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Long Duration Funds

The best long term mutual funds are market vehicles that keep the investor’s money parked in market instruments for longer durations, typically for about 7 to 10 years. For example, selecting a Systematic Investment Plan that invests in the best long term mutual fund for ten years will make your investments compound over time as per the performance of the stocks the fund invests in over 10 years. View More

Typically, it is better not to pull out of long term mutual funds once you start to reap maximum benefits. Long term mutual funds are an investor-favourite because they help achieve long term financial goals, like children’s education.

Best Long Duration Funds

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Who Should Invest in Long Term Funds?

Long term mutual funds are best suited for investors who wish to accomplish their financial goals of the distant future. Think in decades: how much would you need your money to have grown for 10 years? Additionally, if you fall in any of the categories listed below, it is time you start searching for the best mutual funds to invest in for long term. View More

Longer Investment Horizon
Are you planning to park your money in the market for the long term? Mutual funds are the best option. Long term mutual funds are the answer for future financial goals like buying a house, a car, a child’s education or marriage, retirement corpus, or anything else you need for the future.

Need High Returns, But Not Right Now
Long-time mutual funds invest a major part of your money (about 65%) into equities. This means the fund typically yields higher returns because equities are market instruments that perform well when the market is high. In the long term, the investment corpus grows exceptionally well.

Not Looking for Fixed Returns
Since best long term mutual funds invest majorly in equities, there is no chance of receiving a fixed return (fixed returns can be set up by selecting a debt fund scheme instead of investing it in equities). If you do not need a “salary” from investment, then long term mutual funds are a great market vehicle to still make your money grow in the longer run.

Features of Long Term Funds

Before selecting a long term mutual fund to invest in, consider the following features to ensure that you are making an informed decision. View More

Fund Management
A fund manager typically manages mutual funds. Especially in the case of long term mutual funds, the fund manager makes the market decisions for you so that your money stays invested in stocks that are performing well. This is good for the long term.

Mode of Investment
You have two options to get started with long term mutual funds:

Lump-sum investment, where you put all your money at once into a mutual fund.
Systematic Investment Plan where you designate a fixed amount of money at regularly decided intervals to put into a mutual fund.
Market Instrument
Long term mutual funds invest in equities, meaning that they are inherent with market risks. With that said, they do yield higher returns than anything else and may also absorb the risk over longer periods.

Taxability of Long Term Funds

Long term funds in mutual funds are taxed a certain specific way. There are two categories of these funds: equity-oriented (where at least 65% of the corpus is invested in equities) and all the other kinds of investments. View More

For funds that invest in equities, the profits are liable for capital gains tax:

Short-term capital gains tax does not apply to long term funds, as in this case, the investment horizon is longer than one year.
Long term capital gains tax is levied at a rate of flat 10% without indexation benefits if you stay invested in long term funds for more than a year. However, for the first ₹1 lakh gain, the long term funds enjoy an exemption in taxation. Post that, the usual taxation regime applies.
Investors prefer investing in long term mutual funds because of the taxation benefits they provide: especially those investors that pay tax in the higher slabs of income tax.

Risks Involved With Long Term Funds

f you are looking for long term mutual funds to invest in, take some time to evaluate the risks associated with them. Here is a list of potential risks you need to be aware of: View More

Risk of Losses
Investing money in the market anyway constitutes risks. However, with long term mutual funds, the risks are higher. This is because they invest in equities. These market instruments are sensitive to market behaviour and may fluctuate wildly depending on the performance of the stocks they invest in. Make sure you understand the stocks your fund invests in before putting money into it.

No Guarantee
Mutual funds do not guarantee high returns. For example, if your fund went into a loss for one year, and the very next year, it performed exceptionally well. If you average the fund’s performance over the term of investment, the yield is not very impressive at the end.

Payout at Current NAV
You have the option of pulling out of long term mutual funds. However, the redemption you receive will be per the prevailing Net Asset Value of the entire fund. If the fund is making losses, it will reflect on your corpus in the same proportion.

