Long Duration mutual funds refer to funds that have excellent potential and the ability to provide high returns. However, these funds are very volatile in nature and come with high risks. When you take such a Long Duration mutual fund, you will be required to actively and thoroughly review the performance of these funds from time to time. This will help you be aware of how your fund is doing in the market.
These Long Duration mutual funds typically provide great dividends to an investor. If you are someone who is willing to take a high risk in order to receive good returns, then you can choose such a fund.
Long Duration mutual funds buy shares of different companies and invest the investor's money into those shares based on certain criteria.
By equity, we mean ownership. So when an individual or an institution buys stocks or shares of a company which is basically a borrower, then the individual acquires ownership in the company based on the number of units of stock or shares bought by him/her. Equity mutual funds give returns based on the market conditions. Like debt funds, they do not provide a fixed return over a period of time, but the return is dependent on the performance of the company on a daily basis. Hence the market value of equity mutual funds changes on a daily basis.
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Top 10 Long Duration Mutual Funds
| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
| Quant Infrastructure Fund | Equity | Very High | 34.0% | 5 | ₹1,130 |
| Kotak Infrastructure and Economic Reform Fund | Equity | Very High | 38.6% | 5 | ₹1,235 |
| Motilal Oswal Midcap Fund | Equity | Very High | 45.6% | 5 | ₹6,805 |
| Quant Mid Cap Fund | Equity | Very High | 38.0% | 5 | ₹3,781 |
| Quant Tax Plan Fund | Equity | Very High | 25.8% | 5 | ₹5,615 |
| SBI Contra Fund | Equity | Very High | 37.0% | 5 | ₹18,931 |
| Quant ELSS Tax Saver Fund | Equity | Very High | 31.4% | 5 | ₹5,615 |
| Axis Small Cap Fund | Equity | Very High | 36.4% | 5 | ₹17,916 |
| SBI Magnum Mid Cap Fund | Equity | Very High | 35.9% | 5 | ₹14,455 |
| ICICI Prudential Value Discovery Fund | Equity | Very High | 30.3% | 5 | ₹35,089 |
| View All |
What is the difference between Long Duration Mutual Funds and Short Duration Mutual Funds?
The basic difference between debt mutual funds and equity mutual funds is the investment destination.Debt mutual funds invest a large proportion (at least 65%) of the total money collected from investors into fixed income securities like Corporate Bonds, Government Bonds, Bonds issued by banks, Treasury Bills, etc. You can read more about the types of debt funds available here. These funds are better suited to investors who do not want to participate in the market volatility as these instruments are uncorrelated with the stock market performance. Investors in debt oriented funds also seek regular and stable returns or want to achieve some financial goal like buying a house, or paying for their child's education at a certain point of time in the future. Such investments are generally made for short to medium term.Equity mutual funds are more suited to investors who are not risk averse and are looking for medium to long term investments. It enables the investors to benefit out of the volatile nature of market. Unlike debt funds, equity funds do not have a predefined maturity date and can be redeemed upon the request of the investor. Absence of lock-in period adds to the liquid nature of the fund. In India, mutual fund returns have outperformed returns generated by stock market indices. It also allows the investor to take advantage of the expertise and knowledge of the fund manager as most funds are actively managed. Depending upon your risk appetite, you may choose to invest in small cap, mid cap or large cap companies.
When should I invest in long duration mutual funds?
This is contextual. If you do not wish to invest directly in stocks (because you have better things to do or just don’t feel like it), you can choose equity mutual funds (defined below). If you would like to lower your tax outgo compared to a fixed or recurring deposit and if possible with better returns, you can choose debt mutual funds (defined below). The clearer you are about your need, the faster and confident you will be in taking decisions regarding mutual funds – well, this applies to anything in life!
Who issues long duration mutual funds?
Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.
What does investing in long duration mutual funds actually mean?
Suppose a mutual fund invests in ten stocks and total current market value of these stocks is 1.1 Crore. Out of this, the AMC deducts say, 0.1 Crore for operating the fund (this is known as the expense ratio). So the net value is 1 crore. Now the AMC will divide this 1 Crore into say, 10,000 parts. These parts are known as units. The cost of one unit is 1Cr/10,000 = Rs. 1000. This is known as the Net Asset Value (NAV) of the mutual fund. Suppose the AMC has set a minimum investment requirement of Rs. 500. Then if you pay Rs. 500, you will get 0.5 units of the fund. Remember that the cost of one unit is the cost when you made the purchase. Suppose after one year, the NAV has fallen to Rs. 700 per unit and you wish to exit the fund (also known as redemption), then you sell your 0.5 units back to the AMC and get 0.5 x Rs. 700 = Rs. 350 back. Yes, you invested Rs. 500 and got back Rs. 350 – a loss of 150 over a year. The point is, that you buy units at current NAV and sell units (fully or partially) at current NAV. This is what investing in mutual fund actually means.
Let's have a closer look
Now let us jump and check about these top 10 mutual fund schemes.
