Ultra short term bond funds, previously known as liquid plus funds, invest in very short term bonds. While the duration of the underlying securities in Ultra Short term bond funds are longer than liquid funds, the residual maturities of these securities rarely exceed 1 year. These funds are suitable for investors, who want to hold their investment for a period of 1 to 9 months. The average returns of ultra short term bond funds in 2014 was slightly higher than that of liquid funds. The chart below shows the annual returns of ultra short term bond funds from 2012 to 2014.
