Best Long Duration Mutual Funds in India 2026: Top 10 & Guide
What Long Duration mutual funds are, who should invest, key risks, and the top 10 funds with returns and risk data.
Long duration mutual funds are debt funds that hold securities with long maturities, mainly government securities and high-rated corporate bonds. They tend to do best when interest rates fall. This guide covers who should invest, benefits, risks, and the top 10 long duration funds from our data.
Key takeaways
- Long duration funds invest in government securities, corporate bonds and high-rated NCDs with long maturities.
- They perform best when interest rates are falling or expected to stay low.
- Rising rates push bond prices down, and short-term volatility is possible.
- They suit investors seeking interest income, diversification and a longer holding period.
- The top 10 funds below are ranked by an internal score, with return and risk numbers shown.
What are long duration mutual funds?
A long duration fund is a debt fund that invests in debt securities with a long maturity period. It primarily holds government securities, corporate bonds and high-rated non-convertible debentures. The aim is to invest in secure debt instruments with long maturities, helping protect capital from business cycles. These funds do well when interest rates are expected to decline or stay low, because bond prices rise as rates fall.
Who should invest in long duration mutual funds?
- Investors seeking a lower-risk option than equity.
- Investors wanting fixed income in the form of interest.
- Investors who want to diversify with debt funds.
- Investors who expect interest rates to fall or remain low.
What should you consider before investing?
- Goals and risk profile: they suit money you can park for a longer term. Lower risk usually means lower returns.
- Interest rate impact: performance tends to be strongest when rates decline, so consider the rate outlook.
- Fund performance: compare with peers and the benchmark, and check the manager's track record.
- Costs: the expense ratio, exit load and transaction costs affect returns.
Advantages of long duration mutual funds
- Diversification across asset classes.
- Stability and interest income, as long-maturity securities are shielded somewhat from business cycles.
- Lower credit risk from holding government-backed securities and highly rated corporate debt.
Risks of long duration mutual funds
- Interest rate risk: a rise in rates lowers bond prices and can hurt returns.
- Short-term volatility: interest rate swings can make performance erratic in the near term.
How are Long Duration mutual funds taxed?
Gains from Long Duration funds are subject to tax on gains, with the rules depending on the type of debt fund and the date of purchase. The rates and holding-period rules depend on the fund type and can change, so check the current rules or speak to a tax advisor before you invest.
Top 10 Long Duration mutual funds ranked by an internal score
These are the top 10 Long Duration funds from our data, ranked by Invo Wealth's internal fund-quality score. The score itself is not shown, only the return and risk numbers behind it. A "--" means the fund has not completed that period or the data is unavailable.
Returns across 6 months to 5 years
Performance data as of 5 September 2026.
| Fund | 6M CAGR | 1Y CAGR | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|
| Aditya Birla Sun Life Long Term Fund | 3.24% | 3.05% | 6.05% | -- |
| Nippon India Nivesh Lakshya Long Term Fund | 3.84% | 2.49% | 6.05% | 5.61% |
| SBI Long Term Fund | 2.15% | 2.24% | 5.73% | -- |
| ICICI Prudential Long Term Fund | 2.65% | 2.65% | 6.15% | 4.93% |
| HDFC Long Term Fund | 2.52% | 2.05% | 5.58% | -- |
| Axis Long Term Fund | 2.61% | 2.21% | 5.42% | -- |
| BANDHAN LONG TERM FUND | 4.18% | 3.50% | -- | -- |
| Franklin India Long Term Fund | 3.42% | 4.40% | -- | -- |
| UTI Long Term Fund | 1.00% | 1.18% | 4.61% | -- |
| Kotak Long Term Fund | 3.79% | 2.33% | -- | -- |
Risk and consistency metrics
| Fund | ISIN | Volatility | Max drawdown (3Y) | Sortino ratio |
|---|---|---|---|---|
| Aditya Birla Sun Life Long Term Fund | INF209KB14J9 | 3.71% | -3.77% | -0.36 |
| Nippon India Nivesh Lakshya Long Term Fund | INF204KB1ZB0 | 4.63% | -5.38% | -0.28 |
| SBI Long Term Fund | INF200KA13T1 | 4.56% | -4.74% | -0.39 |
| ICICI Prudential Long Term Fund | INF109K01365 | 3.84% | -4.15% | -0.31 |
| HDFC Long Term Fund | INF179KC1EW1 | 5.08% | -6.25% | -0.39 |
| Axis Long Term Fund | INF846K015L0 | 5.03% | -5.95% | -0.43 |
| BANDHAN LONG TERM FUND | INF194KB1HV8 | 4.82% | -4.67% | -1.01 |
| Franklin India Long Term Fund | INF090I01XV3 | 4.19% | -4.42% | -0.88 |
| UTI Long Term Fund | INF789F1AXS1 | 4.80% | -6.43% | -0.69 |
| Kotak Long Term Fund | INF174KA1RC2 | 5.26% | -6.35% | -1.22 |
Long duration funds can swing with interest rates, so read the volatility and drawdown columns before the CAGR figures.
How to invest in Long Duration mutual funds
You can invest in these funds using the Invo Wealth app. Sign up, get complete portfolio insights and start investing in mutual funds that actually suit you.
Conclusion
Long duration funds suit patient investors who expect stable or falling interest rates. Watch for rate risk and check costs before investing.
Frequently asked questions
What is a long duration mutual fund?
It is a debt fund that invests in debt securities with long maturities, mainly government securities, corporate bonds and high-rated non-convertible debentures.
When do long duration funds perform best?
When interest rates are declining or expected to stay low, because bond prices rise as rates fall.
What are the risks of long duration funds?
Interest rate risk is the main one, as rising rates push bond prices down. They can also be volatile in the short term.
How are long duration funds taxed?
They are taxed like other debt funds: gains are added to your income and taxed at the applicable rate regardless of the holding period, subject to the rules in force.
How can I invest in long duration mutual funds?
You can invest through a SIP or a lump sum. To invest in these funds, you can use the Invo Wealth app: sign up, get portfolio insights and start investing.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. This article is for education only and is not investment advice. Past performance does not guarantee future returns. Invo Wealth is an AMFI-registered mutual fund distributor (ARN-368528).