Best Long Duration Funds

Fund Name
AUM
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3Y Returns
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Ratings
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Nippon India Nivesh Lakshya Fund Direct Plan IDCW Payout

Nippon India Nivesh Lakshya Fund Direct Plan IDCW Payout

Debt Long Duration Fund

₹7,843.93 Cr.

7.37%

0

Nippon India Nivesh Lakshya Fund Direct Plan IDCW Reinvestment

Nippon India Nivesh Lakshya Fund Direct Plan IDCW Reinvestment

Debt Long Duration Fund

₹7,843.93 Cr.

7.37%

0

Nippon India Nivesh Lakshya Fund

Nippon India Nivesh Lakshya Fund

Debt Long Duration Fund

₹7,843.93 Cr.

7.37%

0

Nippon India Nivesh Lakshya Fund Direct Plan Quarterly IDCW Reinvestment

Nippon India Nivesh Lakshya Fund Direct Plan Quarterly IDCW Reinvestment

Debt Long Duration Fund

₹7,843.93 Cr.

7.14%

0

Nippon India Nivesh Lakshya Fund Direct Plan Quarterly IDCW Payout

Nippon India Nivesh Lakshya Fund Direct Plan Quarterly IDCW Payout

Debt Long Duration Fund

₹7,843.93 Cr.

7.14%

0

Nippon India Nivesh Lakshya Fund Direct Plan Half Yearly IDCW Payout

Nippon India Nivesh Lakshya Fund Direct Plan Half Yearly IDCW Payout

Debt Long Duration Fund

₹7,843.93 Cr.

6.63%

0

Nippon India Nivesh Lakshya Fund Direct Plan Half Yearly IDCW Reinvestment

Nippon India Nivesh Lakshya Fund Direct Plan Half Yearly IDCW Reinvestment

Debt Long Duration Fund

₹7,843.93 Cr.

6.63%

0

Nippon India Nivesh Lakshya Fund Direct Plan Annual IDCW Payout

Nippon India Nivesh Lakshya Fund Direct Plan Annual IDCW Payout

Debt Long Duration Fund

₹7,843.93 Cr.

5.91%

0

Nippon India Nivesh Lakshya Fund Direct Plan Annual IDCW Reinvestment

Nippon India Nivesh Lakshya Fund Direct Plan Annual IDCW Reinvestment

Debt Long Duration Fund

₹7,843.93 Cr.

5.91%

0

ICICI Prudential Long Term Bond Fund

ICICI Prudential Long Term Bond Fund

Debt Long Duration Fund

₹844.55 Cr.

5.7%

0

ICICI Prudential Long Term Bond Fund Direct Plan Quarterly IDCW Payout

ICICI Prudential Long Term Bond Fund Direct Plan Quarterly IDCW Payout

Debt Long Duration Fund

₹844.55 Cr.

5.7%

0

ICICI Prudential Long Term Bond Fund Direct Plan Quarterly IDCW Reinvestment

ICICI Prudential Long Term Bond Fund Direct Plan Quarterly IDCW Reinvestment

Debt Long Duration Fund

₹844.55 Cr.

5.7%

0

Nippon India Nivesh Lakshya Fund Direct Plan Monthly IDCW Payout

Nippon India Nivesh Lakshya Fund Direct Plan Monthly IDCW Payout

Debt Long Duration Fund

₹7,843.93 Cr.

5.5%

0

Nippon India Nivesh Lakshya Fund Direct Plan Monthly IDCW Reinvestment

Nippon India Nivesh Lakshya Fund Direct Plan Monthly IDCW Reinvestment

Debt Long Duration Fund

₹7,843.93 Cr.

5.5%

0

Kotak Long Duration Fund

Kotak Long Duration Fund

Debt Long Duration Fund

₹91.36 Cr.

0%

0

SBI Long Duration Fund Direct Plan IDCW Payout

SBI Long Duration Fund Direct Plan IDCW Payout

Debt Long Duration Fund

₹1,931.20 Cr.

0%

0

SBI Long Duration Fund Direct Plan IDCW Reinvestment

SBI Long Duration Fund Direct Plan IDCW Reinvestment

Debt Long Duration Fund

₹1,931.20 Cr.

0%

0

HDFC Long Duration Debt Fund

HDFC Long Duration Debt Fund

Debt Long Duration Fund

₹3,111.25 Cr.

