Best Medium Duration Mutual Funds

Medium duration mutual funds as the name suggest invests in instruments for a medium time-frame. While the term medium duration is relative and will differ from one investment instrument to another, it is considered to fall anywhere between 3-4 years. SEBI has mandated that medium duration schemes are required to invest in debt and money market instruments such that the Macaulay duration of the portfolio will be anywhere between three to four years.

While some of best medium duration mutual funds may yield good returns, others may not fare as well. Since the definition of duration is flexible, the investment horizon can become subjective depending on the instrument in question and the investment goals of the investor. Generally, investments for a period of less than 1-year are considered short-term, whereas the ones over ten-years are considered long-term investments.

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Top 10 Medium Duration Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
IDFC Bond Fund - Medium Term FundDebtModerate10.4%5star3,066
SBI Magnum Medium Duration FundDebtModerate11.8%5star3,100
HDFC Medium Term Debt FundDebtModerate10.2%4star1,417
Axis Strategic Bond FundDebtModerate8.4%4star1,268
ICICI Prudential Medium Term Bond FundDebtModerate10.8%4star6,807
UTI Medium Term FundDebtModerate1.9%3star205
Indiabulls Income FundDebtModerate8.6%3star31
Sundaram Medium Term Bond FundDebtModerate7.5%3star80
Kotak Medium Term FundDebtModerate7.3%3star3,324
DSP BlackRock Bond FundDebtModerate3.4%2star271
BNP Paribas Medium Term FundDebtModerate-2.0%2star68
Axis Strategic Bond Fund DebtModerately High-2.1%2star188
L&T Resurgent India Bond FundDebtModerate9.4%2star1,755
Nippon India Classic Bond FundDebtModerate-28.0%2star1,774
Aditya Birla Sun Life Medium Term PlanDebtModerate-2.9%2star4,452
View All Top 10 Medium Duration Mutual Funds

Features of Medium Duration Mutual Fund

Best medium duration mutual funds are designed to offer an investment opportunity that can help investors meet specific investment goals. These funds are designed to help investors meet 3-4 years goals which might be difficult to achieve with long-term or short-term mutual funds. For e.g., If someone wanted to purchase a car in the next three years, would serve as an investment tool to save the required funds.

These funds allow investors to balance the portfolio and add stability to it. The best medium duration funds are suitable for stable returns since these funds invest in debt and money market instruments and delivered returns in the range of 9-11%. There are several schemes offering the best medium duration fund in India. The aim is to choose wisely and invest in one that meets your objectives.

Taxability

Medium duration funds in India invest more than 65% of the corpus in debt and money market instruments. Hence, these funds are treated as debt mutual funds for the purpose of taxations. So, if the funds are held for a period of less than 36 months, a short-term capital gain tax as per the income tax slab of the investor will be applicable.

If the funds are held for a period of over 36 months, a long-term capital gain tax of 20% with indexation benefits will be applicable. Dividends received from medium duration funds are tax-free but liable for a dividend distribution tax of 25 per cent.

Any additional surcharges and cess will also be applicable on returns generated from an investment in the medium term mutual funds.

Who Are These Funds Suited For?

Investors looking to invest for a duration of 3-4 years or seeking alternative options for investment other than fixed deposits can invest in medium duration mutual funds. These investments are suitable for risk-averse investors seeking moderate returns without exposing their capital to huge risks. Some of the best medium duration funds in India can generate returns better than the fixed deposits.

Best medium duration funds are ideal for diversification of the portfolio and reducing the overall risk. Some of the best medium duration mutual funds in India invest in debt instrument using a time-tested strategy and after an in-depth research. This ensures that your capital is invested in the right instruments, thereby reducing the risks. Investors across risk profile should hold some medium duration fund in their portfolio.

Major Advantages

The best medium duration mutual funds are less volatile than the equity-oriented mutual funds and are thus considered a safer option comparatively. The medium duration funds are stable investments with lesser risk and higher potential for a stable return. These funds also offer liquidity enabling the investor to get back the capital with returns in a time span of 3-4 years.

