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What is the difference between Long Duration Mutual Funds and Short Duration Mutual Funds?
The basic difference between debt mutual funds and equity mutual funds is the investment destination. Debt mutual funds invest a large proportion (at least 65%) of the total money collected from investors into fixed income securities like Corporate Bonds, Government Bonds, Bonds issued by banks, Treasury Bills, etc. You can read more about the types of debt funds available here.
These funds are better suited to investors who do not want to participate in the market volatility as these instruments are uncorrelated with the stock market performance. Investors in debt oriented funds also seek regular and stable returns or want to achieve some financial goal like buying a house, or paying for their child's education at a certain point of time in the future. Such investments are generally made for short to medium term. Equity mutual funds are more suited to investors who are not risk averse and are looking for medium to long term investments. It enables the investors to benefit out of the volatile nature of market. Unlike debt funds, equity funds do not have a predefined maturity date and can be redeemed upon the request of the investor.
Absence of lock-in period adds to the liquid nature of the fund. In India, mutual fund returns have outperformed returns generated by stock market indices. It also allows the investor to take advantage of the expertise and knowledge of the fund manager as most funds are actively managed. Depending upon your risk appetite, you may choose to invest in small cap, mid cap or large cap companies.
When should I invest in long duration mutual funds?
This is contextual. If you do not wish to invest directly in stocks (because you have better things to do or just don’t feel like it), you can choose equity mutual funds (defined below). If you would like to lower your tax outgo compared to a fixed or recurring deposit and if possible with better returns, you can choose debt mutual funds (defined below). The clearer you are about your need, the faster and confident you will be in taking decisions regarding mutual funds – well, this applies to anything in life!
Who issues long duration mutual funds?
Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.
What does investing in long duration mutual funds actually mean?
Suppose a mutual fund invests in ten stocks and total current market value of these stocks is 1.1 Crore. Out of this, the AMC deducts say, 0.1 Crore for operating the fund (this is known as the expense ratio). So the net value is 1 crore. Now the AMC will divide this 1 Crore into say, 10,000 parts. These parts are known as units. The cost of one unit is 1Cr/10,000 = Rs. 1000. This is known as the Net Asset Value (NAV) of the mutual fund. Suppose the AMC has set a minimum investment requirement of Rs. 500. Then if you pay Rs. 500, you will get 0.5 units of the fund. Remember that the cost of one unit is the cost when you made the purchase. Suppose after one year, the NAV has fallen to Rs. 700 per unit and you wish to exit the fund (also known as redemption), then you sell your 0.5 units back to the AMC and get 0.5 x Rs. 700 = Rs. 350 back. Yes, you invested Rs. 500 and got back Rs. 350 – a loss of 150 over a year. The point is, that you buy units at current NAV and sell units (fully or partially) at current NAV. This is what investing in mutual fund actually means.
How to invest in long duration mutual funds on Groww?
One of the best ways to hedge against the small-cap volatility is to adopt a phased approach, also known as Systematic Investment Plan (SIP) approach. We are sure that you must be aware of SIP and its benefits. Buying in small quantity but buying regularly provides you with faster growth. On Groww.in, all transactions to and from AMC is done via BSE. When you decide to invest in a large cap mutual fund of your choice, you choose that mutual fund on the website and click ‘invest’. Following that, you are redirected to the BSE page where you make the payment. BSE then directs your money to the AMC managing your mutual fund. To be assured at your end, you can visit the individual AMC website after the payment. You would be able to see all your purchased units against your folio number.
Let's have a closer look
Now let us jump and check about these top 15 mutual fund schemes.
