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Economic Times
5 days ago
- Business
- Economic Times
Best medium duration mutual funds to invest in June 2025
If you are looking for debt mutual fund to park money for four years or more and are ready to take some risk and volatility, you can consider investing in medium duration funds. Synopsis As per Sebi mandate, medium duration funds must invest in debt and money market instruments with Macaulay duration of three to four years. As you can see, these schemes are suitable for investors looking to invest for three to four years or more. However, you should check the portfolio duration of the scheme to ensure that the scheme is in line with your investment horizon. Many investment advisors believe that medium duration funds are better placed to offer superior returns when the interest rates start falling. Debt mutual funds offer attractive returns in a falling interest rate environment. If that interests you, you can learn more about medium duration funds. ADVERTISEMENT Most mutual fund investors stick to liquid funds, ultra short term funds, short term funds, banking & PSU funds, corporate funds, etc. to take care of their short-term needs. Most of them might know about gilt funds. Even though they may not invest in them. However, many investors are not aware of medium duration funds. Chances are that most people will keep hearing about medium duration funds this year because most mutual fund advisors are recommending these schemes to their clients these days. Also Read |Parag Parikh Flexi Cap Fund, Quant Small Cap Fund among 17 mutual funds which deliver over 20% XIRR on SIP investments in 10 years As per Sebi mandate, medium duration funds must invest in debt and money market instruments with Macaulay duration of three to four years. As you can see, these schemes are suitable for investors looking to invest for three to four years or more. However, you should check the portfolio duration of the scheme to ensure that the scheme is in line with your investment mutual fund advisors do not recommend medium and long term debt schemes to regular investors. These schemes are extremely sensitive to changes in the interest rate environment. They suffer when the rates go up. Mutual fund advisors say many conservative investors would find it difficult to handle the volatility faced by these schemes. Also Read | MNC mutual funds struggle to perform, lose 3% in 1 year. What's driving the underperformance? ADVERTISEMENT In short, if you are looking for a debt mutual fund where you can park money for four years or more and are ready to take some risk and volatility, you can consider investing in medium duration funds. Please watch out for monthly updates so that you can keep track of your schemes. Bandhan Bond Fund Medium Term Plan, one of the recommended schemes, has been in the fourth quartile for the last 23 months. The scheme had been in the third quartile earlier. HDFC Medium Term Debt Fund has been in the third quartile for the last 20 months. ADVERTISEMENT MethodologyETMutualFunds has employed the following parameters for shortlisting the debt mutual fund schemes. 1. Mean rolling returns: Rolled daily for the last three years. ADVERTISEMENT 2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.i)When H = 0.5, the series of returns is said to be a geometric Brownian time series. This type of time series is difficult to H 0.5, the series is said to be mean reverting. ADVERTISEMENT iii)When H0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series 3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure. X =Returns below zeroY = Sum of all squares of XZ = Y/number of days taken for computing the ratioDownside risk = Square root of Z 4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund. Asset size: For debt funds, the threshold asset size is Rs 50 crore (Disclaimer: past performance is no guarantee for future performance.) (Catch all the Mutual Fund News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online. NEXT STORY
Time of India
6 days ago
- Business
- Time of India
Best medium duration mutual funds to invest in June 2025
Many investment advisors believe that medium duration funds are better placed to offer superior returns when the interest rates start falling. Debt mutual funds offer attractive returns in a falling interest rate environment. If that interests you, you can learn more about medium duration funds. Most mutual fund investors stick to liquid funds, ultra short term funds, short term funds, banking & PSU funds, corporate funds, etc. to take care of their short-term needs. Most of them might know about gilt funds. Even though they may not invest in them. However, many investors are not aware of medium duration funds. Chances are that most people will keep hearing about medium duration funds this year because most mutual fund advisors are recommending these schemes to their clients these days. Also