Best Medium Duration Mutual Funds

Not everyone is comfortable with the high returns that accompany high risks. Those seeking comparatively stable but lower returns should go for the Stable Wealth portfolio that adopts a balanced approach and puts only 60-65% in equities. However, if the thought of losing money is completely unacceptable to you, go for the conservative Wealth Secure portfolio where the equity allocation is just 20-25% of the corpus. There’s no point in taking risks to earn high returns if it gives you sleepless nights. There are ways which can help you get moderate risks in mutual funds.

If we allocate 65 to 80 percent of a fund to equity and assign remaining to debt and similar instruments, then what we get in return is a Hybrid-Equity fund. These funds allow you to enjoy good returns and low-risk rates courtesy their significant allocation in debt funds. Market gurus believe that it is better to invest in these than to go for an equity-debt portfolio as there is no tax imposed on the debt funds in the mix. It has returns that are taxed at 15% if sold before one year, post this period a 10% tax is applicable on the gains

Purpose: Invest in these funds instead of buying a different kind of equity-debt funds with 60-40 allocations. These funds are best to moderate your risk with a fair return in the high-risk portfolio.

Top 10 Medium Duration Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Indiabulls Arbitrage FundHybridModerately Low6.5%5star510
HDFC Equity Savings FundHybridModerately High4.1%5star6,885
HDFC Balanced FundHybridModerately High8.3%5star22,109
ICICI Prudential Regular Savings FundHybridModerately High4.8%5star1,573
Aditya Birla Sun Life Equity Savings FundHybridModerately High-0.1%5star1,326
Reliance Arbitrage FundHybridModerately Low7.6%5star9,226
ICICI Prudential Balanced Advantage FundHybridModerate3.9%5star28,244
ICICI Prudential Equity & Debt FundHybridModerately High2.0%5star26,729
Principal Hybrid Equity FundHybridModerately High0.5%5star1,603
SBI Equity Savings FundHybridModerately High2.9%4star2,378
View All Top 10 Medium Duration Mutual Funds

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

Indiabulls Arbitrage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Arbitrage segment and provided 6.89% annualized returns in the last 3 years. In the last 1 year, it gave 6.53% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 6.53% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Malay Shah, Sumit Bhatnagar

Launch Date18 Dec 2014
Min Investment Amt500
Groww Rating5star
AUM510Cr
1Y Returns6.5%

HDFC Equity Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Equity Savings segment and provided 12.04% annualized returns in the last 3 years. In the last 1 year, it gave 4.08% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 4.08% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Anil Bamboli, Vinay Kulkarni, Krishan Daga

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM6,885Cr
1Y Returns4.1%

HDFC Balanced Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Aggressive segment and provided 12.07% annualized returns in the last 3 years. In the last 1 year, it gave 8.25% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 8.25% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Chirag Setalvad

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM22,109Cr
1Y Returns8.3%

ICICI Prudential Regular Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Conservative segment and provided 9.89% annualized returns in the last 3 years. In the last 1 year, it gave 4.84% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 4.84% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Rajat Chandak, Manish Banthia

Launch Date2 Jan 2013
Min Investment Amt5,000
Groww Rating5star
AUM1,573Cr
1Y Returns4.8%

Aditya Birla Sun Life Equity Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Equity Savings segment and provided 8.74% annualized returns in the last 3 years. In the last 1 year, it gave -0.07% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -0.07% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Satyabrata Mohanty, Lovelish Solanki, Pranay Sinha

Launch Date27 Nov 2014
Min Investment Amt1,000
Groww Rating5star
AUM1,326Cr
1Y Returns-0.1%

Reliance Arbitrage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Arbitrage segment and provided 7% annualized returns in the last 3 years. In the last 1 year, it gave 7.56% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.56% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Payal Kaipunjal

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM9,226Cr
1Y Returns7.6%

ICICI Prudential Balanced Advantage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Balanced Advantage segment and provided 10.61% annualized returns in the last 3 years. In the last 1 year, it gave 3.92% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 3.92% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: S Naren, Rajat Chandak, Manish Banthia, Ihab Dalwai

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating5star
AUM28,244Cr
1Y Returns3.9%

ICICI Prudential Equity & Debt Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Aggressive segment and provided 13.66% annualized returns in the last 3 years. In the last 1 year, it gave 2.05% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 2.05% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: S Naren, Manish Banthia, Atul Patel

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM26,729Cr
1Y Returns2.0%

Principal Hybrid Equity Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Aggressive segment and provided 15.29% annualized returns in the last 3 years. In the last 1 year, it gave 0.45% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 0.45% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: P V K Mohan, Bekxy Kuriakose

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating5star
AUM1,603Cr
1Y Returns0.5%

SBI Equity Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Equity Savings segment and provided 8.69% annualized returns in the last 3 years. In the last 1 year, it gave 2.89% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 2.89% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Hybrid mutual fund in India.

Fund Manager: Ruchit Mehta, Neeraj Kumar

Launch Date26 May 2015
Min Investment Amt1,000
Groww Rating4star
AUM2,378Cr
1Y Returns2.9%

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When should I invest in medium duration mutual funds?

