Best Long-Term Mutual Funds in India - Checkout for Sustainable Growth
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Long-term mutual funds are designed for investors with a prolonged investment horizon, offering the potential for higher returns. However, these gains come with inherent risks, particularly related to fluctuations in interest rates, which can impact the fund's Net Asset Value (NAV).

Investing in long-term mutual funds entails continuously monitoring interest rates and economic conditions. To help you understand this better, we present some of the best long-duration mutual funds available in India.

Features of Best Long-Duration Funds

The best long-term mutual funds have the following key features:

  • Expert fund management: Long-term funds like Kotak are skilled to make good market decisions. It ensures your investments remain in well-performing assets.
  • Investment options: There should be options available for investors - lump-sum investment or SIP investment. Lump-sum investment is where the entire amount is invested in one go. A systematic Investment Plan or SIP is where investors invest pre-defined amounts in regular intervals.
  • Market exposure: Best long-duration mutual funds primarily invest in equities. It offers both higher returns and market risks. In the longer run, they tend to absorb the risk effectively.

Investors should consider these features before they choose the best long-term mutual funds.

Advantages of Best Long-Term Mutual Funds

Investing in the best long-term mutual funds offers several benefits:

1. Potential for Higher Returns

Long-term mutual funds are designed to generate higher returns over an extended period. They typically invest in a diversified portfolio of stocks, bonds, or a mix of both, aiming for substantial growth potential.

2. Compounding Benefits

Investing in long-term mutual funds allows you to benefit from the power of compounding. Reinvesting dividends and capital gains can significantly boost your investment returns over time.

3. Risk Mitigation

Long-term investments often have a more extended time horizon, enabling them to weather short-term market fluctuations. Diversification across various asset classes helps spread risk, reducing the impact of market volatility.

Best Mutual Funds to Invest in for Long Term

Funds Mutual fund type Fund size (in Rs Cr) 3Y Returns
Nippon India Nivesh Lakshya Fund Debt 6,361 4.10%
HSBC Corporate Bond Fund Debt 6,655 4.52%
SBI Long Duration Fund Debt 914 -
HDFC Long Duration Debt Fund Debt 1332 -

Who Should Invest in the Best Long-Duration Mutual Funds?

Best long-term mutual funds are ideal for investors with specific risk profiles and investment duration. They are suitable for investors who:

  • Have a Long Investment Horizon

Long-duration funds present growth opportunities for those ready to maintain their investment in these assets for a considerable time frame that is often over 5 years.

  • Are Risk-Tolerant

Market risk is associated with long-term funds. This makes them suitable for investors with high-risk tolerance.

  • Seek High Return

Long-duration funds can appeal to investors seeking the prospect of greater returns through compounding over time.

Read Also : एसआईपी क्या है

Taxability of Long-Term Mutual Funds

In terms of taxation, the Long Term Capital Gains (LTCG) on Equity Oriented Schemes are subject to a 10% rate, devoid of indexation and foreign currency conversion benefits, along with an applicable surcharge. Additionally, a 4% Health and education cess is levied on this LTCG. However, this taxation scheme is not applicable when considering units of specified mutual funds. For other schemes, the Long Term Capital Gains are taxed at a rate of 20%, accompanied by an applicable surcharge. Similar to Equity Oriented Schemes, a 4% Health and Education cess is imposed on these gains.

Frequently Asked Questions

Q: Which mutual fund is better for the long term?

Diversified equity mutual funds are often a better choice for long-term investments due to their potential for higher returns.

Q: Which mutual fund is best for 7 years?

For long-term investments, consider equity mutual funds. Diversified equity funds can be suitable for a 7-year investment horizon.

Q: Which fund is best for 5 years?

Equity mutual funds offer the potential for growth over 5 years. Choose well-managed funds aligned with your financial goals.

Q: Can you sell Long Duration Funds at any time?

You can generally sell long-duration funds at any time, but assessing market conditions, duration and potential exit loads is advisable.

Q: Are Long Duration Funds risky?

Long-duration funds can be riskier due to interest rate sensitivity. They are best suited for investors with a higher risk tolerance.

Q: What is the difference between Long Duration and Short Duration Mutual Funds

  Long Duration Funds Short Duration Funds
Investment Horizon Longer (typically over 5 years) Moderate (1-3 years)
Interest Rate Sensitivity Higher, more sensitive to rate changes Lower, less sensitive to rate changes
Risk Level Higher, potentially more volatile Lower, relatively more stable

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.