Advantages of Long Term Mutual Funds

Despite the risks involved, smart investors still keep their money parked in the best MF for long term investment. They have certain unbeatable benefits that other market vehicles rarely provide: View More

Absorption of Market Risks
The equities market is fraught with risks. The performance of stocks that your fund invests in keeps fluctuating. However, in the longer investment horizon, these fluctuations stop being significant. The average performance of a long term fund is still better than most.

Big Corpus
At the end of the investment term, your money will have grown into a sizeable amount that can absorb the risk of inflation as well. You can utilize this corpus for whatever dreams you started investing in. The performance of equities is generally very good over longer periods.

Small Investment
You can start with a long term mutual fund SIP investment with as little as ₹500 a month. The benefit of compounding makes the returns better than fixed asset investments.

Popular Long Duration Funds

  • Fund Name
  • Min SIP Investment Amt
  • AUM (Cr.)
  • 3Y Return

PGIM India Midcap Opportunities Fund – Dir Growth is an Mid Cap scheme that was launched on 02-12-13 and is currently under the management of our experienced fund manager Aniruddha Naha. With an impressive AUM of ₹9,261 Crores, this scheme's latest NAV is ₹53.3 as of 18-08-23.

PGIM India Midcap Opportunities Fund – Dir Growth scheme has delivered a return performance of 6.8% in the last 1 year, 32.5% in the last 3 years, and an 18.8% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Mid Cap funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹9,261
  • 3Y Return
  • 6.8%

Bank of India Small Cap Fund – Direct Growth is an Small Cap scheme that was launched on 19-12-18 and is currently under the management of our experienced fund manager Dhruv Bhatia. With an impressive AUM of ₹595 Crores, this scheme's latest NAV is ₹34.1 as of 18-08-23.

Bank of India Small Cap Fund – Direct Growth scheme has delivered a return performance of 21.9% in the last 1 year, 38.1% in the last 3 years, and an 30.1% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Small Cap funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹595
  • 3Y Return
  • 21.9%

Canara Robeco Small Cap Fund – Direct Growth is an Small Cap scheme that was launched on 15-02-19 and is currently under the management of our experienced fund manager Shridatta Bhandwaldar. With an impressive AUM of ₹7,145 Crores, this scheme's latest NAV is ₹30.2 as of 18-08-23.

Canara Robeco Small Cap Fund – Direct Growth scheme has delivered a return performance of 16% in the last 1 year, 40.1% in the last 3 years, and an 27.8% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Small Cap funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹7,145
  • 3Y Return
  • 16%

Nippon India Nivesh Lakshya Fund – Direct Growth is an Long Duration scheme that was launched on 06-07-18 and is currently under the management of our experienced fund manager Pranay Sinha. With an impressive AUM of ₹6,280 Crores, this scheme's latest NAV is ₹15.3784 as of 18-08-23.

Nippon India Nivesh Lakshya Fund – Direct Growth scheme has delivered a return performance of 8.5% in the last 1 year, 3.7% in the last 3 years, and an 8.8% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Long Duration funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹6,280
  • 3Y Return
  • 8.5%

Quant Infrastructure Fund – Direct Growth is an Sectoral / Thematic scheme that was launched on 07-01-13 and is currently under the management of our experienced fund manager Vasav Sahgal. With an impressive AUM of ₹916 Crores, this scheme's latest NAV is ₹26.6585 as of 18-08-23.

Quant Infrastructure Fund – Direct Growth scheme has delivered a return performance of 12.8% in the last 1 year, 43.4% in the last 3 years, and an 16.5% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Sectoral / Thematic funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹916
  • 3Y Return
  • 12.8%

Quant Mid Cap Fund – Direct Growth is an Mid Cap scheme that was launched on 07-01-13 and is currently under the management of our experienced fund manager Sanjeev Sharma. With an impressive AUM of ₹2,531 Crores, this scheme's latest NAV is ₹170.2542 as of 18-08-23.

Quant Mid Cap Fund – Direct Growth scheme has delivered a return performance of 24.9% in the last 1 year, 39% in the last 3 years, and an 17.5% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Mid Cap funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹2,531
  • 3Y Return
  • 24.9%

AXIS Small Cap Fund – Direct Growth is an Small Cap scheme that was launched on 29-11-13 and is currently under the management of our experienced fund manager Anupam Tiwari. With an impressive AUM of ₹15,025 Crores, this scheme's latest NAV is ₹83.73 as of 18-08-23.