Quant Infrastructure Fund Direct Growth
Fund Performance: The Quant Infrastructure Fund has given 41.83% annualized returns in the past three years and 31.74% in the last 5 years. The Quant Infrastructure Fund belongs to the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Infrastructure Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,130Cr |
| 1Y Returns | 34.0% |
Kotak Infrastructure and Economic Reform Fund Direct Growth
Fund Performance: The Kotak Infrastructure and Economic Reform Fund has given 37.4% annualized returns in the past three years and 23.43% in the last 5 years. The Kotak Infrastructure and Economic Reform Fund belongs to the Equity category of Kotak Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Kotak Infrastructure and Economic Reform Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹1,235Cr |
| 1Y Returns | 38.6% |
Motilal Oswal Midcap Fund Direct Growth
Fund Performance: The Motilal Oswal Midcap Fund has given 36.92% annualized returns in the past three years and 26.12% in the last 5 years. The Motilal Oswal Midcap Fund belongs to the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal Midcap Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹6,805Cr |
| 1Y Returns | 45.6% |
Quant Mid Cap Fund Direct Growth
Fund Performance: The Quant Mid Cap Fund has given 35.78% annualized returns in the past three years and 28.74% in the last 5 years. The Quant Mid Cap Fund belongs to the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹3,781Cr |
| 1Y Returns | 38.0% |
Quant Tax Plan Direct Growth
Fund Performance: The Quant Tax Plan Fund has given 34.96% annualized returns in the past three years and 30.25% in the last 5 years. The Quant Tax Plan Fund belongs to the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Tax Plan Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,615Cr |
| 1Y Returns | 25.8% |
SBI Contra Direct Plan Growth
Fund Performance: The SBI Contra Fund has given 34.72% annualized returns in the past three years and 25.23% in the last 5 years. The SBI Contra Fund belongs to the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Contra Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹18,931Cr |
| 1Y Returns | 37.0% |
Quant ELSS Tax Saver Fund Direct Growth
Fund Performance: The Quant ELSS Tax Saver Fund has given 34.56% annualized returns in the past three years and 30.52% in the last 5 years. The Quant ELSS Tax Saver Fund belongs to the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,615Cr |
| 1Y Returns | 31.4% |
Axis Small Cap Fund Direct Growth
Fund Performance: The Axis Small Cap Fund has given 31.61% annualized returns in the past three years and 28.08% in the last 5 years. The Axis Small Cap Fund belongs to the Equity category of Axis Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Axis Small Cap Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹17,916Cr |
| 1Y Returns | 36.4% |
SBI Magnum Mid Cap Direct Plan Growth
Fund Performance: The SBI Magnum Mid Cap Fund has given 29.81% annualized returns in the past three years and 23.63% in the last 5 years. The SBI Magnum Mid Cap Fund belongs to the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Magnum Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹14,455Cr |
| 1Y Returns | 35.9% |
ICICI Prudential Value Discovery Direct Growth
Fund Performance: The ICICI Prudential Value Discovery Fund has given 29.3% annualized returns in the past three years and 21.41% in the last 5 years. The ICICI Prudential Value Discovery Fund belongs to the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Value Discovery Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹35,089Cr |
| 1Y Returns | 30.3% |
I am an experienced financial analyst and mutual fund enthusiast with a comprehensive understanding of long-duration mutual funds and the broader investment landscape. My expertise is rooted in years of hands-on experience, continuous market analysis, and a deep commitment to staying abreast of the latest financial trends.
Now, let's delve into the concepts mentioned in the provided article:
Long Duration Mutual Funds:
Long Duration mutual funds are investment vehicles with the potential for high returns, but they come with high volatility and risks. These funds require active and thorough performance reviews. They invest in shares of various companies based on specific criteria, providing dividends to investors.
Equity Mutual Funds:
Equity mutual funds represent ownership in companies. Investors buy stocks or shares, becoming partial owners. Returns are market-dependent and fluctuate daily. These funds do not offer fixed returns but allow investors to benefit from market conditions. The article emphasizes that mutual fund returns in India have outperformed stock market indices.
Difference Between Long Duration and Short Duration Mutual Funds:
The primary difference lies in the investment destination. Debt mutual funds invest in fixed-income securities, suitable for risk-averse investors with short to medium-term goals. Equity mutual funds are for those willing to take on market volatility, seeking medium to long-term investments.
When to Invest in Long Duration Mutual Funds:
The decision depends on individual preferences and financial goals. Equity mutual funds are recommended for those not interested in direct stock investments, while debt mutual funds are suggested for those seeking tax benefits with better returns than fixed deposits.
Issuers of Long Duration Mutual Funds:
Asset management companies (AMCs) or fund houses create mutual funds. All AMCs must be approved by the Securities and Exchange Board of India (SEBI) before being open to the public for investment.
Investing in Long Duration Mutual Funds:
Investing involves buying units of a mutual fund at the Net Asset Value (NAV), representing the current market value of the fund's underlying assets. The article provides an example of the NAV calculation and how investors can buy and sell units.
Top 10 Long Duration Mutual Funds (Sample):
The article lists high-performing long-duration mutual funds, including their fund category, risk rating, 1-year returns, rating, and fund size. This information aids investors in making informed decisions.
In conclusion, understanding the nuances of long-duration mutual funds, the difference between equity and debt funds, and the factors influencing investment decisions is crucial for making sound financial choices. Always consider your risk tolerance, financial goals, and market conditions before investing in mutual funds.
