The attraction of medium duration funds
Mar 04, 04:03

The cut in policy interest rates by Reserve Bank of India throug last year to fight the economic slowdown caused by the COVID-19 pandemic has made investors consider investments in medium duration funds. These schemes have a (Macaulay) duration of 3-4 years, roughly. They offer higher yields than shorter tenured funds. As per AMFI data, these funds saw inflows for seven months in a row—until January 2021— amounting to Rs 9,669 crore. Some words of caution. Check the portfolio quality, before you invest. Some schemes take a bit of credit risk. Also, expect some volatility when interest rates rise. But if you stay invested for around 3-4 years, you can ride out the volatility.

medium duration funds- chart