Best Medium to Long Duration Funds 2026: Top 10 & Guide
What Medium to Long Duration mutual funds are, who should invest, key risks, and the top 10 funds with returns and risk data.
Medium to long duration funds are debt funds that hold securities with an average maturity of 4 to 7 years. They are more sensitive to interest rates than shorter funds but can earn more. This guide covers who should invest, benefits, risks, and the top 10 medium to long duration funds from our data.
Key takeaways
- These open-ended debt funds hold securities with an average maturity of 4 to 7 years, typically corporate debt.
- Their longer maturity makes them more sensitive to interest rate moves, with potential for higher returns.
- They suit moderate risk investors with a 3 to 5 year horizon who want fixed income.
- Main risks are interest rate, credit, market and liquidity risks.
- The top 10 funds below are ranked by an internal score, with return and risk numbers shown.
What are medium to long duration mutual funds?
A medium to long duration fund is an open-ended debt fund that invests in debt securities with an average maturity of 4 to 7 years. It typically holds corporate debt instruments with a mix of maturities. Because the maturity is longer than that of short duration funds, these funds are more susceptible to interest rate fluctuations but also have the potential to generate higher returns.
Who should invest in medium to long duration mutual funds?
- Investors willing to take moderate risk.
- Investors with a horizon of 3 to 5 years.
- Investors seeking fixed income from interest.
- Investors with a clear outlook on future interest rates and economic trends, since these funds are sensitive to both.
What should you consider before investing?
- Goals and horizon: know whether you want wealth, savings or income, and plan to stay for 3 to 5 years.
- Interest rate impact: changes in rates affect bond prices and fund performance, so follow the rate trajectory.
- Fund details: check past performance, average maturity, asset allocation and the fund manager's track record.
- Costs and tax: compare expense ratio, exit load and transaction charges, and check the tax implications.
Advantages of medium to long duration mutual funds
- Potential for higher returns than shorter-maturity debt funds.
- Diversification by adding debt to a portfolio.
- Fixed income through interest.
- Lower volatility and lower risk than equity funds.
Risks of medium to long duration mutual funds
- Interest rate risk: they tend to do well when rates fall or are expected to fall, and bond prices drop when rates rise.
- Credit risk: the funds mainly hold highly rated corporate debt, but defaults can still occur.
- Market risk: macroeconomic factors, geopolitics and regulation can affect performance.
- Liquidity constraints: some securities can be hard to trade in volatile markets.
How are Medium to Long Duration mutual funds taxed?
Gains from Medium to 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 Medium to Long Duration mutual funds ranked by an internal score
These are the top 10 Medium to 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 |
|---|---|---|---|---|
| Bandhan Medium to Long Term Fund | 6.93% | 6.09% | 7.29% | 5.99% |
| ICICI Prudential Medium to Long Term Fund | 5.15% | 4.80% | 6.93% | 5.92% |
| BANK OF INDIA CONSERVATIVE HYBRID FUND - Growth | 3.70% | 3.58% | 6.30% | 9.32% |
| UTI Medium to Long Term Fund | 4.22% | 3.90% | 6.03% | 8.18% |
| BANK OF INDIA CONSERVATIVE HYBRID FUND | 3.29% | 3.24% | 5.90% | 9.02% |
| SBI MEDIUM TO LONG TERM FUND | 4.80% | 4.39% | 6.27% | 5.55% |
| LIC MF Medium to Long Term Fund | 4.61% | 4.55% | 6.48% | 5.54% |
| Franklin India Medium to Long Term Fund | 5.03% | 4.94% | -- | -- |
| Kotak Medium to Long Term Fund | 4.98% | 4.25% | 6.23% | 5.14% |
| Aditya Birla Sun Life Medium to Long Term Fund | 3.66% | 3.55% | 5.86% | 5.13% |
Risk and consistency metrics
| Fund | ISIN | Volatility | Max drawdown (3Y) | Sortino ratio |
|---|---|---|---|---|
| Bandhan Medium to Long Term Fund | INF194K01HF5 | 1.25% | -0.60% | 0.38 |
| ICICI Prudential Medium to Long Term Fund | INF109K01BO8 | 2.38% | -1.73% | -0.04 |
| BANK OF INDIA CONSERVATIVE HYBRID FUND - Growth | INF761K01397 | 4.71% | -4.22% | -0.20 |
| UTI Medium to Long Term Fund | INF789F01406 | 2.39% | -1.73% | -0.57 |
| BANK OF INDIA CONSERVATIVE HYBRID FUND | INF761K01462 | 4.71% | -4.31% | -0.31 |
| SBI MEDIUM TO LONG TERM FUND | INF200K01594 | 2.24% | -1.50% | -0.47 |
| LIC MF Medium to Long Term Fund | INF767K01923 | 2.35% | -1.64% | -0.33 |
| Franklin India Medium to Long Term Fund | INF090I01XD1 | 2.24% | -1.75% | -1.37 |
| Kotak Medium to Long Term Fund | INF174K01EM0 | 2.59% | -1.96% | -0.42 |
| Aditya Birla Sun Life Medium to Long Term Fund | INF209K01579 | 2.71% | -2.05% | -0.59 |
Check the drawdown column to see how each fund coped when rates rose.
How to invest in Medium to 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
Medium to long duration funds can add steady interest income for investors who accept rate sensitivity. Match your horizon to the fund's average maturity.
Frequently asked questions
What is a medium to long duration fund?
It is an open-ended debt fund that invests in debt securities with an average maturity of 4 to 7 years, mainly corporate debt.
Who should invest in medium to long duration funds?
Investors with moderate risk tolerance and a 3 to 5 year horizon who want fixed income from interest and have a clear view on interest rates.
What are the main risks?
Interest rate risk, credit risk, market risk and liquidity constraints. These funds tend to do well when rates fall and struggle when rates rise.
How are medium to 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 medium to 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).