Long Duration Mutual Funds to Invest in 2025 are investment vehicles designed for individuals who aim to achieve financial goals over an extended period, typically beyond seven years. These funds are often associated with higher growth potential due to their equity-oriented nature, allowing investors to benefit from compounding returns and market growth.
The idea is to let your money grow through compounding—where your returns keep earning more returns over time. While the value of these funds can go up and down in the short term, they are designed for those who has long-term goals, like saving for retirement, buying a house, or securing their child’s education.
Advantages of Long Duration Mutual Funds
1. Wealth creation:
By staying invested for a longer time, these funds allow your money to grow significantly due to the power of compounding.
2. Higher returns:
Long-duration mutual funds, particularly equity-focused ones, have the potential to deliver higher returns compared to short-term investments.
3. Goal Alignment:
Ideal for achieving big financial goals like retirement, buying a house, or children’s higher education.
4. Tax Efficiency:
Holding investments for a longer period can reduce tax liability, as long-term capital gains (LTCG) tax is often lower than short-term taxes.
5. Flexibility:
Investors can choose from various long-term mutual funds, such as equity, balanced, or sectoral funds, to suit their risk appetite and goals.
Top Schemes of Long-term Mutual Fund
Here are recommending some Top-performing mutual funds mutual fund schemes that are ideal for investors that are ideal for investors to build wealth.
1. Nippon India Nivesh Lakshya Fund – Direct growth
Category: Long Duration Fund
Objective: Focuses on long-term government securities intending to match the total returns of the Nifty 50 G-Sec Index.
1-Year Return: 13.07%
3-Year Return: 7.16%
2. ICICI Prudential Long Term Bond Fund – Direct-Growth
Category: Debt Fund
Objective: Invest in long-term debt instruments with a focus on generating consistent income.
1-Year Return: 11.48%
3-Year Return: 6.21%
3. Aditya Birla Sun Life Long Duration Fund – Direct-Growth
Category: Debt Fund
Objective: Invest in long-duration debt securities with a focus on providing optimal returns.
1-Year Return: 12.38%
4. Axis Long Duration Fund – Direct-Growth
Category: Debt Fund
Objective: Seeks to generate returns by investing in long-duration debt instruments.
1-Year Return: 13.00%
5. SBI Long Duration Fund – Direct-Growth
Category: Debt Fund
Objective: Invest in long-term debt securities to provide capital appreciation and regular income.
1-Year Return: 13.27%
Features of Long-term Funds:-
1. Investment Horizon:
Long-term funds are designed for investors with a time horizon of 7 years or more, allowing them to ride out short-term market fluctuations and focus on long-term growth.
2. Focus on Growth:
These funds often invest in growth-oriented assets, such as equities, government securities, or long-duration bonds, aiming to deliver significant returns over time.
3. Higher Risk, Higher Return:
While these funds can be more volatile in the short term, they have the potential for higher returns in the long run. The idea is to capitalize on compounding returns.
4. Diversification:
Long-term funds tend to have a well-diversified portfolio across multiple asset classes, reducing the impact of any single market movement.
5. Tax Efficiency:
Many long-term mutual funds benefit from favorable tax treatment. For example, long-term capital gains (LTCG) tax is often lower than short-term taxes, making them more tax-efficient for long-term investors.
Best Long-Term Duration Mutual Funds:-
1. Nippon India Nivesh Lakshya Fund – Direct-Growth
Category: Long Duration Debt Fund
Investment Objective: This fund invests primarily in long-term government securities, with a focus on delivering returns that track the performance of the Nifty 50 G-Sec Index.
1-Year Return: 13.07%
3-Year Return: 7.16%
Why Invest: Ideal for conservative investors seeking stable returns from government-backed securities.
2. ICICI Prudential Long Term Bond Fund – Direct-Growth
Category: Debt Fund
Investment Objective: Invests in a diversified mix of long-duration debt and money market instruments to generate stable returns for long-term investors.
1-Year Return: 11.48%
3-Year Return: 6.21%
Why Invest: A solid choice for risk-averse investors looking for relatively safe returns over the long term.
3. Aditya Birla Sun Life Long Duration Fund – Direct-Growth
Category: Debt Fund
Investment Objective: Invests in long-duration debt securities with a focus on providing optimal returns with a balance between duration and credit risk.
1-Year Return: 12.38%
Why Invest: A good option for investors seeking a mix of income and capital appreciation.
4. Axis Long Duration Fund – Direct-Growth
Category: Debt Fund
Investment Objective: Aims to generate superior long-term returns by investing in long-duration debt instruments.
1-Year Return: 13.00%
Why Invest: This fund provides a diversified portfolio, ideal for long-term wealth creation.
5. SBI Long Duration Fund – Direct Growth
Category: Debt Fund
Investment Objective: Focuses on long-term debt securities to provide capital appreciation and regular income over time.
1-Year Return: 13.27%
Why Invest: Suitable for conservative investors aiming for consistent returns from fixed-income securities.
Is It Good to Invest in Long-Duration Funds?
Longer Time Horizon: When considering Long Duration Funds, think about your investment goals and how long you can stay invested. These funds tend to be more volatile in the short term due to changes in bond prices. If you’re comfortable with those fluctuations and can commit to a longer investment period, they could be a good match.
Diversification: A well-rounded investment portfolio is key. If your portfolio is already diversified, adding Long long-duration funds can provide more balance. However, it’s crucial to avoid concentrating too much on one asset type, as that can expose you to unnecessary risks.
Higher Potential Returns: Compared to other debt funds like short-duration or liquid funds, Long Duration Funds generally offer higher returns. But with those higher returns comes greater risk. So, if you’re someone who can tolerate a little more volatility and are seeking better returns, these funds could suit you well.
Long Duration Funds can be an excellent option for investors looking for higher returns over a longer period, but they come with added volatility. Before investing, it’s important to assess your risk tolerance, investment horizon, and diversification strategy. If you’re willing to ride out short-term market fluctuations and have a longer-term view, these funds can offer substantial rewards.