0%

0

HDFC Long Duration Debt Fund IDCW Direct Plan Payout

HDFC Long Duration Debt Fund IDCW Direct Plan Payout

Debt Long Duration Fund

₹3,111.25 Cr.

0%

0

HDFC Long Duration Debt Fund IDCW Direct Plan Reinvestment

HDFC Long Duration Debt Fund IDCW Direct Plan Reinvestment

Debt Long Duration Fund

₹3,111.25 Cr.

0%

0

Axis Long Duration Fund Direct Plan Quarterly IDCW Payout

Axis Long Duration Fund Direct Plan Quarterly IDCW Payout

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Aditya Birla Sun Life Long Duration Fund

Aditya Birla Sun Life Long Duration Fund

Debt Long Duration Fund

₹120.23 Cr.

0%

0

Axis Long Duration Fund Direct Plan Monthly IDCW Payout

Axis Long Duration Fund Direct Plan Monthly IDCW Payout

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Bandhan Long Duration Fund

Bandhan Long Duration Fund

Debt Long Duration Fund

₹86.90 Cr.

0%

0

Axis Long Duration Fund Direct Plan Annual IDCW Reinvestment

Axis Long Duration Fund Direct Plan Annual IDCW Reinvestment

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Axis Long Duration Fund

Axis Long Duration Fund

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Aditya Birla Sun Life Long Duration Fund Direct IDCW Payout Payout

Aditya Birla Sun Life Long Duration Fund Direct IDCW Payout Payout

Debt Long Duration Fund

₹120.23 Cr.

0%

0

Aditya Birla Sun Life Long Duration Fund Direct IDCW Reinvestment Reinvestment

Aditya Birla Sun Life Long Duration Fund Direct IDCW Reinvestment Reinvestment

Debt Long Duration Fund

₹120.23 Cr.

0%

0

Axis Long Duration Fund Direct Plan Quarterly IDCW Reinvestment

Axis Long Duration Fund Direct Plan Quarterly IDCW Reinvestment

Debt Long Duration Fund

₹304.68 Cr.

0%

0

UTI Long Duration Fund

UTI Long Duration Fund

Debt Long Duration Fund

₹92.55 Cr.

0%

0

UTI Long Duration Fund Direct Plan Quarterly IDCW Payout

UTI Long Duration Fund Direct Plan Quarterly IDCW Payout

Debt Long Duration Fund

₹92.55 Cr.

0%

0

UTI Long Duration Fund Direct Plan Quarterly IDCW Reinvestment

UTI Long Duration Fund Direct Plan Quarterly IDCW Reinvestment

Debt Long Duration Fund

₹92.55 Cr.

0%

0

UTI Long Duration Fund Direct Plan Half Yearly IDCW Payout

UTI Long Duration Fund Direct Plan Half Yearly IDCW Payout

Debt Long Duration Fund

₹92.55 Cr.

0%

0

UTI Long Duration Fund Direct Plan Half Yearly IDCW Reinvestment

UTI Long Duration Fund Direct Plan Half Yearly IDCW Reinvestment

Debt Long Duration Fund

₹92.55 Cr.

0%

0

Kotak Long Duration Fund Direct Plan IDCW Reinvestment

Kotak Long Duration Fund Direct Plan IDCW Reinvestment

Debt Long Duration Fund

₹91.36 Cr.

0%

0

Bandhan Long Duration Fund Direct Plan IDCW Payout

Bandhan Long Duration Fund Direct Plan IDCW Payout

Debt Long Duration Fund

₹86.90 Cr.

0%

0

UTI Long Duration Fund Direct Plan Annual IDCW Payout

UTI Long Duration Fund Direct Plan Annual IDCW Payout

Debt Long Duration Fund

₹92.55 Cr.

0%

0

Bandhan Long Duration Fund Direct Plan IDCW Reinvestment

Bandhan Long Duration Fund Direct Plan IDCW Reinvestment

Debt Long Duration Fund

₹86.90 Cr.

0%

0

UTI Long Duration Fund Direct Plan Annual IDCW Reinvestment

UTI Long Duration Fund Direct Plan Annual IDCW Reinvestment

Debt Long Duration Fund

₹92.55 Cr.

0%

0

Kotak Long Duration Fund Direct Plan IDCW Payout

Kotak Long Duration Fund Direct Plan IDCW Payout

Debt Long Duration Fund

₹91.36 Cr.

