Medium to Long Duration Funds: Debt Fund Investment

What is a Medium To Long Duration Fund?

A Medium To Long Duration Fund is a debt mutual fund that invests in debt instruments having a medium and long-term investment horizon. The Macaulay duration of the fund ranges between 4 and 7 years.

Advantages of Medium To Long Duration Fund

Good returns

Since these funds also invest in long-term debt instruments, the returns are usually higher than short duration debt funds.

Mid to long-term investment

If you want to invest for 5 years or more for any medium-term financial goal, these funds are a suitable choice.

Diversified portfolio

You get an actively managed, diversified portfolio that invests in high-quality bonds and debt instruments for attractive returns.

Higher Liquidity Than Fixed Deposits

Generally offer enhanced liquidity compared to fixed deposits, allowing investors to redeem a portion or the entirety of their investment and add further funds with greater ease.

Medium To Long Duration Fund Returns Calculator

REGULAR INVESTMENT

SIP

Invest systematically in regular amounts and build a corpus with a disciplined investing habit.

START SIP

ONE TIME INVESTMENT

Lump sum

Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.

INVEST LUMPSUM

INVEST AMOUNT

PERIOD

RETURNS

Total Amount Invested

₹ 0

after 30 years you will get a return of

₹ 0

Disclaimer: Projections/estimations is backtested using historical data.

TARGETED RETURN VALUE

INVESTMENT PERIOD

RETURNS

Total Amount Invested

₹ 0

after 30 years you will get a return of

₹ 0

Disclaimer: Projections/estimations is backtested using historical data.

ABCD - One app to build a diversified

Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.

A choice of different types of mutual fund schemes
Online investments with a fully integrated digital platform
Facility to switch, redeem and invest more from a single platform

Download our mobile app now

PLAY STORE

APP STORE

Scan the QR code to download our Mobile App

Download our mobile app now

PLAY STORE

APP STORE

Understanding Medium To Long Duration Fund

Table of Contents

What are Medium To Long Duration Funds?What are the features of medium to long duration mutual funds?Things to keep in mind when investing in Medium To Long Duration Funds What are the types of risks that Medium To Long Duration Funds face?What is the tax implication of Medium To Long Duration Funds?What are the payout options?

What are Medium To Long Duration Funds?

A type of open-ended debt mutual fund, Medium To Long Duration Funds invest in debt securities in such a manner that the Macaulay duration of the portfolio lies between 4 and 7 years, making it suitable for medium to long-term investors.

What are the features of medium to long duration mutual funds?

Offers stable returns on investment
Low volatility risk since the fund primarily invests in debt and money market securities
There’s no capping on the maximum investment amount
Returns from these funds can go up to 10% p.a.
You can get better returns compared to fixed deposits while minimising investment risks

Things to keep in mind when investing in Medium To Long Duration Funds

Check the expense ratio of such schemes. A high ratio eats into the fund’s returns and should be avoided

Compare Medium To Long Duration Funds on their returns. A fund with the highest return is better

These funds face high interest rate risks since they invest in long-term debt securities which might fall in value if interest rates are cut.

What are the types of risks that Medium To Long Duration Funds face?

Credit risk

Risk of default on the debt instrument
Interest rate risk

Risk of rising interest rates, which reduces the value of debt instruments
Inflation risk

Risk of inflation reducing the returns from the debt fund
Liquidity risk

Risk of not being able to trade in debt instruments

What is the tax implication of Medium To Long Duration Funds?

Returns earned are taxed at your income tax slab rates
Dividends earned, if any, are taxed at your income tax slab rate

What are the payout options?

Dividend option

Earn dividends on your investment at regular intervals
Growth option

Accumulate the returns over the investment tenure and get a lump sum amount on redemption

Portfolio Track

Consolidate with Portfolio Track

Consolidate assets, liabilities
Track portfolio at fingertips

Know more

FAQs On Medium To Long Duration Fund

Medium To Long Duration Funds invest in debt securities and money market instruments such as treasury bills, government securities, commercial paper, non-convertible debentures, etc.

You can redeem your Medium To Long Duration Fund online either by logging into your demat account or through your account on the Aditya Birla Capital website.

The investment horizon for Medium To Long Duration Funds is 4 to 7 years.

Yes, Medium To Long Duration Funds can be a good option for new investors with financial goals spanning up to 7 years who are looking for better return potential than fixed-income instruments.

As per the 2023 Budget, Medium To Long Duration Funds are not eligible for tax savings.