Long Duration Funds
Last Updated on 11 May 2026
3 Year Average Returns
5.57%
Funds on Anand Rathi
77
Long Duration Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| UTI-Medium to Long Duration Fund (IDCW-A) | 1.83% | 5.71% | 7.99% |
| UTI-Medium to Long Duration Fund (IDCW-Q) | 1.83% | 5.71% | 7.99% |
| UTI-Medium to Long Duration Fund (Flexi) | 1.83% | 5.71% | 7.99% |
| UTI-Medium to Long Duration Fund (G) | 1.83% | 5.71% | 7.99% |
| UTI-Medium to Long Duration Fund (IDCW-H) | 1.83% | 5.71% | 7.73% |
| ICICI Pru Bond Fund - Regular (IDCW-Q) | 2.98% | 6.69% | 5.92% |
| ICICI Pru Bond Fund - Regular (G) | 2.98% | 6.69% | 5.75% |
| ICICI Pru Bond Fund - Regular (IDCW-H) | 2.98% | 6.69% | 5.75% |
| SBI Medium to Long Duration Fund-Reg (IDCW) | 2.60% | 6.11% | 5.54% |
| SBI Medium to Long Duration Fund-Reg Bonus Option | 2.60% | 6.11% | 5.54% |
| SBI Medium to Long Duration Fund-Reg (G) | 2.60% | 6.11% | 5.54% |
| SBI Medium to Long Duration Fund-Reg (IDCW-Q) | 2.60% | 6.11% | 5.54% |
| ICICI Pru Bond Fund - Regular (IDCW-M) | 2.98% | 6.35% | 5.38% |
| LIC MF Medium to Long Duration Fund-Reg (IDCW) | 2.55% | 6.17% | 5.27% |
| LIC MF Medium to Long Duration Fund-Reg (G) | 2.55% | 6.17% | 5.27% |
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What Are Long Duration Debt Funds?
A long duration fund is a type of open-ended debt mutual fund that invests in bonds with long maturity — typically more than 7 years.
They mostly invest in Government securities, Long-term corporate bonds, PSU bonds, and other fixed-income securities.
The defining factor here is duration. These funds maintain a Macaulay duration of more than 7 years, which means they are highly sensitive to interest rate movements. Because of long maturity exposure, these are also called long duration bond funds.
Benefits Of Long Duration Debt Funds
Many investors would wonder, "Why would someone take this kind of volatility in debt?" The answer lies in the main benefits of long duration debt funds. Let's find out:
1. Interest Rate Sensitivity
With time, bond prices and interest rates move in opposite directions. So, when the RBI cuts rates, long duration mutual funds tend to benefit from price movements (or falling interest rates) compared to short duration funds.
2. Suitable As Debt Funds For Long Term Allocation
If your financial goal is 7–10 years away, a long duration fund can align better to help achieve it. Investors do use them as part of their long-term debt allocation strategy.
3. Professional Bond Management
Long duration bond funds are actively managed since the fund manager frequently tracks interest rate outlook, inflation trends, government borrowing, and yield curve movements. In short, you don't have to analyse bond markets yourself; the fund manager does instead.
4. Diversification From Equity
If your portfolio is heavy in equity, adding long duration debt funds can diversify risk — especially when equity markets are volatile.
How Do Long Duration Mutual Funds Work?
Long duration mutual funds are similar to other duration-based debt funds. The key difference lies in the fund manager's outlook on interest rate movements and how the portfolio is positioned accordingly.
Interest Rate Scenario
Interest rates peak at high inflation levels, may cool down later, and the central bank may start rate cuts.
Bond Prices React Oppositely
When interest rates fall, existing long-term bonds originally issued at higher interest rates turn more attractive in the market. Their prices start rising.
Impact On Long Duration Fund
A long duration fund, which holds bonds with maturity of 7+ years, benefits from this price increase. As bond prices rise, the fund's NAV also rises.
Capital Appreciation Opportunity
This price movement creates capital gains in addition to the regular interest income earned from the bonds.
If Interest Rates Rise Further
Bond prices may fall, and long duration bond funds can see short-term NAV correction.
Active Portfolio Rebalancing
During such phases, the fund manager may rebalance the portfolio depending on market outlook and risk strategy. That's why timing and holding period matter a lot in long duration mutual funds.
Who Should Invest In Long Duration Debt Funds?
Likewise, investors who expect these funds to act as emergency funds, short-term parking options, or who track their portfolio daily and worry about small short-term dips, this category may not suit.
- Investors with a 7+ year horizon
- Those who understand interest rate cycles
- Moderate risk investors
- Investors positioning for a falling interest rate cycle
How To Invest In Long Duration Mutual Funds With Anand Rathi?
Investing in long duration mutual funds with Anand Rathi is simple and digital. Here's how you can do it:
1. Open Or Log In To Your Account
Visit the Anand Rathi website or ARInvest app. Open your demat account or log in securely.
2. Navigate To Debt Funds Section
Go to the "Invest" section and filter under Debt → Long Duration Fund.
3. Select The Right Scheme
Compare available long duration bond funds based on portfolio quality, expense ratio, and performance, and invest.
4. Choose Investment Mode
You can invest via Lump sum investment or SIP investment. Choose what fits your financial plan.
5. Confirm And Track
Complete the transaction and monitor your long duration fund through your dashboard.
Factors To Consider Before Investing In Long Duration Bond Funds
Before investing in long duration debt funds, consider these points carefully:
1. Interest Rate Outlook
This is the most important factor. If rates are likely to fall → positive for long duration mutual funds. If rates may rise further → short-term volatility is possible.
2. Investment Horizon
Minimum 7 years is mandatory Macaulay duration prescribed by SEBI. Consider your investment horizon, whether it fits, and accordingly decide to invest or not.
3. Credit Quality
Check whether the fund invests in high-rated government bonds or lower-rated corporate bonds. Higher yield often means higher credit risk.
4. Risk Appetite
Even though it's debt, the NAV movement can be sharp during rate changes. Have a clear understanding of rate cycles and how comfortable you're with such volatility.
5. Expense Ratio
Lower expense ratio helps improve net yield over a long holding period, so compare with other funds as well.
Taxation Rules On Long Duration Debt Funds
The tax rules for Long duration debt funds usually depend on their purchase and redemption (sale) dates.
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: Taxed as STCG (Short term capital gains), irrespective of holding period, at the Individual's slab rate.
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