Quant Infrastructure Fund Direct Growth
Fund Performance: The Quant Infrastructure Fund has given 42.98% annualized returns in the past three years and 35.38% in the last 5 years. The Quant Infrastructure Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Infrastructure Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,207Cr |
| 1Y Returns | 75.1% |
Quant Mid Cap Fund Direct Growth
Fund Performance: The Quant Mid Cap Fund has given 37.93% annualized returns in the past three years and 31.7% in the last 5 years. The Quant Mid Cap Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹5,421Cr |
| 1Y Returns | 67.5% |
Motilal Oswal Midcap Fund Direct Growth
Fund Performance: The Motilal Oswal Midcap Fund has given 36.22% annualized returns in the past three years and 27.06% in the last 5 years. The Motilal Oswal Midcap Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal Midcap Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹8,481Cr |
| 1Y Returns | 62.1% |
Quant Tax Plan Direct Growth
Fund Performance: The Quant Tax Plan Fund has given 34.96% annualized returns in the past three years and 30.25% in the last 5 years. The Quant Tax Plan Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Tax Plan Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,614Cr |
| 1Y Returns | 25.8% |
Kotak Infrastructure and Economic Reform Fund Direct Growth
Fund Performance: The Kotak Infrastructure and Economic Reform Fund has given 33.17% annualized returns in the past three years and 24.9% in the last 5 years. The Kotak Infrastructure and Economic Reform Fund comes under the Equity category of Kotak Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Kotak Infrastructure and Economic Reform Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹1,543Cr |
| 1Y Returns | 51.0% |
Quant ELSS Tax Saver Fund Direct Growth
Fund Performance: The Quant ELSS Tax Saver Fund has given 32.87% annualized returns in the past three years and 32.24% in the last 5 years. The Quant ELSS Tax Saver Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹7,769Cr |
| 1Y Returns | 57.0% |
Quant Large and Mid Cap Fund Direct Growth
Fund Performance: The Quant Large and Mid Cap Fund has given 31.45% annualized returns in the past three years and 26.02% in the last 5 years. The Quant Large and Mid Cap Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Large and Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,884Cr |
| 1Y Returns | 63.5% |
Tata Small Cap Fund Direct Growth
Fund Performance: The Tata Small Cap Fund has given 30.94% annualized returns in the past three years and 27.24% in the last 5 years. The Tata Small Cap Fund comes under the Equity category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹6,289Cr |
| 1Y Returns | 40.5% |
SBI Contra Direct Plan Growth
Fund Performance: The SBI Contra Fund has given 30.9% annualized returns in the past three years and 25.69% in the last 5 years. The SBI Contra Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Contra Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹25,324Cr |
| 1Y Returns | 49.3% |
Bandhan Tax Advantage (ELSS) Direct Plan Growth
Fund Performance: The Bandhan Tax Advantage (ELSS) Fund has given 28.88% annualized returns in the past three years and 18.62% in the last 5 years. The Bandhan Tax Advantage (ELSS) Fund comes under the Equity category of IDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bandhan Tax Advantage (ELSS) Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,160Cr |
| 1Y Returns | 16.8% |
ICICI Prudential Value Discovery Direct Growth
Fund Performance: The ICICI Prudential Value Discovery Fund has given 27.76% annualized returns in the past three years and 22.63% in the last 5 years. The ICICI Prudential Value Discovery Fund comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Value Discovery Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹40,653Cr |
| 1Y Returns | 44.9% |
SBI Long Term Equity Fund Direct Plan Growth
Fund Performance: The SBI Long Term Equity Fund has given 27.75% annualized returns in the past three years and 21.5% in the last 5 years. The SBI Long Term Equity Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Long Term Equity Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹21,202Cr |
| 1Y Returns | 60.3% |
Fund Performance: The ICICI Prudential Large & Mid Cap Fund has given 27.65% annualized returns in the past three years and 21.61% in the last 5 years. The ICICI Prudential Large & Mid Cap Fund comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Large & Mid Cap Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹11,333Cr |
| 1Y Returns | 47.3% |
JM Flexicap Fund Direct Plan Growth
Fund Performance: The JM Flexicap Fund has given 27.18% annualized returns in the past three years and 23.32% in the last 5 years. The JM Flexicap Fund comes under the Equity category of JM Financial Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in JM Flexicap Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹1,656Cr |
| 1Y Returns | 59.1% |
Axis Small Cap Fund Direct Growth
Fund Performance: The Axis Small Cap Fund has given 27.03% annualized returns in the past three years and 27.35% in the last 5 years. The Axis Small Cap Fund comes under the Equity category of Axis Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Axis Small Cap Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹19,606Cr |
| 1Y Returns | 41.1% |