Read | Parag Parikh Flexi Cap Fund, Quant Small Cap Fund among 17 mutual funds which deliver over 20% XIRR on SIP investments in 10 years Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo As per Sebi mandate, medium duration funds must invest in debt and money market instruments with Macaulay duration of three to four years. As you can see, these schemes are suitable for investors looking to invest for three to four years or more. However, you should check the portfolio duration of the scheme to ensure that the scheme is in line with your investment horizon. Not a crowd favourite Most mutual fund advisors do not recommend medium and long term debt schemes to regular investors. These schemes are extremely sensitive to changes in the interest rate environment. They suffer when the rates go up. Mutual fund advisors say many conservative investors would find it difficult to handle the volatility faced by these schemes. Live Events Also Read | MNC mutual funds struggle to perform, lose 3% in 1 year. What's driving the underperformance? In short, if you are looking for a debt mutual fund where you can park money for four years or more and are ready to take some risk and volatility, you can consider investing in medium duration funds. Please watch out for monthly updates so that you can keep track of your schemes. Bandhan Bond Fund Medium Term Plan, one of the recommended schemes, has been in the fourth quartile for the last 23 months. The scheme had been in the third quartile earlier. HDFC Medium Term Debt Fund has been in the third quartile for the last 20 months. Best medium duration schemes to invest in June 2025 SBI Magnum Medium Duration Fund HDFC Medium Term Debt Fund Bandhan Bond Fund - Medium Term Plan Axis Strategic Bond Fund Methodology ETMutualFunds has employed the following parameters for shortlisting the debt mutual fund schemes. 1. Mean rolling returns: Rolled daily for the last three years. 2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H. i)When H = 0.5, the series of returns is said to be a geometric Brownian time series. This type of time series is difficult to forecast. ii)When H <0.5, the series is said to be mean reverting. iii)When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series 3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure. X =Returns below zero Y = Sum of all squares of X Z = Y/number of days taken for computing the ratio Downside risk = Square root of Z 4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund. Asset size: For debt funds, the threshold asset size is Rs 50 crore
Time of India
17-06-2025
- Business
- Time of India
SBI's highest FD rate now falls to 6.7%. Are debt funds more attractive than ever now?
With SBI , the largest public sector lender, highest fixed deposit rate falling to 6.7% post repo rate and CRR cut by RBI and around 260 debt mutual funds outperforming it, mutual fund experts mention that debt mutual funds are now relatively well-positioned versus traditional fixed deposits—especially as FD rates continue to reset lower and with the RBI recently shifting its stance from accommodative to neutral, the room for further aggressive easing may be limited. 'This makes it a good time for investors to consider short duration funds for stability, and dynamic bond funds for flexibility to capture any residual fall in yields or rate volatility. Banking & PSU funds, which invest in high-quality issuers, remain a strong choice for conservative investors seeking safety with better returns & high liquidity,' Sagar Shinde, VP of Research at Fisdom shared with ETMutualFunds. Also Read | Flexi cap mutual funds dominate inflows for third straight month. Are investors seeking all-cap advantage? Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo 'However, with FDs offering guaranteed returns, investors don't need to choose one over the other—it's entirely feasible to have a blend of FD and debt funds depending on time horizon, risk profile & liquidity preference,' he further adds. SBI has reduced the interest rates on its special fixed deposit 'Amrit Vrishti' scheme while keeping the other regular fixed deposit rates unchanged and this revised rate is effective from June 15. The rate for public under 2 years to less than 3 years has been revised to 6.7% which is the highest among all revised rates. Live Events Reserve Bank of India in its last policy meeting reduced the repo rate by another 50 basis points to 5.50% and a 100 basis point CRR cut, marking it the third consecutive rate cut in the current calendar year and the second one in the current financial year. ETMutualFunds analyzed the two-year performance of all debt mutual fund categories alongside the interest rates on fixed deposits offered by SBI, India's largest public sector bank, in the same period. Around 260 debt mutual funds outperformed the bank deposit rate of 6.7% offered by SBI over the past two years. Four schemes gave double-digit returns, of