AXIS Small Cap Fund – Direct Growth scheme has delivered a return performance of 20.1% in the last 1 year, 35.2% in the last 3 years, and an 24.4% since its launch. With a minimum SIP investment of just ₹100, this scheme offers a great investment opportunity for those looking to invest in Small Cap funds.

  • Min SIP Investment Amt
  • ₹100
  • AUM (Cr.)
  • ₹15,025
  • 3Y Return
  • 20.1%

SBI Contra Fund – Direct Growth is an Contra scheme that was launched on 02-01-13 and is currently under the management of our experienced fund manager Dinesh Balachandran. With an impressive AUM of ₹13,460 Crores, this scheme's latest NAV is ₹285.779 as of 18-08-23.

SBI Contra Fund – Direct Growth scheme has delivered a return performance of 23.5% in the last 1 year, 37.7% in the last 3 years, and an 15.9% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Contra funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹13,460
  • 3Y Return
  • 23.5%

PGIM India Flexi Cap Fund – Dir Growth is an Flexi Cap scheme that was launched on 04-03-15 and is currently under the management of our experienced fund manager Aniruddha Naha. With an impressive AUM of ₹5,972 Crores, this scheme's latest NAV is ₹31.25 as of 18-08-23.

PGIM India Flexi Cap Fund – Dir Growth scheme has delivered a return performance of 8.9% in the last 1 year, 23.6% in the last 3 years, and an 14.4% since its launch. With a minimum SIP investment of just ₹100, this scheme offers a great investment opportunity for those looking to invest in Flexi Cap funds.

  • Min SIP Investment Amt
  • ₹100
  • AUM (Cr.)
  • ₹5,972
  • 3Y Return
  • 8.9%

Quant Large and Mid Cap Fund – Direct Growth is an Large & Mid Cap scheme that was launched on 07-01-13 and is currently under the management of our experienced fund manager Sanjeev Sharma. With an impressive AUM of ₹994 Crores, this scheme's latest NAV is ₹86.3316 as of 18-08-23.

Quant Large and Mid Cap Fund – Direct Growth scheme has delivered a return performance of 16.8% in the last 1 year, 27.3% in the last 3 years, and an 18.3% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Large & Mid Cap funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹994
  • 3Y Return
  • 16.8%

Frequently Asked Questions

What is the taxation on Long Duration Funds return?

Investments in Long Duration Funds are for a minimum of 3 years. The resulting returns are referred to as LTCGs or long-term capital gains. These are taxable at 20 regardless of the income tax rate. Long-duration funds capital gains tax considers indexation and helps investors reduce their overall tax liability.

Can Long Duration Funds lose money?

Yes, bond funds can lose money based on interest rate fluctuations. The size of the gains or losses also depends on the portfolio’s composition.

Are Long Duration Funds risky?

Long duration funds have a long horizon. It means that investments will likely go through an entire business cycle and therefore involve greater risk than short-term funds. These funds pose a higher risk in case of changes in interest rates if there is any reversal of the business or economic cycle.

Who Are These Funds Suited For?

Several Investors look for stable returns to reach a long-term financial goal, such as buying a house, saving for retirement, or financing their child’s education. Long-term funds are open-ended investments that invest in bonds (generally in government and corporate bonds) with longer maturities. These long-duration funds come with a higher risk and can offer higher returns than medium-term funds in a falling interest rate scenario. These funds do not have a predetermined maturity date, and the lack of a lock-in period can lead to high liquidity. 

Can you sell Long Duration Funds at any time?

Yes, you can sell long-duration funds after doing considerable research on their potential gain or loss in returns at any time as needed.

Where do Long Duration Funds invest?

Long-duration funds don’t have specific regulations on the type of borrowers they can lend to. However, most of the funds in this category lend themselves to high-end, secure, or quality borrowers.

What returns can I expect with a Long Duration Funds investment?

Long Duration Funds have averaged returns of 3.76% per year, whereas their annualized returns over 3 and 5 years are 6.15% and 6.1%, respectively.

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