Medium Duration Debt Mutual Fund

The fund manager invests in a blend of fixed-income securities with maturities averaging between 3 and 4 years. This strategy enables the fund to capture accrual income (interest) and capital gains in a scenario where interest rates are falling, as bond prices typically rise when rates decline.

Although they carry a higher interest rate sensitivity than liquid or short-term funds, these funds are typically invested in high-credit-rated instruments, thereby keeping credit risk relatively low. However, investors must be comfortable with short-term volatility due to changes in the interest rate environment.

Medium Duration Funds are ideal for:

• Investors with a 3- to 4-year investment horizon
• Individuals planning for medium-term financial goals like a car purchase, home down payment, child's education, or vacation
• Those looking to earn better returns than FDs or savings accounts
• Investors seeking tax-efficient returns over the long term (held > 3 years)

These funds are particularly well-suited for a declining interest rate cycle, where bond prices appreciate, offering potential capital gains in addition to interest income.

• Better Return Potential: Typically, 6% to 8% p.a., depending on market movements
• Moderate Risk Profile: Slightly higher than short-term debt funds but lower than long-duration or equity funds
• Ideal for Medium-Term Goals: Aligns well with goals in the 3–4 year range
• Interest Rate Opportunity: Potential to benefit in falling rate scenarios
• Tax Efficiency: Investments held over 3 years qualify for LTCG with indexation benefits, reducing taxable gains
• Diversified Portfolio: Exposure to a broad range of high-quality debt instruments
• No Lock-in Period: Flexibility to exit when needed, though a longer horizon is recommended for optimal performance

• Ideal Investment Horizon: 3–4 years
• Risk Level: Moderate (Interest rate risk > Credit risk)
• Returns: Approx. 6%–8% annually (market-dependent)
• Liquidity: High, with typical T+1 or T+2 redemption
• Lock-in Period: None
• Taxation: Debt fund taxation rules (STCG < 3 yrs, LTCG > 3 yrs with indexation)