New Delhi, June 15 -- There are different types of debt mutual funds based on the types of instruments they invest in and the maturity profile of those investments. Two categories that often appear similar to investors are money-market funds and short-duration funds.

Money-market funds primarily invest in short-term instruments maturing within one year, while short-duration funds invest in a mix of debt securities and money-market instruments with a portfolio duration of 1 to 3 years.

Although both belong to the debt fund category, they differ significantly in terms of investment horizon, risk profile, and return potential. Let's find out.

As per Sebi regulations, money-market funds must invest in money-market instruments with a maturi...