Best medium to long duration funds to invest in August 2024

economictimes.indiatimes.com:

mutual funds.

According to Sebi norms, medium to long term funds have a mandate to invest in debt and money market instruments in such a way that the Macaulay's duration of the portfolio is four to seven years. Since these schemes invest in long-term debt instruments, they are considered risky. Even a minor upward movement in interest rates could make these schemes extremely risky and volatile. In simple terms, investors might lose money in such a scenario. That explains why advisors do not speak about these schemes often. Needless to say investors should be extremely cautious about these schemes in the current scenario.

Long term debt schemes are extremely sensitive to interest rate changes. They lose money when interest rates go up. When rates are falling, they benefit the most. According to investment experts, when one invests for a long period in debt instruments, the investor is forced to go through an interest cycle that would have an upward and downward phase. This means the investor might see a lot of volatility and sometimes losses when the interest rates start hardening or going up. Needless to say, the opposite scenario might benefit investors.

Best MF to invest

Looking for the best mutual funds to invest? Here are our recommendations.

Investment advisors believe that many conservative investors would not be able to go through turbulent phases. Investors can avoid this only if they time their entry and exit into long-term debt funds. Many investors would find it difficult to predict the