What is medium duration fund?
Sep 23, 06:09


Medium duration funds came into existence in 2018 after massive rationalisation and standardisation exercise in Indian mutual funds industry. A medium term fund sits between short-term and long-term debt funds. Its underlying duration has to be around 3-4 years. If you have a similar time frame, a medium-term bond fund is meant for you. Historically, these funds also hold some securities with slightly lesser-rated securities. Therefore, there is an element of credit risk. These funds aren't as risk-averse as, say, a corporate bond fund or even a Banking & PSU debt fund. Also, if interest rates rise too fast, then the returns offered by MDF can be volatile.

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