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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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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.
Explore Medium To Long Duration Fund
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
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 SIPONE 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 LUMPSUMTotal Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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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 FundsWhat 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?
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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?
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Offers stable returns on investment
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Low volatility risk since the fund primarily invests in debt and money market securities
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There’s no capping on the maximum investment amount
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Returns from these funds can go up to 10% p.a.
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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?
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Credit risk
Risk of default on the debt instrument
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Interest rate risk
Risk of rising interest rates, which reduces the value of debt instruments
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Inflation risk
Risk of inflation reducing the returns from the debt fund
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Liquidity risk
Risk of not being able to trade in debt instruments
What is the tax implication of Medium To Long Duration Funds?
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Returns earned are taxed at your income tax slab rates
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
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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.
The average rate of returns for Medium To Long Duration Funds has been 5-8%.
Medium To Long Duration Funds are better than short duration funds if your investment horizon is more than 4 years and you are ready for the interest rate risk that comes with them.
No, there is no exit load on Medium To Long Duration Funds.
Investors looking for a better return potential than fixed-income instruments but less risk than equity and with financial goals spanning 4-7 years should invest in Medium To Long Duration Funds.
Medium To Long Duration Funds carry the interest rate risk that all debt funds do, apart from the risk of market fluctuations throughout the investment tenure.
Medium To Long Duration Funds invest in debt securities with a medium to long-term maturity profile, typically ranging from 3 to 7 years.
Medium To Long Duration Funds work by investing primarily in debt instruments with varying maturities, aiming to generate income and capital appreciation over the medium to long term.
Medium To Long Duration Funds are typically considered moderate to high-risk investments due to their exposure to interest rate fluctuations and credit risks associated with longer-duration bonds.
The Macaulay duration for Medium To Long Duration Funds typically falls within the range of 4 to 8 years, reflecting the weighted average maturity of the fund's underlying bond holdings.
Medium To Long Duration Funds are taxed based on the investor's holding period. Short-term capital gains (STCG) tax applies if the holding period is less than three years, while long-term capital gains (LTCG) tax applies for holdings over three years, taxed at 20% with indexation benefits.
Timing entry and exit in Medium To Long Duration Funds involves assessing interest rate expectations, economic conditions, and the fund's performance outlook. Investors may consider entering when interest rates are expected to fall and exiting when rates are anticipated to rise.
Accrual income in Medium To Long Duration Funds refers to the interest income generated by the fund's underlying securities over time. It contributes to the fund's total returns and can be influenced by factors such as the credit quality and duration of the bonds held in the portfolio.
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