In 2025, when interest rates are changing rapidly and the need to access cash could arise at any time, many people are wondering where to park their short-term savings. Bank FDs no longer offer the same returns as they once did and often come with lock-in terms. It’s time to look at the best money market mutual funds; they’re safe, readily withdrawable, and have the potential to deliver better returns than a bank savings account or FD. In this article, let’s explore the best money market funds in India in 2025, how to choose them, and how they can be a smart addition to your investment strategy.
What Are Money Market Mutual Funds?
Money Market Mutual Funds are a type of debt mutual fund that primarily invest in high-quality short-term (one year or less) debt securities. The objective of these funds is to preserve capital and provide stable, predictable returns, while also providing investors with high liquidity, meaning easy access to funds.
Where do Money Market Funds Invest?
Money Market Funds include only short-term (up to 1 year maturity) and low-risk instruments in their portfolios.
These primarily include:
- Treasury Bills (T-Bills): Short-term bonds issued by the government, which are considered the safest.
- Commercial Papers (CPs): Debt instruments issued by corporate entities for short-term borrowing.
- Certificates of Deposit (CDs): Short-term certificates of deposit issued by banks.
- Tri-Party Repos (TREPS) and Cash Equivalents: These help maintain the fund’s liquidity.
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Best Money Market Mutual Funds in 2025
| S.No | Fund Name | AUM (Rs Cr) | 3 Years Return (%) | 5 Years Return (%) | Current NAV |
|---|---|---|---|---|---|
| 1 | Tata Money Market Fund | ₹38,807.85 | 7.85% | 6.30% | ₹4911.57 |
| 2 | HDFC Money Market Fund | ₹37,139.08 | 7.51% | 6.06% | ₹5380.91 |
| 3 | ICICI Prudential Money Market Fund | ₹34,019 | 7.57% | 6.07% | ₹387.19 |
| 4 | Kotak Money Market Fund | ₹32,820.86 | 7.52% | 6.10% | ₹4581.39 |
| 5 | Aditya Birla Sun Life Money Manager Fund Direct-Growth | ₹26,757 | 7.57% | 6.29% | ₹382.62 |
| 6 | Nippon India Money Market Fund | ₹23,246 | 7.59% | 6.16% | ₹4235.20 |
| 7 | UTI Money Market Fund | ₹18,862 | 7.60% | 6.16% | ₹3146 |
| 8 | Axis Money Market Fund | ₹18,086 | 7.55% | 6.11% | ₹1460.25 |
| 9 | Bandhan Money Market Fund | ₹12,247 | 7.05% | 5.47% | ₹41.11 |
| 10 | HSBC Money Market Fund | ₹4,358 | 7.24% | 5.60% | ₹26.89 |
1. Tata Money Market Fund
Tata Money Market Fund, managed by Tata Asset Management, was launched on March 15, 1994. Its objective is to provide investors with stable returns and high liquidity with low risk. Under the management of Amit Somani, the fund size has reached ₹38,808 crore. Its portfolio is safe and diversified, with key holdings such as HDFC Bank Ltd, Bank of Baroda, SIDBI, Union Bank of India, The Federal Bank Ltd This makes it a strong choice among the best money market mutual funds of 2025.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹500 | ₹5,000 | Amit Somani |
2. HDFC Money Market Fund
HDFC Money Market Fund is a good option for those looking to keep their money safe for a short period of time. This fund was launched on December 10, 1999, and is managed by HDFC Asset Management Company. HDFC AMC is considered one of the most trusted companies in India, so it’s easy to trust this fund.
It has a corpus size of approximately ₹37,139 crore, and its investments are mostly in short-term bonds of banks and government institutions. Its portfolio includes strong institutions like CDs of SIDBI, Bank of Baroda, NABARD, Union Bank, and Canara Bank. All this makes it a reliable and balanced money market fund.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹100 | ₹100 | Praveen Jain |
3. ICICI Prudential Money Market Fund
ICICI Prudential Money Market Fund is one of those funds that doesn’t let money get stuck anywhere. Meaning, if you want your money to remain safe but get slightly better returns than a bank account, this fund fulfils that need well. It is managed by ICICI Prudential Asset Management, which has been a trusted asset in the market since the 90s. The fund was launched in 1993 and today its size is around ₹34,019 crore. The portfolio is well balanced; with the remaining holdings in strong institutions like Reserve Bank of India; National Bank For Agriculture & Rural Development (NABARD); HDFC Bank Ltd; Punjab National Bank; Indian Bank. This is why this fund provides steady returns without taking on too much risk.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹100 | ₹500 | Manish Banthia |
4. Kotak Money Market Fund
Kotak Money Market Fund is one of those funds that combines both stable returns and reliability. It is managed by Kotak Mahindra Asset Management Company and was launched on August 5, 1994. Its objective is clear: to keep your money safe while also providing slightly better returns than banks. The fund’s corpus is approximately ₹32,820 crore, reflecting investor confidence. Its portfolio is well-balanced and diversified. It includes Tri-Party Repo, ICICI Securities, 364‑Day Treasury Bill, 5.15% GOI, and Punjab National Bank.