0%

0

UTI Long Duration Fund Direct Plan Flexi IDCW Payout

UTI Long Duration Fund Direct Plan Flexi IDCW Payout

Debt Long Duration Fund

₹0.00 Cr.

0%

0

SBI Long Duration Fund

SBI Long Duration Fund

Debt Long Duration Fund

₹1,931.20 Cr.

0%

0

UTI Long Duration Fund Direct Plan Flexi IDCW Reinvestment

UTI Long Duration Fund Direct Plan Flexi IDCW Reinvestment

Debt Long Duration Fund

₹0.00 Cr.

0%

0

Axis Long Duration Fund Direct Plan Monthly IDCW Reinvestment

Axis Long Duration Fund Direct Plan Monthly IDCW Reinvestment

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Axis Long Duration Fund Direct Plan Daily IDCW Reinvestment

Axis Long Duration Fund Direct Plan Daily IDCW Reinvestment

Debt Long Duration Fund

₹304.68 Cr.

0%

0

Axis Long Duration Fund Direct Plan Annual IDCW Payout

Axis Long Duration Fund Direct Plan Annual IDCW Payout

Debt Long Duration Fund

₹304.68 Cr.

0%

0

About Long Duration Mutual Fund

Long duration mutual funds are open ended mutual funds that invest mostly in government and corporate bonds with a longer residual maturity period. They invest in debt and money market instruments with a duration of more than 7 years. As per a SEBI mandate, the long-duration funds must choose bonds with an average maturity period of more than seven years. These funds invest in highly volatile government and corporate bonds and have the potential to deliver high returns along with higher risk for a medium-term financial goal. However, these funds are comparatively riskier than debt funds.

How Do Long Duration Funds Work?

Long duration funds fall within the category of debt funds, primarily directing their investments towards high-quality corporate borrowers for extended periods, typically exceeding 5 years.

Given their extended investment tenure, these funds inherently expose themselves to the entirety of the economic cycle, making them intrinsically riskier than other types of debt funds.

Features of Long Duration Mutual Funds

Long duration mutual funds are believed to have brilliant potential and the capacity to yield high returns. That said, these funds are highly volatile and unstable and are associated with increased risks. They cater to an investor’s financial goals which are long term in nature such as buying a house, a car, a child’s education (or) marriage, a retirement corpus, or anything else one may need for the future. A major part of investors’ money (about 65%) goes into equities as they are market instruments that perform well when the market is high and enables the investment corpus to be exceptional in the long term.

Advantages of Long Duration Mutual Funds

Knowing the risks involved, wise investors keep their money parked in mutual funds for long term investment. Long duration funds have certain unbeatable benefits that other market vehicles rarely provide:

  • Compared to debt funds, the long duration funds may earn a higher return.
  • These funds could help in achieving medium term goals.
  • Long duration funds typically yield higher returns compared to fixed deposits.
  • These funds have a probability of giving higher after tax returns for high income investors.
  • Provision of stability during market volatility is a plus to investing in long duration funds.
  • With long duration funds, investors can enable the diversification of portfolios.

Risk of Long Duration Mutual Funds

Long duration mutual funds have a longer horizon. They involve greater risk than short term funds as they will likely go through an entire business cycle. In comparison to medium and short duration funds, long duration funds pose a higher risk in interest rates due to changes in the business cycle and as they invest the bulk of the corpus in bonds. Rising interest scenarios and credit risk are a few factors which affect long duration funds. These funds may invest in both government and corporate bonds.

