Invest in Best Medium-Duration Mutual Funds in India 2025
Explore the best medium duration mutual funds in 2024. Learn how these funds are ideal choice for medium term investments and balance risk and reward
What are Medium-Duration Mutual Funds?
Medium-duration mutual funds as the name suggests invest in debt securities with maturities typically ranging from 3 to 4 years. The objective is to provide higher returns than short-term funds also balancing the risk associated with long durations.
Who Should Invest in Medium-Duration Mutual Funds?
- Moderate Risk Takers: Investors who are willing to accept moderate risk for potentially higher returns compared to short duration funds
- Medium-Term Goals: Individuals with financial goals are not very near. Perhaps like funding a school fees, buying a new car, or going on for a vacation are some of the goals that you can fulfil using these
- Income Generation: Those who want a regular income stream from their investments without facing the brunt of equity market.
- Diversification Seekers: Investors looking to diversify their portfolio with a balanced mix of risk and return.
Top 5 Medium Duration Mutual Funds
| Fund Name | Category | Risk | 6-Month Return (%) | 1-Year Return (%) | Rating | Fund Size (Cr.) |
|---|---|---|---|---|---|---|
| Aditya Birla Sunlife Medium Term Fund | Medium Duration | Moderate | 4.40% | 7.43% | ₹1,859.0 | |
| Union Medium Duration Fund | Medium Duration | Moderate | 3.70% | 6.85% | ₹1,106.69 | |
| DSP Bond Fund | Medium Duration | Moderate | 3.74% | 7.11% | ₹3,356.2 | |
| Bandhan Bond Fund Medium Term | Medium Duration | Moderate | 3.51% | 6.64% | ₹1,557.0 | |
| HSBC Medium Duration Fund | Medium Duration | Moderate | 4.15% | 7.33% | ₹809.0 |
Factors to Consider While Investing in Medium-Duration Mutual Funds
- Interest Rate Risk: Understand how changes in interest rates can impact the fund’s performance. The effects of interest rate change are far more pronounced on Medium duration funds compared to short term funds
- Expense Ratio: Lower expense ratios can lead to better net returns. Pick a fund with a minimal expense ratio
- Historical Performance: Review the fund’s historical returns, it will give you a good measure of the funds’ performance in the market
- Financial Goals: Align the fund’s duration with your financial timeline so that it matches your goal
Major Benefits of Medium-Duration Mutual Funds
- Higher Returns: Potentially higher returns due to longer investment horizons
- Balanced Risk: Ideal for moderate risk takers as it offers a balance between risk and safety
- Regular Income: Provides regular income through interest payments from the underlying assets
- Professional Management: Managed by experienced fund managers wisely select the debt instruments
Risks Involved in Medium-Duration Mutual Funds
- Interest Rate Risk: It is more sensitive to interest rate changes, which can impact returns
- Market Risk: Subject to market fluctuations, although to a lesser extent than equity funds.
- Inflation Risk: Returns might not always keep pace with inflation, affecting the real value of returns
FAQ on Medium Duration Mutual Funds
- What are medium-duration mutual funds?
Medium-duration mutual funds invest in debt securities with investment horizon of 3 to 5 years. The objective is to provide higher returns than short term funds balancing out the risks associated with the longer time horizon
- What category does Medium Duration Funds come under?
Medium Duration Funds come under debt funds where the underlying assets fall under securities, bonds, and more
- Who should invest in medium-duration mutual funds?
Medium-duration mutual funds are suitable for moderate risk-takers, individuals with medium-term financial goals (3 to 5 years), those seeking regular income, and investors that want portfolio diversification
- What are the benefits of investing in medium-duration mutual funds?
Benefits include potentially higher returns, balanced risk, regular income, diversification, and professional management.
- How do I choose the right medium-duration mutual fund?
Take into account, interest rate risk , expense ratio, historical performance, investment horizon, and the fund manager’s track record. Always align the fund’s duration with your financial goals and risk tolerance.