which the top three performers were from the credit risk fund category. DSP Credit Risk Fund delivered the highest return of 19.1% over the last two years, followed by HSBC Credit Risk Fund and Aditya Birla SL Credit Risk Fund, which provided 13.7% and 11.9% returns respectively during the same period. Also Read | Nifty stuck in narrow range. Here's the mutual fund move you need to make now Aditya Birla SL Medium Term Plan delivered a return of 10.4%, followed by Invesco India Credit Risk Fund and 360 ONE Dynamic Bond Fund which gave 9.3% and 9.1% respectively in the same period. Motilal Oswal Liquid Fund was the last one to offer 6.8% return in the said period. After the outperformance by debt mutual funds, the expert mentions that in the current context of a likely pause in rate cuts and a neutral policy stance, investors should consider a barbell strategy—allocating to both short and dynamic duration categories. As the short duration funds help manage reinvestment and interest rate risk for near-term needs, while dynamic bond funds offer the opportunity to benefit if yields continue to drift lower or if volatility creates short-term mispricing, Shinde believes. 'Investors should prefer funds with high-quality portfolios, moderate duration, and reasonable YTMs. Since the direction of rates may now be more data-driven, staggered entries via SIPs or STPs can help mitigate timing risk,' Shinde recommends. FD vs debt funds Now coming to the comparison between fixed deposits and debt mutual funds, fixed deposits are considered low risk investments as they offer a guaranteed return for the predetermined period whereas debt mutual funds have a slightly higher risk associated with them because of the interest rate movement. The second point of difference comes on the taxation part. The investment in tax-saving fixed deposits is exempted under Section 80 C of the Income Tax Act whereas for the debt mutual funds there is no such exemption. But both fixed deposits and debt mutual funds are classified under the same asset class. As the fixed deposits offer lower interest rates compared to debt mutual funds, Shinde advises that investors in higher tax brackets, with a 1–5-year horizon, can consider diversifying beyond FDs into mutual funds and while debt funds and FDs now have similar tax treatment, mutual funds offer added benefits like no TDS, liquidity, and potential capital gains. 'Arbitrage funds can be more efficient for holding periods of one year or more, while income-plus-arbitrage funds tend to become more tax-efficient when held for over two years,' he recommends. Also Read | HDFC Flexi Cap Fund exits IndusInd Bank and HAL, adds Swiggy in May 'However, mutual funds come with risks not present in FDs. Debt funds can face interest rate, credit, and liquidity risks, and arbitrage strategies depend on market conditions for return generation. Instead of a full switch, a blended allocation—combining FDs, debt funds, and arbitrage-oriented categories—can help investors strike the right balance between stability, flexibility, and post-tax efficiency,' he further added. We considered all debt categories such as gilt fund, long duration, medium to long duration, gilt fund - constant maturity 10 year, credit risk funds, liquid funds, money market funds, overnight funds, corporate bond fund, dynamic bond fund, floating rate bond, banking and PSU funds, medium duration, low duration, short duration funds. We excluded debt based target maturity funds. We considered regular and growth options. We calculated returns for the last two years. We calculated CAGR returns as in debt mutual funds, returns up to one year are annualised and above one year are CAGR. Note, one should not make investment or redemption decisions based on the above exercise. One should always consider risk profile, investment horizon and goal before making investment decisions. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle
Time of India
26-05-2025
- Business
- Time of India
Best medium duration mutual funds to invest in May 2025
Many investment advisors believe that medium duration funds are better placed to offer superior returns when the interest rates start falling. Debt mutual funds offer attractive returns in a falling interest rate environment. If that interests you, you can learn more about medium duration funds. Most mutual fund investors stick to liquid funds, ultra short term funds, short term funds, banking & PSU funds, corporate funds, etc. to take care of their short-term needs. Most of them might know about gilt funds. Even though they may not invest in them. However, many investors are not aware of medium duration funds. Chances are that most people will keep hearing about medium duration funds this year because most mutual fund advisors are recommending these schemes to their clients these days. Also Read | Nifty still below peak, but why are these mutual funds at record-high NAVs? Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Air conditioners without external unit. (click to see prices) Air Condition | Search Ads Search Now Undo As per Sebi mandate, medium duration funds must invest in debt and money market instruments with Macaulay duration of three to four years. As you can see, these schemes are suitable for investors looking to invest for three to four years or more. However, you should check the portfolio duration of the scheme to ensure that the scheme is in line with your investment horizon. Not a crowd favourite Most mutual fund advisors do not recommend medium and long term debt schemes to regular investors. These schemes are extremely sensitive to changes in the interest rate environment. They suffer when the rates go up. Mutual fund advisors say many conservative investors would find it difficult to handle the volatility faced by these schemes. Live Events Also Read | Global mutual funds slip as much as 3% — check the worst performers In short, if you are looking for a debt mutual fund where you can park money for four years or more and are ready to take some risk and volatility, you can consider investing in medium duration funds. Please watch out for monthly updates so that you can keep track of your schemes. Bandhan Bond Fund Medium Term Plan, one of the recommended schemes, has been in the fourth quartile for the last 22 months. The scheme had been in the third quartile earlier. HDFC Medium Term Debt Fund has been in the third quartile for the last 19 months. Best medium duration schemes to invest in May 2025 SBI Magnum Medium Duration Fund HDFC Medium Term Debt Fund Bandhan Bond Fund - Medium Term Plan Axis Strategic Bond Fund Methodology ETMutualFunds has employed the following parameters for shortlisting the debt mutual fund schemes. 1. Mean rolling returns: Rolled daily for the last three years. 2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H. i)When H = 0.5, the series of returns is said to be a geometric Brownian time series. This type of time series is difficult to forecast. ii)When H <0.5, the series is said to be mean reverting. iii)When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series 3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure. X =Returns below zero Y = Sum of all squares of X Z = Y/number of days taken for computing the ratio Downside risk = Square root of Z 4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund. Asset size: For debt funds, the threshold asset size is Rs 50 crore
Economic Times
20-05-2025
- Business
- Economic Times
Over 260 debt mutual funds beat fixed deposits rate in 2 years. Should you switch?
ETMutualFunds analysed the two-year performance of all debt mutual fund categories alongside the interest rates on fixed deposits offered by SBI, India's largest public sector bank, in the same period. With SBI cutting FD rates by 20 bps and over 260 debt mutual funds outperforming them, many experts believe debt funds now offer a more attractive, tax-efficient option for low-risk investors seeking better returns than the current market scenario, short-duration funds, medium-duration funds, dynamic bond funds, and gilt funds can be good investment options with different horizons.'In the current environment, short-duration funds and medium-duration funds are ideal for those with investment horizons of 1–3 years and 3–5 years, respectively. Dynamic bond funds are also suitable for those who want fund managers to actively manage duration based on changing interest rates. For risk-averse investors, gilt funds, which invest in government securities, can be a good alternative, offering safety with potential for capital gains if interest rates decline further, said Adhil Shetty, CEO of Also Read | Sensex @82,300: Should mutual fund investors alter their investment strategy? State Bank of India (SBI) has cut its fixed deposit (FD) interest rates for both the general public and senior citizens, effective May 16, 2025. According to the website, SBI has reduced FD rates by 20 basis points (bps) across all tenors. The latest FD rate cut comes just a month after the cut announced on April 15. The interest rate applicable for a tenure of 2 years to less than 3 years is reduced to 6.7% against 6.9% before. ETMutualFunds analysed the two-year performance of all debt mutual fund categories alongside the interest rates on fixed deposits offered by SBI, India's largest public sector bank, in the same period. Around 264 debt mutual funds outperformed the bank deposit rate of 6.7% offered by SBI over the past two years. Four schemes gave double-digit returns, of which the top three performers were from the credit risk fund category. DSP Credit Risk Fund delivered the highest return of 18.7% over the last two years, followed by HSBC Credit Risk Fund and Aditya Birla SL Credit Risk Fund, which provided 13.8% and 12% returns, respectively, during the same period. Aditya Birla SL Medium Term Plan delivered