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- Best Mutual Funds for Medium to Long Duration Investment
Best Mutual Funds for Medium to Long Duration Investment
Invest in the best mutual funds recommended by Scripbox that are algorithmically selected that best suit your needs
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List of Medium To Long Duration Mutual Funds in 2025
Top 10 Medium to Long Duration Mutual Funds to invest in 2025
Below are the medium to long duration mutual funds in india:
1. Aditya Birla Sun Life Income Fund Direct (G)
Aditya Birla Sun Life Income Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.9%, a 3 Years return of 8.1% and a 5 Years return of 6.6%. The fund has an expense ratio of 0.7% and an AUM of ₹2317 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.79% to debt and 3.21% to other assets.
2. Kotak Bond Fund Direct (G)
Kotak Bond Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 9.6%, a 3 Years return of 9.0% and a 5 Years return of 6.8%. The fund has an expense ratio of 0.7% and an AUM of ₹2131 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 092.71% to debt and 6.95% to other assets.
3. ICICI Prudential Bond Fund Direct (G)
ICICI Prudential Bond Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 10.2%, a 3 Years return of 9.3% and a 5 Years return of 7.0%. The fund has an expense ratio of 0.6% and an AUM of ₹2889 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.16% to debt and 3.84% to other assets.
4. SBI Magnum Income Fund Direct (G)
SBI Magnum Income Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 9.5%, a 3 Years return of 8.8% and a 5 Years return of 7.1%. The fund has an expense ratio of 0.8% and an AUM of ₹1983 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 091.48% to debt and 8.52% to other assets.
5. UTI Medium to Long Duration Fund Direct (G)
UTI Medium to Long Duration Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 9.5%, a 3 Years return of 8.2% and a 5 Years return of 8.8%. The fund has an expense ratio of 1.2% and an AUM of ₹334 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 097.12% to debt and 2.88% to other assets.
6. Nippon India Income Fund Direct (G)
Nippon India Income Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 9.0%, a 3 Years return of 8.9% and a 5 Years return of 6.4%. The fund has an expense ratio of 0.7% and an AUM of ₹426 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 090.17% to debt and 9.83% to other assets.
7. HDFC Income Fund Direct (G)
HDFC Income Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 9.7%, a 3 Years return of 8.9% and a 5 Years return of 6.4%. The fund has an expense ratio of 0.8% and an AUM of ₹953 crores as of 2025-06-20. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 093.55% to debt and 6.01% to other assets.
8. LIC MF Medium to Long Duration Fund Direct (G)
LIC MF Medium to Long Duration Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 11.3%, a 3 Years return of 9.4% and a 5 Years return of 6.2%. The fund has an expense ratio of 0.2% and an AUM of ₹202 crores as of 2025-06-20. It was Launched on 2013-01-02. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 098.28% to debt and 1.72% to other assets.
9. Canara Robeco Income Fund Direct (G)
Canara Robeco Income Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.5%, a 3 Years return of 7.9% and a 5 Years return of 5.9%. The fund has an expense ratio of 0.8% and an AUM of ₹121 crores as of 2025-06-20. It was Launched on 2013-01-02. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 082.54% to debt and 17.46% to other assets.
10. Bandhan Bond Fund Income Plan Direct (G)
Bandhan Bond Fund Income Plan Direct (G) is a Debt fund that has delivered a 1 Year return of 7.1%, a 3 Years return of 7.3% and a 5 Years return of 5.1%. The fund has an expense ratio of 1.3% and an AUM of ₹494 crores as of 2025-06-20.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 098.59% to debt and 1.41% to other assets.
Investing in the right mutual funds is challenging. Mutual fund investments are useful for investors with a clear investment goal and who have a significant risk appetite. Medium to long duration funds provides investors an opportunity to generate good returns with a moderate degree of liquidity. These schemes invest their corpus in a range of debt and money market securities.
Recommended: To check best mutual funds to invest
Top 5 Mutual Funds for Medium to Long Duration Investment 2025
Direct Plan
| Fund Name | 3 Year Returns | 5 Year Returns |
| ICICI Prudential Bond Fund Direct Plan Growth | 6.6% | 7.2% |
| Kotak Bond Fund Direct Plan Growth | 6.4% | 7.3% |
| Aditya Birla Sun Life Income Fund Direct Plan Growth | 6% | 7.1% |
| Nippon India Income Fund Direct Plan Growth | 6.6% | 6.9% |
| LIC MF Medium to Long Duration Fund Direct Plan Growth | 6.6% | 6.2% |
Regular Plan
| Fund Name | 3 Year Returns | 5 Year Returns |
| ICICI Prudential Bond Fund Regular Plan Growth | 6.2% | 6.7% |
| SBI Magnum Income Fund Regular Plan Growth | 5.9% | 7% |
| Kotak Bond fund Regular Plan Growth | 5.4% | 6.3% |
| HDFC Income Fund Regular Plan Growth | 5.1% | 5.4% |
| Nippon India Income Fund Plan Regular Plan Growth | 5.7% | 5.9% |
What is Medium to Long Duration Mutual Funds?
