We derive the luminosity function and redshift distribution of short Gamma Ray Bursts (SGRBs) using (i) all the available observer-frame constraints (i.e. peak flux, fluence, peak energy and duration distributions) of the large population of Fermi SGRBs and (ii) the rest-frame properties of a complete sample of Swift SGRBs. We show that a steep $phi(L)propto L^{-a}$ with a>2.0 is excluded if the full set of constraints is considered. We implement a Monte Carlo Markov Chain method to derive the $phi(L)$ and $psi(z)$ functions assuming intrinsic Ep-Liso and Ep-Eiso correlations or independent distributions of intrinsic peak energy, luminosity and duration. To make our results independent from assumptions on the progenitor (NS-NS binary mergers or other channels) and from uncertainties on the star formation history, we assume a parametric form for the redshift distribution of SGRBs. We find that a relatively flat luminosity function with slope ~0.5 below a characteristic break luminosity ~3$times10^{52}$ erg/s and a redshift distribution of SGRBs peaking at z~1.5-2 satisfy all our constraints. These results hold also if no Ep-Liso and Ep-Eiso correlations are assumed. We estimate that, within ~200 Mpc (i.e. the design aLIGO range for the detection of GW produced by NS-NS merger events), 0.007-0.03 SGRBs yr$^{-1}$ should be detectable as gamma-ray events. Assuming current estimates of NS-NS merger rates and that all NS-NS mergers lead to a SGRB event, we derive a conservative estimate of the average opening angle of SGRBs: $theta_{jet}$~3-6 deg. Our luminosity function implies an average luminosity L~1.5$times 10^{52}$ erg/s, nearly two orders of magnitude higher than previous findings, which greatly enhances the chance of observing SGRB orphan afterglows. Efforts should go in the direction of finding and identifying such orphan afterglows as counterparts of GW events.
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