Medium to Long Duration Funds invest in the debt and money market instruments with duration ranging between 4 to 7 years. These funds are volatile during fluctuations in interest rates and suitable for medium-term financial goals.
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Top Best Mutual Funds for Medium to Long Duration Investment for long-term growth
Till Date CAGR
|Aditya Birla Sun Life Income Fund Discipline Advantage Plan (G)|
|ICICI Prudential Bond Fund (G)|
|SBI Magnum Income Fund (G)|
|ICICI Prudential Bond Fund Institutional (G)|
|Aditya Birla Sun Life Income Fund (G)|
|HDFC Income Fund (G)|
|IDFC Bond Fund Income Plan (G)|
|IDFC Bond Fund Income Plan (G)|
|Kotak Bond fund (G)|
|Nippon India Income Fund Plan (G)|
|HSBC Medium to Long Duration Fund (G)|
|UTI Bond Fund (G)|
|LIC MF Bond Fund (G)|
|Canara Robeco Income Fund (G)|
|UTI Bond Fund Segregated 17022020 (G)|
|JM Medium to Long Dur Fund (G)|
|Tata Income Fund Income (G)|
|Nippon India Nifty SDL Plus G Sec Jun 2028 Mat 70 30 Idx Fd Rg fund (G)|
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.
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|Fund Name||Till Date CAGR||Expense Ratio|
|ICICI Prudential Bond Fund (G)||8.7%||1.18%|
|SBI Magnum Income Fund (G)||7.6%||1.46%|
|Kotak Bond fund (G)||8.4%||1.79%|
|HDFC Income Fund (G)||7.3%||2.06%|
|Nippon India Income Fund Plan (G)||8.4%||1.68%|
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.
The following are benefits of investing in Medium to Long Duration mutual funds:
Although Medium to Long Duration Mutual Funds generate higher returns they also have some disadvantages.
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. 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.
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.