Best Medium Duration Mutual Funds In 2025

Many investors prefer medium duration mutual funds, as they provide a good mix of reliability, optimal returns and reduced waiting period

For the benefit of investors, debt funds have been classified into various categories. This makes it easier for investors to choose the most suitable option, based on their investment goals. One of the preferred options is the medium duration mutual funds. Let us take a closer look to understand how these can be useful for investors.

What is medium duration mutual funds?

Medium duration mutual funds are those that have an investment horizon of three to four years. This time frame reflects the Macaulay Duration of the portfolio that the fund has invested. The Macaulay Duration essentially determines the time it takes to recover the cost of investment. Medium duration mutual funds focus exclusively on debt securities and money market instruments.

These funds usually deliver returns in the range of 7% to 9%. It is suitable for investors who want safer investment options and are looking at an investment horizon of around 3-4 years. Medium duration mutual funds are able to avoid the volatility seen with short-term funds. They also reduce the waiting period, as seen with longer investment avenues such as real estate, gold, etc.

Best medium duration mutual funds in 2025

Aditya Birla Sun Life Medium Term Plan Direct Growth – This fund currently has a portfolio worth more than Rs 2,000 crore. Net asset value is Rs 41.65 and annualized returns over a 3-year period is 14.2%. Around 38% of the funds are invested in Government of India (GOI) Securities. The remaining funds are mostly invested in debentures, bonds and NCDs. Aditya Birla Sun Life Medium Term Plan Direct Growth is currently rated under the ‘Moderately High Risk’ category, as it seeks to deliver optimal growth. Users can invest with SIPs starting at just Rs 1,000.

Axis Strategic Bond Fund Direct Growth – Currently categorized as a ‘Moderately High Risk’ fund, the Axis Strategic Bond Fund Direct Growth has a 3-year annualized return of 7.46%. Assets under management are worth around Rs 1,980 crore, with NAV valued at Rs 29.62. Users can start with SIP amount of just Rs 100. Around 39% of the portfolio comprises investments in GOI securities.

ICICI Prudential Medium Term Bond Fund Direct Plan Growth –  This has a 3-year annualized return of 7.32%, with NAV valued at Rs 47.40. It is rated as a ‘Moderately High Risk’ fund. Assets under management are worth around Rs 5,695 crore. Users can start with SIP amount of Rs 1,000. Exposure to GOI Securities is around 27%. Rest of the funds are invested in debt offerings of financial, construction and energy companies.

Kotak Medium Term Fund Direct Growth – Assets under management are worth Rs 1,879 crore, with annualized 3-year returns at 7.21%. The NAV is currently at Rs 24.32. Users can invest in this fund with SIPs starting at just Rs 100. GOI Securities form around 26% of the portfolio and the rest in various sectors such as construction, energy, financial, metals & mining, services and consumer staples.

SBI Magnum Medium Duration Fund Direct Growth – 3-year annualized returns are at 7.01%, with current NAV at Rs 53.41. Risk rating is ‘Moderately High’. Assets under management are at Rs 6,552 crore. Users can start with SIP amount of Rs 500. Around 34% is invested in GOI securities. The rest of the portfolio covers sectors like construction, financial and consumer staples.

DISCLAIMER – This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult a professional before making any investment decisions. Investments are subject to market risks.