Medium to Long Duration Funds invest in the debt and money market instruments. The Macaulay duration of these investments is between 4 to 7 years. These funds are highly sensitive to changes in interest rates. The bond price falls with a rise in interest and rises when the interest rate falls. Interest rate fluctuations affect debt funds as it disturbs the prices of the underlying bonds in the fund portfolio.
Debt funds are classified on the basis of their tenure. Following are the maturity periods of Debt funds:
You must pick the right duration of the fund to get the best returns on your investment. An ideal duration is one which matches your financial goals. Besides, the tenure of debt funds you must also review the risk involved. As debt funds are prone to risk, so is your investment in medium to long duration funds. As well as, if you are okay with exposing your portfolio to some level of risk, you can invest in these schemes.
Medium to long duration funds seeks to generate higher returns in comparison to medium and low duration funds. These funds are volatile during fluctuations in interest rates. Consequently, their returns are better in a falling interest rate scenario.
Advantages of Investing in Medium to Long Duration Mutual Funds
The following are benefits of investing in Medium to Long Duration mutual funds:
- These funds allow investors to diversify their portfolios.
- You can enjoy a higher return on your investment in comparison to bank fixed deposits of a similar term.
- Investors in the higher income tax bracket can enjoy a tax-efficient return.
Although Medium to Long Duration Mutual Funds generate higher returns they also have some disadvantages.
Disadvantages
- They are suitable for investors having medium to long term perspective (4 to 7 years)
- Generally, these funds are prone to interest rate fluctuations
- They are not completely risk-free and are advisable for investors with decent risk-taking ability.
- Capital Gains Tax is applicable on short as well as long-term investments in medium to long duration funds.
Who should Invest in Medium to Long Duration Mutual Funds
Investors with a medium to long term investment objective can invest in these funds. You must have an investment horizon of four to seven years. In such a scenario you can expect a high return in comparison to both low duration and medium duration funds. Your investment in medium to long duration funds will help you achieve medium-term financial goals.
Medium to long duration funds also help you diversify your portfolio while protecting it from stock market volatility. You earn returns from investment in this scheme through a combination of interest earnings and capital gains.
You can enjoy higher returns by investing in medium to long duration funds than putting your money in fixed deposits of similar tenure. Investors in the higher income tax brackets can avail tax-efficient returns from these schemes. However, from April 1st 2023, capital gains will be taxed as per the applicable slab rates. Medium to long duration funds are also recommended for investors expecting higher returns in a falling interest rate scenario.
These funds are also advisable to risk-averse investors looking to park their money. Considering the majority of investments made by these funds are in high credit-rated debt securities the associated risk is low. Consequently, you can earn moderate returns from them while keeping your exposure to risk minimal.
The volatility of debt mutual funds is relatively less in comparison to equity mutual funds. Its returns are not driven by market fluctuations. It depends on the credit risk of the underlying debt securities. If you cannot tolerate volatility and want to earn reasonably good returns then you can opt for medium to long duration funds.
Things To Consider When Investing in Medium to Long Duration Mutual Funds
- Investment Objectives: You can invest in medium to long duration funds by matching their duration with your financial goals. They are useful to achieve your medium-term goals like paying off a loan or renovating your house.
- Time Horizon: You must invest in these funds for a longer tenure. A time horizon of four to seven years is ideal for good returns. Investors investing in medium to long term mutual funds for more than 5 years can expect to earn high returns. The reason for this is the tenure of debt instruments in which these schemes invest. The maturity period of their portfolio is usually more than 4 years. You must understand frequent outflows from any mutual fund affects its performance. Your return will be affected negatively if you withdraw from the fund before the maturity of debt securities.
- Risk Profile: Medium to long duration funds are prone to interest rate risk as they invest in government bonds of a longer duration. The fund could lose value if the interest rates rise. The Macaulay duration of these schemes is four to seven years. They are affected by the fluctuations in the interest rate cycle due to a longer maturity period. However, as these funds invest a large portion of their corpus in government securities, the credit risk is lower.
- Track Record: You must consider checking the fund portfolio for better clarity. Reviewing the track record of the fund house and fund manager is an essential step. Review these before investing in any debt fund.
- Taxation: The medium to long term funds are subject to similar tax regulations as other debt funds. The tax is levied according to their holding period. Short-term capital gains (STCG) are applicable after a holding period below 36 months. The tax calculation will depend on your income tax slab.
Long-term capital gains (LTCG) are levied for a holding period of 36 months or more. The tax liability for these gains is 20% with the indexation benefit. The benefit of indexation allows you to adjust for inflation by raising the purchase price of your medium to long term funds.
Your dividend earnings from medium to long duration funds are a part of your taxable income. The tax payable on dividends will depend on your income tax slab. Although, dividends were tax-free in the hands of the investors before the Union Budget 2020. The dividend distribution tax (DDT) was earlier being paid by Mutual fund houses before distributing the dividends to the investors.
Furthermore, as per the 2023 Finance Bill, capital gains from debt fund investments from April 1st 2023, will be taxed as per the investor’s IT slab rate. Debt funds will no longer have the LTCG benefit.
You can invest in debt funds to generate returns for a specific investment objective. Medium to long-duration funds provide good returns accompanied by some risk. You must consider a fund house that actively manages your investment and its underlying components.