Medium Duration Funds
Last Updated on 12 May 2026
3 Year Average Returns
6.95%
Funds on Anand Rathi
43
Medium Duration Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| Aditya Birla SL Medium Term Plan (IDCW) | 8.43% | 9.55% | 11.83% |
| Aditya Birla SL Medium Term Plan (G) | 8.31% | 9.55% | 11.83% |
| Aditya Birla SL Medium Term Plan (IDCW-Q) | 8.31% | 9.55% | 11.83% |
| Aditya Birla SL Medium Term Plan (IDCW-H) | 8.31% | 9.55% | 11.83% |
| Nippon India Medium Duration Fund (IDCW) | 7.22% | 7.58% | 8.87% |
| Nippon India Medium Duration Fund (G) | 7.22% | 7.58% | 8.87% |
| Nippon India Medium Duration Fund (IDCW-Q) | 7.22% | 7.58% | 8.87% |
| ICICI Pru Medium Term Bond Fund - Regular (IDCW-Q) | 6.51% | 7.55% | 6.67% |
| AXIS Strategic Bond Fund (IDCW-Q) | 5.88% | 7.47% | 6.60% |
| AXIS Strategic Bond Fund (IDCW-H) | 5.87% | 7.47% | 6.60% |
| AXIS Strategic Bond Fund (G) | 5.87% | 7.47% | 6.59% |
| ICICI Pru Medium Term Bond Fund - Regular (G) | 6.51% | 7.49% | 6.59% |
| Kotak Medium Term Fund (G) | 6.12% | 7.55% | 6.37% |
| Kotak Medium Term Fund (IDCW-Standard) | 6.12% | 7.55% | 6.37% |
| SBI Medium Duration Fund - Regular (IDCW) | 5.04% | 6.98% | 6.15% |
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What Are Medium Duration Fund?
A medium duration fund is a type of debt mutual fund that invests primarily in fixed-income securities such as corporate bonds, G-secs (Government Securities), Treasury bills (T-bills), and money market instruments – with a maturity of 3 to 4 years.
The term "Macaulay duration" is often used in this context—it represents the weighted average time an investor must wait to receive the fund's cash flows. For medium duration funds, this is typically between 3 and 4 years. This unique feature of these funds (investment horizon) makes them ideal for investors who can stay invested for a medium-term period.
How Does Medium Duration Fund Work?
A medium duration debt fund pools money from multiple investors and diversifies in an investment portfolio of debt instruments. As per SEBI regulations, the fund manager shall invest a maximum in debt and fixed-income securities.
To make an investment, investors can choose between two modes: Lump Sum Investment (one-time amount) or Systematic Investment Plan (SIP) at regular intervals. For medium duration funds, the minimum SIP starts as low as ₹100, while the minimum lump sum can be around ₹500-1,000.
Benefits Of Medium Duration Fund
Medium duration debt funds can be an ideal option for those investors looking for a balance between risk and returns over a medium-term horizon. Here are the key benefits:
Balanced Risk and Return
These funds have lower risk than pure equity funds, provide competitive returns while managing interest rate risk. Thus, investors with a moderate risk appetite could find them a suitable option to invest.
Diversification
Medium duration funds invest across government bonds, corporate bonds, and money market instruments, which helps reduce risk by spreading investments across various securities.
Liquidity
With securities maturing in 3-4 years, these funds offer liquidity allowing investors to access their money if required.
Flexible Investment Options
You can invest through Systematic Investment Plans (SIPs) or lump sum, based on your financial plan and convenience.
Who Should Invest In Medium Duration Fund?
Medium duration funds are not for everyone, but could suit those:
- Investors with a Medium-Term Horizon or a financial goal that requires 3 to 5 years of investment.
- Individuals comfortable with some volatility but unwilling to take high equity risk – basically those with moderate risk appetite.
- Diversification seekers looking to add a debt component to their portfolios for better risk management.
How To Invest In Medium Duration Fund With Anand Rathi?
Looking to invest in Medium Duration Mutual Fund? Investing in medium duration debt funds with Anand Rathi is simple, convenient, and available online. Follow these steps:
Create or Log In to Your Account
Visit the Anand Rathi website or ARInvest app to open your demat account or log in to your existing account.
Filter Funds
Go to "Invest" section and filter using "Debt → Medium Duration Funds" to view options.
Enter Details
Specify the investment amount and, for SIPs, the frequency.
Confirm & Monitor
Complete your transaction and track your investment in your account/dashboard.
Factors To Consider Before Investing In Medium Duration Fund
Before investing in a medium duration fund, it is important to evaluate the following:
Investment Horizon
Medium duration funds come with a standard maturity period. Ensure the fund's average maturity (typically 3-4 years) aligns with your financial goal and investment timeline.
Risk Tolerance
Even with moderate risk, medium-duration funds are not risk-free. Thus, evaluate your comfort level with interest rate risk, credit risk, and potential market fluctuations of the fund.
Credit Quality of Securities
Check the ratings of bonds and other securities in the fund. Higher-rated instruments reduce default risk, while lower-rated ones may increase potential yield, but come with greater risk.
Fund Performance
Review historical performance against benchmarks and similar funds, including the fund's track record. Past performance is not indicative of future results, but it provides perspective on consistency.
Expense Ratio
A lower expense ratio ensures more of your investment goes toward generating returns rather than fund management fees.
Taxation Rules On Medium Duration Fund
The tax rules for SEBI-listed Medium duration debt fund have two categories:
Bought Before April 1, 2023, but sold after July 23, 2024: LTCG (12.5% - without indexation), STCG (slab rate).
Bought On or after April 1, 2023: Irrespective of holding period - Taxed at the individual's slab rate.
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