Factors To Consider Before Investing in Exchange Traded Funds

  1. Investment Goals: Long-duration funds can be instrumental in achieving medium-term financial objectives. Therefore, it’s crucial to strategise your investments for an extended period to realise substantial returns.
  2. Investment Horizon: Opt for long-duration funds with a time horizon spanning 3 to 5 years for the potential of attractive returns.
  3. Risk Profile: It’s important to acknowledge that long-duration funds carry a higher level of risk compared to many other debt funds. This heightened risk is primarily associated with susceptibility to interest rate fluctuations due to the fund’s investments in extended-duration securities.
  4. Return Potential: Long-duration funds have the potential to yield superior returns in a declining interest rate environment compared to medium-duration counterparts. It’s advisable to evaluate a fund’s performance by scrutinising its consistent returns over an extended period, typically ranging from 3 to 10 years.
    Choosing funds that have consistently outperformed their peers can be a sound investment strategy. Consider them if they have consistently surpassed benchmark rates of return across various timeframes.
  5. Expense Ratio: The expense ratio plays a pivotal role in determining your overall returns from the fund. It represents the fees charged by the fund house for managing various expenses associated with the debt fund. A high expense ratio can erode the Net Asset Value (NAV) of the fund, thereby diminishing your overall returns. Consequently, it’s prudent to opt for funds that boast a low expense ratio.
  6. Financial Metrics: To assess a debt fund’s suitability, you can delve into financial ratios such as standard deviation, Sharpe ratio, alpha, and beta, among others. Funds with high standard deviation and beta tend to be riskier propositions. On the other hand, debt funds featuring a higher Sharpe ratio are preferable, as they offer a more favourable risk-adjusted return on the portfolio.

Who Should Invest in Long Duration Mutual Funds?

Long-duration mutual funds are suitable for those investors who are susceptible to undergoing volatility for a short duration of time and stay invested for a long period of time. An investor could opt to invest in long-duration mutual funds if they can sit tight through the fluctuation in interest rates with a possible reward of high returns. These funds are focused on making the investor earn better and higher returns in the long run. It fits best for those who have financial goals in the far distant future, who think in decades, like 20 years or 30 years and know how much money they require as a corpus. These funds act as a good investment vehicle and are suitable for investors who are not looking for a fixed income stream.

Taxability of Long Duration Mutual Funds

The taxability of long duration mutual funds remains the same as how we tax debt funds. It is taxed as per the investor’s income tax slab after a holding period of 36 months. If the holding period exceeds 36 months then the fund is taxed at 20% with an indexation benefit. 

As you would know, the indexation benefit enables investors to inflate the purchase price to account for inflation adjustment. Tax liability on these funds would completely depend on one’s income tax slab. Investors should be keen to earn a tax-efficient income as compared to fixed deposits if they fall under the highest income tax slab rate.

When an investor earns dividends on their long duration mutual fund, the dividends are considered as a part of their taxable income and are subject to taxation at the applicable rate based on their income tax bracket. Also, there is a 10% TDS on the dividend amount if it exceeds 5,000 in a financial year.

How To Invest in Long Duration Funds?

Investing in Long Duration Mutual Funds via your Angel One account is a hassle-free process. Follow these steps to get started:

Step 1: Initiate the process by logging in to your Angel One account using your registered mobile number. Complete the OTP validation and input your MPIN.

Important Note: If you don’t currently possess a Demat account with Angel One, you can promptly open one by undergoing the KYC procedure and providing the necessary documentation.

Step 2: Now, let’s focus on selecting the ideal fund for long-term growth, tailored to your financial goals and risk tolerance. Within the Angel One app’s mutual fund section, consider the following aspects:

  • Identify the specific fund you wish to invest in or take guidance from Angel One’s recommended funds across different categories.
  • Delve into the fund’s historical performance, tax implications, portfolio sectors, and underlying stocks.
  • Utilise the provided calculator to estimate potential returns.
  • Gauge the fund’s risk level and align it with your own risk tolerance.
  • Examine the fund’s ratings from reputable agencies, typically on a scale of 1 to 5.
  • Factor in the fund’s expense ratio to understand the associated costs.

Step 3: Once you’ve decided on the long-term fund(s) that suit your objectives, navigate to your Angel One account. Access the Mutual Funds section and locate your chosen fund. Given the long-term nature of this investment, exercise caution during this stage, considering the following:

  • Determine whether you want to invest a lump sum amount or opt for a systematic monthly investment plan (SIP).
  • Specify your desired investment amount and choose your preferred payment method. While UPI is recommended, you can also use net banking.
  • If you’ve opted for the SIP route, establish a mandate to ensure seamless future instalments.