Since the best medium duration funds invest in debt and money market instruments, the chances of getting back the investment in case of default are higher than any investment made in equities of the same company. While even the best medium duration funds of 2019 are subject to interest rate risk, chances of a long-term down cycle are comparatively lesser.

The fact that debt funds invest in government securities, certificate of deposits, corporate bonds, commercial paper, etc. make them a stable investment option. Prospective stakeholders and sponsors can contemplate investing in these medium duration schemes with a limit of a few years.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

IDFC Bond Fund Medium Term Plan Direct Growth

Fund Performance: This fund has given 7.94% annualized returns in the last three years. In the last year, its returns were 10.36%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 10.36% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM3,066Cr
1Y Returns10.4%

SBI Magnum Medium Duration Fund Direct Growth

Fund Performance: This fund has given 9.14% annualized returns in the last three years. In the last year, its returns were 11.76%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 11.76% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM3,100Cr
1Y Returns11.8%

HDFC Medium Term Debt Fund Direct Plan Growth

Fund Performance: This fund has given 7.97% annualized returns in the last three years. In the last year, its returns were 10.21%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 10.21% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM1,417Cr
1Y Returns10.2%

Axis Strategic Bond Fund Direct Growth

Fund Performance: This fund has given 8.22% annualized returns in the last three years. In the last year, its returns were 8.38%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 8.38% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM1,268Cr
1Y Returns8.4%

ICICI Prudential Medium Term Bond Fund Direct Plan Growth

Fund Performance: This fund has given 8.08% annualized returns in the last three years. In the last year, its returns were 10.85%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 10.85% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM6,807Cr
1Y Returns10.8%

UTI Medium Term Fund Direct Growth

Fund Performance: This fund has given 5.27% annualized returns in the last three years. In the last year, its returns were 1.87%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 1.87% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM205Cr
1Y Returns1.9%

Indiabulls Income Fund Direct Growth

Fund Performance: This fund has given 8.46% annualized returns in the last three years. In the last year, its returns were 8.57%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 8.57% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM31Cr
1Y Returns8.6%

Sundaram Medium Term Bond Fund Direct Growth

Fund Performance: This fund has given 7.04% annualized returns in the last three years. In the last year, its returns were 7.49%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.49% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM80Cr
1Y Returns7.5%

Kotak Medium Term Fund Direct Growth

Fund Performance: This fund has given 7.15% annualized returns in the last three years. In the last year, its returns were 7.3%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.3% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM3,324Cr
1Y Returns7.3%

DSP Bond Direct Growth

Fund Performance: This fund has given 5.08% annualized returns in the last three years. In the last year, its returns were 3.39%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 3.39% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM271Cr
1Y Returns3.4%

BNP Paribas Medium Term Fund Direct Growth

Fund Performance: This fund has given 3.4% annualized returns in the last three years. In the last year, its returns were -1.99%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing -1.99% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM68Cr
1Y Returns-2.0%

Axis Regular Saver Fund Direct Growth

Fund Performance: This fund has given 4.4% annualized returns in the last three years. In the last year, its returns were -2.09%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing -2.09% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM188Cr
1Y Returns-2.1%

L&T Resurgent India Bond Fund Direct Growth

Fund Performance: This fund has given 7.4% annualized returns in the last three years. In the last year, its returns were 9.36%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 9.36% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM1,755Cr
1Y Returns9.4%

Nippon India Strategic Debt Fund Direct Growth

Fund Performance: This fund has given -6.32% annualized returns in the last three years. In the last year, its returns were -28.04%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing -28.04% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹5,000
AUM1,774Cr
1Y Returns-28.0%

Aditya Birla Sun Life Medium Term Direct Plan Growth

Fund Performance: This fund has given 3.21% annualized returns in the last three years. In the last year, its returns were -2.86%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing -2.86% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹1,000
AUM4,452Cr
1Y Returns-2.9%

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