Best Medium to Long Duration Funds in India

Fund Name
Franklin India Medium to Long Duration Fund-Dir (G) Medium to Long Duration Fund \| Debt	8.18%	₹5,000	₹51.21	Invest
JM Medium to Long Duration Fund - Direct (G) Medium to Long Duration Fund \| Debt	7.94%	₹1,000	₹31.07	Invest
LIC MF Medium to Long Duration Fund-Dir (G) Medium to Long Duration Fund \| Debt	7.86%	₹5,000	₹200.78	Invest
HSBC Medium to Long Duration Fund - Direct (G) Medium to Long Duration Fund \| Debt	7.22%	₹5,000	₹47.87	Invest
SBI Magnum Income Fund - Direct (G) Medium to Long Duration Fund \| Debt	7.22%	₹5,000	₹2,171.28	Invest
UTI-Medium to Long Duration Fund - Direct (G) Medium to Long Duration Fund \| Debt	6.97%	₹500	₹315.50	Invest
HDFC Income Fund - Direct (G) Medium to Long Duration Fund \| Debt	6.63%	₹100	₹914.60	Invest
Nippon India Medium to Long Duration Fund - Dir (G) Medium to Long Duration Fund \| Debt	6.24%	₹5,000	₹427.09	Invest
Canara Robeco Income Fund - Direct (Growth) Medium to Long Duration Fund \| Debt	6.21%	₹5,000	₹122.30	Invest
Aditya Birla SL Income Fund - Dir (G) Medium to Long Duration Fund \| Debt	6.21%	₹5,000	₹2,115.11	Invest

What are Mutual Funds with Medium to Long Duration?

These funds are debt mutual funds that invest in securities with a maturity period ranging from four to seven years. These funds aim to provide a balance between risk and return by investing in a mix of government and corporate bonds. The longer duration means these funds are more sensitive to interest rate changes compared to short term funds. They also offer the potential for higher returns over the medium to long term.

How Do the Best Medium to Long Duration Funds Work?

These funds work by investing in a diversified portfolio of debt securities with maturities between four to seven years. The fund manager actively manages the portfolio to maintain the desired duration and credit quality. By doing so, these funds aim to provide stable returns while managing the credit risks associated with interest rate fluctuations and credit defaults. The performance of these funds is influenced by changes in interest rates and the creditworthiness of the issuers.

Why Invest in these funds?

When you invest in medium to long duration funds, it offers several advantages. These mutual funds offer a strategic balance of returns and risk management, making them attractive for investors seeking portfolio diversification and steady growth.

Higher Returns: These funds typically yield higher returns compared to short duration funds and fixed deposits. It makes them attractive for medium-term investors.

Diversification: By investing in a mix of government and corporate bonds, these funds provide diversification and reduces the overall risk of the portfolio.

Flexibility: Suitable for investors with a medium-term investment horizon. These funds offer flexibility and enable investors to fulfill their financial goals in terms of liquidity and returns.

Interest Rate Sensitivity: These funds can benefit from falling interest rates, if the value of the underlying fixed income securities were to increase in the future.

FAQ’s

What strategies do fund managers employ to mitigate credit risk in Medium to Long Duration Debt Mutual Funds?

Fund managers mitigate credit risk by diversifying the portfolio across various issuers and sectors. They conduct thorough credit analyses and invest in high-quality bonds.

How is the modified duration of these funds calculated, and what does it state about the fund’s sensitivity to interest rate changes?

Modified duration is calculated by adjusting the Macaulay duration for interest rate changes. It indicates how much the fund’s price will change for a given change in interest rates.

What are the implications of holding Medium to Long duration debt funds in a rising interest rate environment versus a falling rate environment?

In a rising interest rate environment, the value of these funds may decrease. Subsequently, their value may also increase in a falling rate environment, leading to capital gains.

How does the average maturity of the fund’s assets influence its yield and price volatility?

The average maturity of the fund’s assets affects its yield and price volatility. Long term investing with longer maturities generally leads to higher yields but also higher price volatility.

What specific factors should investors consider when assessing the liquidity of these funds?

If you have invested in long duration funds, you must consider the fund’s portfolio composition. Also, consider the average maturity of its assets, and the credit quality of the issuers when assessing liquidity.