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Best Medium Duration Mutual Funds

According to SEBI guidelines, there are 16 subtypes of debt mutual funds, and medium duration mutual funds are one of them. Medium duration funds invest in securities with a duration of 3 to 4 years, and their primary objective is to ensure a steady return throughout this period.

Best medium duration mutual funds invest in money market instruments and debt securities, which offer stable returns. These funds comprise securities with a higher maturity than short-term funds but not as extended as that of long duration schemes. Owing to their long tenure, these underlying securities are subject to interest rate fluctuations.

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Top 10 Medium Duration Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
SBI Magnum Medium Duration FundDebtModerately High5.5%5star9,793
ICICI Prudential Medium Term Bond FundDebtModerately High7.2%4star7,067
HDFC Medium Term Debt FundDebtModerately High7.1%4star4,058
Axis Strategic Bond FundDebtModerately High7.2%4star1,686
IDFC Bond Fund - Medium Term FundDebtModerate3.9%4star4,019
L&T Resurgent India Bond FundDebtModerate7.5%3star1,205
Kotak Medium Term FundDebtModerate7.0%3star3,023
Sundaram Medium Term Bond FundDebtModerate3.3%3star68
DSP Bond FundDebtModerate4.5%3star479
UTI Medium Term FundDebtModerate7.7%2star67
BNP Paribas Medium Term FundDebtModerate3.5%2star23
Tata Medium Term FundDebtModerately High6.5%2star74
Nippon India Classic Bond FundDebtHigh19.8%1star270
Invesco India Medium Duration FundDebtModerateN.Astar718
View All Top 10 Medium Duration Mutual Funds

Features of Medium Duration Mutual Fund

Best medium duration mutual fund offers the following features –

Asset allocation: The asset allocation of medium duration funds follows the rule of debt funds. It primarily invests in money market and debt securities with a Maximum duration of 3 – 4 years.

Risk-reward ratio: Although debt funds are immune to market risks, they are susceptible to credit, interest, and liquidity risks. The same can be said about medium duration MFs. Therefore, the risk-reward ratio for this particular fund is high to moderate, depending on a specific scheme.

Taxability

Long-term Capital Gains Tax: If you sell the units of your debt funds after 3 years from the date of purchase, you are liable to pay LTCG tax on capital gains. If you opt for indexation benefits, you need to pay tax at 20%, and without that benefit, it is at 10%.

Short-term Capital Gains Tax: In case you liquidate your debt fund units within 3 years of purchase, the capital gains will be added to your taxable income.

TDS: TDS is not applicable for best medium duration mutual funds.

Who Are These Funds Suited For?

Medium duration funds are ideal for individuals with a low-risk appetite and a mid-term outlook. Since the maturity period of the underlying stocks is 3 to 4 years, these can be an alternative for bank deposits as well. This particular mutual fund type suits the conservative investment style, as it offers balanced returns over a medium tenure.

Besides, here are some points to consider before investing in medium duration mutual funds.

Investment objective: The first point to evaluate is your investment objective. Being clear of it is vital as it will allow you to find the right plan from the top medium duration mutual funds. You can then select a plan that will help you fulfil your financial goal over a preferred time horizon.

Risk appetite: It’s imperative to evaluate your risk-bearing capacity before investing. Theoretically, medium duration funds carry minimal risks, but they are susceptible to interest, credit, and liquidity risks. Therefore, it is vital to analyse the portfolio of the best medium duration mutual funds to determine a scheme that suits your risk tolerance.

Experience of the fund manager: Alongside risk assessment, you should also review the experience and past performance of a fund manager. It helps in understanding such an individual’s level of competence in navigating different market scenarios.

Previous performance of a fund: Even though a fund’s past performance is not an indication of its future returns, it can hint towards how the scheme fared previously under different market conditions. Therefore, it is imperative to check the previous performance of a fund before investing. 

Expense ratio: Fund management incurs expenses, which is then deducted from generated returns. It is denoted as expense ratio, which is a small % of total fund assets. 

Exit load: AMCs levy an additional charge if you leave a scheme before a particular date specified in the scheme-related documents. However, these details vary from one mutual fund plan to another, and some best medium duration mutual funds 2021 may not have such additional charges.

Direct and regular plans: Direct plans are issued by fund houses directly for you to invest in. Therefore, no intermediaries are involved. Contrarily, for regular plans, you need to invest through a third party like a broker. Typically, the expense ratio for direct plans is lower than that of regular ones. Also, direct plans report a higher NAV when compared to regular plans.