Top 5 Long Duration Funds to Invest In

Name of the Fund AUM (in crore) Minimum
Investment
(in )
3Y CAGR % 5Y CAGR %
ICICI Prudential Long Term Bond Fund 629.94 5,000 4.29 7.67
Nippon India Nivesh Lakshya Fund 5119.61 5,000 5.50 NA
SBI Long Duration Fund 687.43 5,000 NA NA
HDFC Long Duration Debt Fund 871.07 100 NA NA
Aditya Birla Sun Life Long Duration Fund 58.26 100 NA NA

ICICI Prudential Long Term Bond Fund

As of March 31, 2023 the fund has a portfolio composition of 93.36% in government securities and 3.46% in TREPS. The expense ratio of the fund is 1.50% and 2.02% under direct and regular investment mode plans, respectively. The scheme is being managed by Manish Banthia since September 2013 and Anuj Tagra since December 2020. The fund possesses a moderate risk level and currently has no exit load conditions. Investors should please note that the benchmark of the scheme has changed to NIFTY Long Duration Debt Index A-III with effect from April 1, 2022.

Nippon India Nivesh Lakshya Fund

This fund falls under the debt category of mutual funds and as of March 31, 2023 the fund has a portfolio composition of 75.69% in government bonds and 0.94% in TREPS. The expense ratio of the fund is 0.25% and 0.53% under direct and regular investment mode plans, respectively. The scheme is being managed by Pranay Sinha since March 2021. The fund possesses a moderate risk level and currently has exit load of 1% if redeemed or switched out on or before completion of 12 months and no exit load if redeemed or switched out after completion after 12 months from the date of allotment of units. The benchmark of the scheme is the CRISIL Long Duration Fund AIII Index.

SBI Long Duration Fund

This fund falls under the debt category of mutual funds and currently has 113.92% of its investments in Government securities, out of which 1.92% is in TREPS. The expense ratio of the fund is 0.22% and 0.67% under direct and regular investment mode plans respectively. The scheme is being managed by Rajeev Radhakrishnan and Mohit Jain since December 2022. The fund possess a moderate risk level and currently has exit load of 1% if redeemed or switched out on or before completion of 12 months and no exit load if redeemed or switched out after completion after 12 months from the date of allotment of units. The benchmark of the scheme is the CRISIL Long Duration Fund AIII Index.

HDFC Long Duration Debt Fund

This fund is a relatively new entrant to the debt category of mutual funds and currently has 94.66% of its investments in government securities. The expense ratio of the fund is 0.25% and 0.60% under direct and regular investment plans, respectively. The scheme has been managed by Shobit Mehrotra since January 2023. The fund possesses a moderate high risk level and currently has no exit load conditions. The benchmark of the Scheme is the Nifty Long Duration Debt Index – A-III.

Aditya Birla Sun Life Long Duration Fund

Aditya Birla Sun Life Long Duration Fund was launched in July 2022 as a debt category mutual fund. About 89.40% of its investments are in government securities where there are only three issuers, namely Government of India, UTTAR PRADESH SDL, and LIC Housing Finance Limited. The expense ratio of the fund is 0.41% and 1.07% under direct and regular investment plans respectively. The scheme is being managed by Mr. Harshil Suvarnkar, Mr. Dhaval Joshi & Mr. Bhupesh Bameta since August 08, 2022, November 21, 2022 & January 25, 2023 respectively. The fund possesses a moderate high risk level and currently has no exit load conditions. The benchmark of the Scheme is Nifty Long Duration Debt Index – A-III.

Mutual Funds Calculators

Long Duration Funds FAQs

Are long duration mutual funds highly risky?

Every type of mutual fund comes with its own set of risks. Long duration funds also have some risk attached to them. However, in comparison to other types of funds, debt funds are relatively safe.

Should I invest in long duration mutual funds?

Yes, if you are an investor who is looking for diversification of your portfolio and needs a debt fund, you could venture into investing in long duration fund if it satisfies your requirements.

What are the expected returns of long duration mutual funds?

The returns that one can expect as an investor of long duration mutual funds are like that of a debt fund. An investor might even experience a higher yield of return subject to market performance and volatility. That said, these funds could give better returns than traditional fixed deposits in the long run.

What are the risks involved in investing in long duration mutual funds?

The risks of investing in long duration mutual funds are like that of traditional debt funds. As fund managers select bonds with a Macaulay duration of more than 7 years to invest for long-duration funds, accordingly the risk adjusted returns would be optimal.

Are long duration mutual funds taxable?

Yes, they are taxable. Short term capital gains tax is applicable for a holding period of up to 36 months and beyond that duration long term gains tax is applicable with an indexation benefit.

How much money should I invest in long duration mutual funds?

This is very subjective and varies from person to person depending on one’s risk appetite. Ideally, invest that amount initially that feels comfortable and reevaluate it on a periodic basis depending on your requirements.