What are the risks in shorter duration funds and I am asking this question specially after the Templeton decision to shut down many short duration funds due to losses?

The decision by Franklin Templeton has served to once again highlight the risks of short duration and medium duration funds where the exposure to corporate debt and lower quality debt is quite high. That is the key takeaway. This risk is specific to funds with shorter-tenure debt that try to eke out extra returns by taking credit risks. The assets of the six schemes totalled Rs 30,854 crore as of March 31, of which 67% was in the short and medium duration schemes. More than one-third of the amount was in the Ultra Short. The big risk for other funds is that they will have to write down their asset values to the true price as soon as possible to avoid any further contagion.