers provide.

ICICI Prudential Short Term Fund vs Fixed Deposits

For the conservative Indian investor, the Fixed Deposit (FD) is the benchmark against which all debt products are measured. While FDs offer guaranteed returns, the ICICI Prudential Short Term Debt Fund offers market-linked returns that have historically beaten inflation more effectively.

Here is a comparison based on rates available in January 2026:

While Small Finance Banks may offer up to 7.77% on 5-year deposits, the lock-in is substantial. The ICICI Prudential Short Term Fund Direct Growth provides comparable or superior returns without locking the capital for half a decade. Furthermore, the indexation benefit on Long Term Capital Gains (LTCG) significantly reduces the tax liability for those in higher tax brackets, a benefit that FDs do not offer.

ICICI Prudential Short Term Fund vs Liquid Funds

Investors often confuse short-term funds with liquid funds. While both are debt schemes, their use cases differ significantly.

If you need the money within a few weeks, liquid funds are safer. However, if your horizon extends beyond a year, the ICICI Short Term Debt Fund is generally the superior choice for wealth accumulation.

Who Should Invest in ICICI Prudential Short Term Fund?

Your risk profile needs assessment before you make any investment decisions.

This scheme is typically suitable for:

• Conservative Investors: Those who want better returns than savings accounts but do not want the volatility of equity markets.
• Goal-Based Savers: Investors saving for a specific goal occurring in the next 1 to 3 years, such as a car purchase or a home down payment.
• Retirees: Individuals who want to invest their retirement savings in a secure investment that provides them with consistent income through a systematic withdrawal plan (SWP) payments.
• Portfolio Diversifiers: Investors who want to decrease their equity investments should use secure debt instruments to enhance their portfolio distribution. Investors who need to keep their money for less than three months should select liquid funds instead of this fund. Investors who want to achieve high growth rates above ten percent should invest in equity mutual funds.

Direct vs Regular Plan

The expense ratio of the fund impacts the final amount of money you will have. The ICICI Short Term Fund Direct Growth plan has a lower expense ratio than the Regular plan because it does not pay distributor commissions.

Expense Ratio (Direct): 0.73%

Expense Ratio (Regular): 1.05%

The difference of 0.32% may seem insignificant on an annual basis, but it makes a big difference in the long run because of the compounding effect.

Example of wealth creation (₹10 Lakh investment at an assumed 8% return): The Direct plan would normally accumulate much more money than the Regular plan over a period of 10 years because of the compounding effect of the saved expense ratio. Smart investors always opt for the ICICI Short Term Debt Fund Direct Growth plan to maximise their returns.

Exit Load & Tax Implications

One of the most attractive features of this scheme is the liquidity terms.

• ICICI Prudential Short Term Fund Exit Load: 0% (Nil). Most debt funds charge an exit load if redeemed within a specific period (e.g., 30 or 90 days). The ICICI Prudential Short Term Debt Fund Direct Growth plan generally does not levy an exit load, allowing investors to withdraw their capital whenever needed without penalty, providing immense flexibility.

Taxation:

• Short Term Capital Gains (STCG): If redeemed before 36 months, the gains are added to your income and taxed according to your income tax slab.
• Long Term Capital Gains (LTCG): If redeemed after 36 months, the gains are taxed at 20% with indexation benefits. Indexation allows you to adjust the purchase price of your units for inflation, effectively lowering the taxable profit and reducing the tax outgo.

Conclusion

The ICICI Prudential Short Term Fund has established itself as a dependable investment option within the short-term debt market. The fund achieves investment security through its portfolio, which contains safe corporate bonds and government securities, while delivering profit potential. The investment option becomes attractive to investors who need to invest for three years because it consistently exceeds fixed deposit returns and category benchmarks while maintaining a zero exit load fee. The fund generates income through its cash management function, which serves as a temporary solution and as a secure part of long-term investment portfolios.

My Mudra provides clear and data-based financial evaluations, personalised investment recommendations, and easy fund comparisons for simplified and informed decision-making for confident wealth management.

Also Read:
- How to Invest in Mutual Funds Online in India (2026)
- Power of Compounding in Mutual Funds & SIP