Major Advantages

Here are some notable advantages of investing in the best medium duration mutual funds –

Low-risk option: Medium duration funds involve less risk than pure equity schemes and equity-oriented MFs. Thus, they are suitable to dilute the concentrated stake in a portfolio and hedge against market volatility. 

Suitable for long-term investors: Best medium duration mutual funds suit a mid-to-long-term approach. They can be an ideal choice if you are searching for an investment option with higher returns than bank deposits and less risk than equity funds.

Mode of investments: You can invest in a medium duration mutual fund scheme of choice via SIP or lump sum method. In SIP or Systematic Investment Plans, you need to pay a specified amount at regular intervals. It can be a monthly, half-yearly, or quarterly system, depending on your preference. As for the lump-sum method, it is self-explanatory. The amount for both approaches can vary from one scheme to another. In most cases, the minimum SIP amount is Rs.500, and the lump-sum amount is Rs.1000.

Let's have a closer look

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

SBI Magnum Medium Duration Fund Direct Growth

Fund Performance: This fund has given 10.05% annualized returns in the last three years. In the last year, its returns were 5.51%. 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 5.51% 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
AUM9,793Cr
1Y Returns5.5%

ICICI Prudential Medium Term Bond Fund Direct Plan Growth

Fund Performance: This fund has given 9.38% annualized returns in the last three years. In the last year, its returns were 7.19%. 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 7.19% 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
AUM7,067Cr
1Y Returns7.2%

HDFC Medium Term Debt Fund Direct Plan Growth

Fund Performance: This fund has given 9.36% annualized returns in the last three years. In the last year, its returns were 7.06%. 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 7.06% 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
AUM4,058Cr
1Y Returns7.1%

Axis Strategic Bond Fund Direct Growth

Fund Performance: This fund has given 8.83% annualized returns in the last three years. In the last year, its returns were 7.16%. 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 7.16% 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
AUM1,686Cr
1Y Returns7.2%

IDFC Bond Fund Medium Term Plan Direct Growth

Fund Performance: This fund has given 8.76% annualized returns in the last three years. In the last year, its returns were 3.89%. 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 3.89% 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
AUM4,019Cr
1Y Returns3.9%

L&T Resurgent India Bond Fund Direct Growth

Fund Performance: This fund has given 8.69% annualized returns in the last three years. In the last year, its returns were 7.51%. 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 7.51% 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
AUM1,205Cr
1Y Returns7.5%

Kotak Medium Term Fund Direct Growth

Fund Performance: This fund has given 8.17% annualized returns in the last three years. In the last year, its returns were 7%. 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% 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
AUM3,023Cr
1Y Returns7.0%

Sundaram Medium Term Bond Fund Direct Growth

Fund Performance: This fund has given 6.91% annualized returns in the last three years. In the last year, its returns were 3.33%. 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 3.33% 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 ₹250.

Min Investment Amt₹5,000
AUM68Cr
1Y Returns3.3%

DSP Bond Direct Growth

Fund Performance: This fund has given 5.95% annualized returns in the last three years. In the last year, its returns were 4.5%. 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 4.5% 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
AUM479Cr
1Y Returns4.5%

UTI Medium Term Fund Direct Growth

Fund Performance: This fund has given 5.23% annualized returns in the last three years. In the last year, its returns were 7.73%. 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 7.73% 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
AUM67Cr
1Y Returns7.7%

BNP Paribas Medium Term Fund Direct Growth

Fund Performance: This fund has given 3.53% annualized returns in the last three years. In the last year, its returns were 3.54%. 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 3.54% 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 ₹300.

Min Investment Amt₹5,000
AUM23Cr
1Y Returns3.5%

Tata Medium Term Fund Direct Growth

Fund Performance: This fund has given 3.28% annualized returns in the last three years. In the last year, its returns were 6.54%. 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 6.54% 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
AUM74Cr
1Y Returns6.5%

Nippon India Strategic Debt Fund Direct Growth

Fund Performance: This fund has given -3.62% annualized returns in the last three years. In the last year, its returns were 19.84%. 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 19.84% 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
AUM270Cr
1Y Returns19.8%

Invesco India Medium Duration Fund Direct Growth

Fund Performance: In the last year, its returns were NA. 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 NA 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
AUM718Cr
1Y ReturnsNA

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