This is contextual. If you do not wish to invest directly in stocks (because you have better things to do or just don’t feel like it), you can choose equity mutual funds (defined below). If you would like to lower your tax outgo compared to a fixed or recurring deposit and if possible with better returns, you can choose debt mutual funds (defined below). The clearer you are about your need, the faster and confident you will be in taking decisions regarding mutual funds – well, this applies to anything in life!

Who issues medium duration mutual funds?

Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.

What does investing in medium risk duration funds actually mean?

Suppose a mutual fund invests in ten stocks and total current market value of these stocks is 1.1 Crore. Out of this, the AMC deducts say, 0.1 Crore for operating the fund (this is known as the expense ratio). So the net value is 1 crore. Now the AMC will divide this 1 Crore into say, 10,000 parts. These parts are known as units. The cost of one unit is 1Cr/10,000 = Rs. 1000. This is known as the Net Asset Value (NAV) of the mutual fund. Suppose the AMC has set a minimum investment requirement of Rs. 500. Then if you pay Rs. 500, you will get 0.5 units of the fund. Remember that the cost of one unit is the cost when you made the purchase. Suppose after one year, the NAV has fallen to Rs. 700 per unit and you wish to exit the fund (also known as redemption), then you sell your 0.5 units back to the AMC and get 0.5 x Rs. 700 = Rs. 350 back. Yes, you invested Rs. 500 and got back Rs. 350 – a loss of 150 over a year. The point is, that you buy units at current NAV and sell units (fully or partially) at current NAV. This is what investing in mutual fund actually means.

Best Medium Duration Debt Mutual Funds

<p>Short term funds are similar to ultra-short term investments but with a duration of approximately three years. If your goals are to manage expenses while buying a house or planning a marriage within one to three years, then this category can help you with decent returns without any risk factors. Returns are taxed as per your income tax slab if sold before three years and have negligible tax (20% with indexation benefit) post that period.</p> <p><b>Purpose:</b> Invest in these funds if you are aiming to buy a house or plan a wedding within three years.</p>

What are Medium Duration Debt Mutual Funds?

Debt funds are mutual funds investing in such debt instruments. They are of different kinds depending on the kind of debt instruments they invest in. Higher the credit rating of the debtor, lesser the chance of default and hence lesser the risk is – however, returns for such instruments can be lower. Lower the duration of the debt, lesser the probability of interest rate fluctuation and hence lesser the uncertainty of returns.

Volatility in Medium Duration Debt Funds

Debt funds are preferred by individuals who are not willing to invest in the highly volatile equity markets. A debt fund provides a steady but low-income, relative to equity. It is comparatively less volatile.

Tax Benefits in Medium Duration Debt Funds

In terms of taxation, debt funds score better than bank FDs. If you hold your investments for more than 3 years, you just need to pay only 20% capital gains tax (with indexation benefits). Since you take indexation benefit (that means adjusting the cost of your investment for inflation), your ‘real’ tax outgo will be far lower than the 20 percent. Be it in terms of liquidity, superior returns or tax benefits, debt mutual funds score over passive bank deposits.

TDS in Medium Duration Debt Mutual Funds

There is no TDS in debt funds. If your interest income exceeds Rs 10,000 a year, the bank will deduct 10.3% from this income and no more.

Do I need to invest in Medium Duration Debt mutual funds?

No. There is no need to. Among the available investment options,open-ended mutual funds are but one choice. You can choose them if they are suitable for your need.

Who issues medium duration debt mutual funds?

Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.

From where can I buy debt mutual funds?

One of the best ways to hedge against the small-cap volatility is to adopt a phased approach, also known as Systematic Investment Plan (SIP) approach. We are sure that you must be aware of SIP and its benefits. Buying in small quantity but buying regularly provides you with faster growth. On Groww.in, all transactions to and from AMC is done via BSE. When you decide to invest in a large cap mutual fund of your choice, you choose that mutual fund on the website and click ‘invest’. Following that, you are redirected to the BSE page where you make the payment. BSE then directs your money to the AMC managing your mutual fund. To be assured at your end, you can visit the individual AMC website after the payment. You would be able to see all your purchased units against your folio number.

How long does it take to start investing in debt mutual funds if I do not have a KYC?

It is not possible for any investor to start investing in mutual funds without having completed the KYC process. Under the Prevention of Money Laundering Act (PMLA), Know Your Customer (KYC) norms have been mandated to track the legality of funds used in an investment. KYC is a one-time process which every first-time mutual fund investor needs to follow, to be able to invest in a mutual fund. KYC process on Groww can be completed in 2-3 days. KYC can be completed online with the help of E-KYC or electronic KYC. E-KYC Aadhar (based on OTP) : Investor can use online KYC facility using just the aadhar card number and PAN number, by visiting the website and following the easy process. After entering relevant details like aadhar and PAN number, investor will receive an OTP and KYC will be completed instantly. However, one can invest only up to ₹50,000 per fund house per year under this method.

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Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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