Short-term bonds from reputable institutions like Canara Bank, HDFC Bank, and Axis Bank are also part of the portfolio.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹100 | ₹100 | Deepak Agrawal |
5. Aditya Birla Sun Life Money Manager Fund
Aditya Birla Sun Life Money Manager Fund is considered one of those funds that balances both safety and stable returns. It is managed by Aditya Birla Sun Life Asset Management Company and was launched on September 5, 1994. This fund is ideal for investors who want to park money for a short period but expect better returns than a bank account. The fund has a corpus of approximately ₹26,757 crore and a strong portfolio. It includes trusted institutions like Canara Bank, Bank of Baroda, IDBI Bank, Kotak Mahindra Bank And 5.15% Government Stock 2025, (09-Nov-2025) and 182 Days Treasury Bill (1.83%) provide further stability.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹1,000 | ₹1,000 | Kaustubh Gupta |
6. Nippon India Money Market Fund
The Nippon India Money Market Fund is an old and trusted fund. It’s managed by Nippon India Asset Management and has been in operation since 1995. Its sole purpose is to provide risk-free, short-term, secure investment that earns decent interest and allows for quick withdrawal if needed. It now has a corpus of over ₹23,000 crore, and most of its investments are in short-term bonds of banks and government institutions, such as Canara Bank, Kotak Bank, NABARD, Axis, IndusInd, and HDFC Bank all with a share of approximately 1.5% to 2.5%. A portion is also held in Tri-Party Repo to maintain liquidity. Overall, this fund is suitable for those who are risk-averse but want their money to perform better than a bank account.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹100 | ₹500 | Vikash Agarwal |
7. UTI Money Market Fund
The UTI Money Market Fund’s strengths are its simplicity, ease of understanding, and reliability. It’s managed by the UTI Asset Management Company and has been in the market since 2002. Its purpose is simple: if someone has spare money for a few months, they should invest it in a place where they can withdraw it immediately if needed, while still earning slightly higher returns than a bank account. Its size is around ₹18,800 crore. Most of the funds are invested in short-term bonds of government and banking institutions. It holds stakes in major institutions like NABARD, Indian Bank, Axis Bank, and HDFC Bank, along with a small portion in 364-Day Treasury Bills. This makes it stable and reliable. Simply put, this fund is ideal for those who are risk-averse but want their money to “work” a little.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹500 | ₹500 | Amit Sharma |
8. Axis Money Market Fund
Axis Money Market Fund is one of those funds that offers reliable, stable returns. It is managed by Axis Asset Management Company and was launched on January 13, 2009. Its objective is simple to provide a safe investment option for the short term, where the money is neither at risk nor idle. It has a corpus size of around ₹18,086 crore and a well-balanced portfolio. Most of the investments are in short-term instruments of banking and government institutions. Major holdings include HDFC Bank Ltd., Canara Bank, Small Industries Development Bank of India Ltd., HDFC Bank Ltd., and Kotak Mahindra Bank Ltd.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹1,000 | ₹5,000 | Devang Shah |
9. Axis Money Market Fund
Bandhan Money Market Fund is a fund that focuses on safety, stability, and reliability. It is managed by Bandhan Asset Management Company and was launched on November 20, 1999. It is specifically designed for investors who want to keep their money safe for a few months but expect slightly better returns than bank returns. The fund has a corpus of approximately ₹12,247 crore and a balanced and prudently constructed portfolio. It comprises high-quality papers from both the government and banking sectors. Key holdings include safe-haven securities like 182 Days Treasury Bill, SIDBI, Axis Bank, Canara Bank, NABARD, and HDFC Bank.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹100 | ₹100 | Brijesh Shah |
10. Axis Money Market Fund
The HSBC Money Market Fund is a fund that maintains the right balance of safety and stability. It is managed by HSBC Asset Management Company and was launched on December 12, 2001. Its focus is on short-term investments making it a good option for those who want to keep their money safe for a few months and expect better returns than a savings account. The fund’s size is approximately ₹4,358 crore and its portfolio is well-diversified. It includes both government and corporate short-term instruments. Key holdings include safe institutions like NABARD , Indian Bank , Mindspace Business Parks REIT, Bank of Baroda, Bharti Telecom, and Bajaj Auto Credit . Treasury bills (approximately 6.7%) provide additional stability and liquidity to the fund.
Fund details :
| Min SIP | Min Investment | Fund Manager |
|---|---|---|
| ₹1,000 | ₹5,000 | Mahesh Chhabria |
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Risks & Challenges in Money Market Mutual Funds
- Interest Rate Fluctuation : Money market funds are considered safe, but fluctuations in market interest rates can slightly impact their returns. Especially when rates rise suddenly, the fund’s net asset value (NAV) may fall slightly.
- Credit Risk : Most funds invest in AAA-rated or government securities, but if a corporate bond or commercial paper defaults, there is a potential for loss. Therefore, it is important to understand the fund’s holdings.
- Liquidity Risk : These funds are generally very liquid, but sometimes, when there is a sudden liquidity shortage in the market, the funds may face difficulty selling their holdings. During such times, returns may be slightly affected.
- Short-Term Horizon Limitation : Money market funds are not intended to generate long-term returns. These are only suitable for short-term investments, such as 3–12 months. Long-term investors expecting high growth may be disappointed.
- Taxation Impact : After 2023, the indexation benefit on debt funds has been eliminated. This means that any earnings from money market funds will be taxable according to your income slab. This means that investors in higher tax brackets may see slightly lower net returns.
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Conclusion
If you’re looking to keep your money safe for a short period of time and want it to perform better than sitting in a bank account, Money Market Mutual Funds are a wise choice. These funds don’t take on high risk or tie up money; they simply deliver simple, liquid, and reliable returns. By choosing the right fund, you can grow your cash without stress, with complete transparency and flexibility.
Frequently Asked Questions (FAQs)
What is a Money Market Mutual Fund?
This is a debt fund that invests in safe government and corporate bonds with short-term maturity periods of up to 1 year.
Are Money Market Funds safe to invest in?
Yes, they are quite safe because they invest mostly in AAA-rated and government securities.
What is the average return of money market funds in 2025?
The average return of these funds has been around 6.5% to 7%.
Can I withdraw my money anytime?
Yes, you can withdraw it anytime after investing; the money is usually received the next day.
Who should invest in money market funds?
People who need to keep their money safe and easily accessible for a short period of time.