a return of 10.4%, followed by Axis Gilt Fund and Axis Floater Fund, which gave 9.6% and 9.5% respectively in the same period. Motilal Oswal Liquid Fund was the last one to offer a 6.8% return in the said period. Also Read | Railways PSU ETF delivers 16% in a week. Is this the right opportunity for portfolio diversification? After the outperformance by debt mutual funds, the expert recommends that a prudent strategy is to match the fund category with your investment horizon, a laddering strategy, where you invest across different maturities, can help manage reinvestment risk and interest rate fluctuations and starting a Systematic Investment Plan (SIP) can also help average out costs and reduce the impact of market volatility.'A prudent strategy is to match the fund category with your investment horizon. For example, use short-duration funds for up to 3 years and medium-duration or dynamic bond funds for longer terms. A laddering strategy, where you invest across different maturities, can help manage reinvestment risk and interest rate fluctuations,' Shetty further advices that starting a Systematic Investment Plan (SIP) can also help average out costs, reduce the impact of market volatility and investors should focus on funds with high credit quality, avoiding those heavily exposed to lower-rated instruments. With the RBI MPC meeting scheduled for next month, it's worth noting that the central bank has cut the repo rate by 25 basis points in each of the last two meetings, following a prolonged pause at 6.5% across 11 consecutive expert mentions that it's also important to monitor the interest rate cycle, if further rate cuts are expected, longer-duration funds may deliver capital appreciation and lastly, one should understand the exit load and taxation rules; debt funds held for over 3 years earlier benefited from indexation, but recent changes to tax rules mean post-tax returns should be carefully Minister Nirmala Sitharaman in the last Budget made no change for the debt mutual funds, which continued to be taxed as per the tax 40 debt mutual funds have failed to beat the fixed deposit interest rate offered by SBI. These funds gave returns ranging between 6% to 6.7% in the said of India Credit Risk Fund gave 6.1% and Motilal Oswal Ultra Short Term Fund gave the lowest return of 6% in the mentioned time period. Also Read | BSE and Adani Enterprises among stocks that HDFC Mutual Fund bought and sold in April Now coming to the comparison between fixed deposits and debt mutual funds, fixed deposits are considered low-risk investments as they offer a guaranteed return for the predetermined period whereas debt mutual funds have a slightly higher risk associated with them because of the interest rate movement. The second point of difference comes on the taxation part. The investment in tax-saving fixed deposits is exempted under Section 80C of the Income Tax Act whereas for the debt mutual funds there is no such exemptions. But both fixed deposits and debt mutual funds are classified under the same asset the fixed deposits offer lower interest rates compared to debt mutual funds, Shetty recommends that investors in the higher tax brackets benefit the most from switching to debt mutual funds, as traditional FD interest is fully taxable as per slab, while mutual funds—although recently taxed differently—still offer relatively efficient returns in some adds that savers seeking better liquidity and flexibility than FDs can also consider debt mutual funds, as they generally offer quicker redemption with lower penalties and retired individuals and conservative investors, who are looking for stable income but are open to a little market-linked risk, can shift partially to safe options like gilt or banking & PSU funds. 'Importantly, those with a long-term outlook and an understanding of interest rate movements can strategically allocate to longer-duration or dynamic bond funds for potentially higher returns. However, this shift should be made keeping in mind the risks associated with NAV fluctuations, especially in a volatile rate environment,' he said. We considered all debt categories such as gilt fund, long duration, medium to long duration, gilt fund - constant maturity 10 year, credit risk funds, liquid funds, money market funds, overnight funds, corporate bond fund, dynamic bond fund, floating rate bond, banking and PSU funds, medium duration, low duration, short duration funds. We excluded debt based target maturity funds. We considered regular and growth options. We calculated returns for the last two years. We calculated CAGR returns as in debt mutual funds, returns up to one year are annualised, and returns above one year are CAGR. Note, one should not make investment or redemption decisions based on the above exercise. One should always consider risk profile, investment horizon and goal before making investment decisions. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle.
