Best Medium to Long Term Funds to Invest in November 2024

Mutual fund managers and advisors are urging conservative bond investors to stick to “safer” short-term bond funds such as money market funds, liquid funds and short-term funds. This could explain why most mutual fund investors are unaware of the existence of medium to long-term debt mutual funds.

As per Sebi norms, medium to long term funds are mandated to invest in debt and money market instruments such that the duration of the Macaulay portfolio is four to seven years. Since these schemes invest in long-term debt securities, they are considered risky. Even a small upward movement in interest rates could make these systems extremely risky and volatile. To put it simply, investors could lose money in such a scenario. This explains why consultants don’t often talk about these systems. It goes without saying that investors should be extremely cautious about these plans in the current scenario.

Long-term debt plans are extremely sensitive to changes in interest rates. You lose money when interest rates rise. When interest rates fall, they benefit the most. According to investment experts, when investing in debt securities for a long period of time, the investor is forced to go through an interest rate cycle that consists of an up and a down phase. This means that the investor may face great volatility and sometimes losses if interest rates start to fall or rise. It goes without saying that the opposite scenario could benefit investors.

Investment advisors believe that many conservative investors would not be able to survive turbulent phases. Investors can avoid this only by timing their entry and exit from long-term debt funds. It would be difficult for many investors to predict the movement of interest rates and entry and exit from the plans. This explains the advice to stick to short-term remedies.

However, this does not mean that you should not be familiar with the medium and long duration category. Anyone who is willing to take risks and has a long investment horizon can invest in these programs with the help of competent investment fund advisors. The only basic requirement is that you are aware of the additional risk of these systems. Here are our recommended medium to long term debt funds.

There are no changes in the list this month. All projects went well. Please follow our monthly updates to stay on top of your investments.Best Medium to Long Term Bond Funds to Invest in November 2024

• SBI Magnum Income Fund
• ICICI Prudential Bond Fund
• Aditya Birla Sun Life Income Fund

methodology

If you want to know more about our methodology, you can take a look.
ETMutualFunds.com has used the following parameters for selecting debt mutual fund schemes.
1. Average rolling return: Rolled daily for three years.

2. Consistency over the last three years: The Hurst exponent H is used to calculate the consistency of a fund. The H-exponent is a measure of the randomness of a fund’s NAV series. High H funds tend to have low volatility compared to low H funds.

i)If H = 0.5, the return series is called geometric Brownian time series. This type of time series is difficult to predict.

ii) If H <0.5, it is called a mean-reverting series.

iii) If H > 0.5, the series is said to be persistent. The larger the value of H, the stronger the trend of the series

3. Downside Risk: For this measure, we only considered the negative returns of the mutual fund system.
X = return below zero

Y = sum of all squares of X

Z = Y/number of days needed to calculate the ratio

Downside risk = square root of Z

4. Outperformance: Fund return – benchmark return. Daily rolling returns are used to calculate the fund and benchmark returns and then the fund’s active return.

Asset size: For debt funds, the asset size threshold is Rs 50 crore

(Disclaimer: Past performance is no guarantee of future performance.)