Top Medium Duration Funds to Invest in Feb 2025
A medium duration fund is a type of debt mutual fund that invests in debt securities for a medium-term period (three to four years). It aims to provide a balance of income and capital appreciation while managing risk.
As per SEBI norms, the medium duration fund must invest in debt and money market instruments with a Macaulay duration of three to four years. This fund can deliver impressive returns when the interest rates fall. This is because bond prices and interest rates have an inverse relationship. However, these funds suffer most when the interest rates go up, which makes them risky.
Many mutual fund advisors believe that medium duration funds are expected to offer superior returns when the interest rates start falling. Many investors are not familiar with these schemes, but it is more likely that people would hear about medium duration mutual funds as many mutual fund advisors are recommending these funds to their clients.
If you are someone who wants to benefit from the falling interest rate scenarios, then you should take a look at these medium duration mutual funds.
Top Medium Duration Mutual Funds to Invest in February 2025
- Axis Strategic Bond Fund
- HDFC Medium Term Debt Fund
- SBI Magnum Medium Duration Fund
- Bandhan Bond Fund Medium Term Plan
Bandhan Bond Fund The medium-term plan, which had been in the third quartile earlier, has been in the fourth quartile for the last 19 months. Additionally, HDFC Medium Term Debt Fund has been in the third quartile for the last 16 months.
Which type of Investor should Invest in these Funds?
The medium duration funds are most suitable for investors looking to invest for three to four years or more and are willing to take risk. Mutual fund advisors do not suggest medium duration funds to regular investors because these schemes are sensitive to the changes in interest rates and many investors would not be able to manage the volatility of these schemes.
Conclusion
In short, if you are ready to face the volatility and willing to take some level of risk, you may consider investing in medium duration funds. These funds have the potential to deliver attractive returns during falling interest rate scenarios. However, it is suggested to conduct your own research and consider other factors like your financial situation, risk tolerance and investment horizon before investing in medium duration mutual funds.
