Introduction
Investing in mutual funds can be an excellent strategy for long-term wealth accumulation. Long-duration mutual funds are particularly attractive for investors seeking high returns over an extended period. These funds typically invest in equities and are known for their volatility and potential for substantial returns. In this article, we’ll explore the best mutual funds for long-term investment in India, focusing on high-quality, low-competition keywords to help you make informed decisions.
Understanding Long Duration Mutual Funds
Long-duration mutual funds refer to funds with the potential to provide high returns over a prolonged period, often exceeding ten years. These funds are volatile and come with high risks, requiring investors to actively monitor their performance. Despite their volatility, these funds are favored for their ability to generate significant returns, making them suitable for investors willing to take on higher risks for potentially higher rewards.
Key Characteristics of Long Duration Mutual Funds
- High Returns: These funds aim to achieve substantial returns over the long term.
- Volatility: The value of these funds can fluctuate significantly.
- Equity Investments: Primarily invest in stocks of various companies.
- Active Management: Often actively managed by fund managers to maximize returns.
- Dividends: Potential to provide dividends to investors.
How Long Duration Mutual Funds Work
Long-duration mutual funds invest in the stocks of different companies. When you buy into these funds, you’re essentially purchasing a share of ownership in these companies. The performance of your investment is tied to the market performance of these stocks. Unlike debt funds, which offer fixed returns, equity mutual funds provide returns based on the market conditions and the company’s performance.
List of Top Long Duration Mutual Funds in India
Here’s a detailed look at some of the best long-duration mutual funds available in India, including their categories, risk levels, one-year returns, ratings, and fund sizes.
| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size (in Cr) |
|---|---|---|---|---|---|
| Motilal Oswal Midcap Fund | Equity | Very High | 61.7% | 5 | ₹10,378 |
| Invesco India Infrastructure Fund | Equity | Very High | 81.6% | 5 | ₹1,239 |
| Quant Infrastructure Fund | Equity | Very High | 83.6% | 5 | ₹3,564 |
| Kotak Infrastructure and Economic Reform | Equity | Very High | 64.3% | 5 | ₹1,989 |
| Quant Mid Cap Fund | Equity | Very High | 74.2% | 5 | ₹7,952 |
| Nippon India Small Cap Fund | Equity | Very High | 56.5% | 5 | ₹51,566 |
| Quant Tax Plan Fund | Equity | Very High | 25.8% | 5 | ₹5,614 |
| JM Flexicap Fund | Equity | Very High | 66.1% | 5 | ₹2,472 |
| Quant Large and Mid Cap Fund | Equity | Very High | 69.3% | 5 | ₹2,954 |
| SBI Contra Fund | Equity | Very High | 48.7% | 5 | ₹30,520 |
| Tata Small Cap Fund | Equity | Very High | 48.7% | 5 | ₹7,083 |
| Quant ELSS Tax Saver Fund | Equity | Very High | 61.5% | 5 | ₹9,860 |
| Bandhan Tax Advantage (ELSS) Fund | Equity | Very High | 16.8% | 5 | ₹5,160 |
| SBI Long Term Equity Fund | Equity | Very High | 59.0% | 5 | ₹23,887 |
| Motilal Oswal Large and Midcap Fund | Equity | Moderately High | 55.9% | 5 | ₹4,292 |
What Makes These Funds Stand Out?
Motilal Oswal Midcap Fund
- Performance: Has provided 40.33% annualized returns over the past three years and 31.84% over the last five years.
- Minimum Investment: ₹500 for both lump sum and SIP.
- Fund Size: ₹10,378 Cr.
Invesco India Infrastructure Fund
- Performance: Has given 38.58% annualized returns in the past three years and 32.81% in the last five years.
- Minimum Investment: ₹1,000 for lump sum and ₹500 for SIP.
- Fund Size: ₹1,239 Cr.
Quant Infrastructure Fund
- Performance: Has achieved 38.36% annualized returns in the past three years and 39.03% over the last five years.
- Minimum Investment: ₹5,000 for lump sum and ₹1,000 for SIP.
- Fund Size: ₹3,564 Cr.
Kotak Infrastructure and Economic Reform Fund
- Performance: Provided 38.23% annualized returns in the past three years and 29.29% over the last five years.
- Minimum Investment: ₹100 for both lump sum and SIP.
- Fund Size: ₹1,989 Cr.
Difference Between Long Duration and Short Duration Mutual Funds
The primary distinction between long-duration and short-duration mutual funds lies in their investment strategy and risk profile.
Long Duration Mutual Funds
- Investment: Primarily in equities.
- Risk: High, due to market volatility.
- Returns: Potential for high returns over the long term.
- Liquidity: No predefined maturity date; can be redeemed on request.
Short Duration Mutual Funds
- Investment: Fixed income securities like corporate bonds, government bonds, and treasury bills.
- Risk: Lower, as these are less volatile and uncorrelated with the stock market.
- Returns: More stable and predictable.
- Purpose: Ideal for achieving short to medium-term financial goals.
When Should You Invest in Long Duration Mutual Funds?
Investing in long-duration mutual funds is ideal if:
- You Seek High Returns: You are looking for potentially high returns over a long period.
- You Can Tolerate Volatility: You are comfortable with the fluctuations in the market.
- You Have Long-Term Goals: You are planning for long-term financial goals like retirement or wealth accumulation.
Issuers of Long Duration Mutual Funds
Asset Management Companies (AMCs) or fund houses issue mutual funds. These companies are regulated by the Securities and Exchange Board of India (SEBI), ensuring all mutual funds meet regulatory standards before being offered to the public.
Investing in Long Duration Mutual Funds
Example of How Investments Work
When you invest in a mutual fund, you’re buying units of the fund based on its Net Asset Value (NAV). The NAV is the total market value of the fund’s assets minus liabilities, divided by the number of units outstanding. Your investment grows or shrinks based on the NAV fluctuations.
Steps to Invest Through Platforms Like Groww
- Choose the Fund: Select a fund that aligns with your investment goals and risk tolerance.
- Invest: You can invest a lump sum amount or start a Systematic Investment Plan (SIP).
- Monitor Performance: Regularly review the fund’s performance to ensure it meets your expectations.
Detailed Analysis of Top Mutual Funds
Motilal Oswal Midcap Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 61.7%
- Rating: 5
- Fund Size: ₹10,378 Cr
- Investment: ₹500 (lump sum/SIP)
Invesco India Infrastructure Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 81.6%
- Rating: 5
- Fund Size: ₹1,239 Cr
- Investment: ₹1,000 (lump sum), ₹500 (SIP)
Quant Infrastructure Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 83.6%
- Rating: 5
- Fund Size: ₹3,564 Cr
- Investment: ₹5,000 (lump sum), ₹1,000 (SIP)
Kotak Infrastructure and Economic Reform Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 64.3%
- Rating: 5
- Fund Size: ₹1,989 Cr
- Investment: ₹100 (lump sum/SIP)
Quant Mid Cap Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 74.2%
- Rating: 5
- Fund Size: ₹7,952 Cr
- Investment: ₹5,000 (lump sum), ₹1,000 (SIP)
Nippon India Small Cap Fund
- Category: Equity
- Risk: Very High
- **1
Y Returns**: 56.5%
- Rating: 5
- Fund Size: ₹51,566 Cr
- Investment: ₹5,000 (lump sum), ₹100 (SIP)
Quant Tax Plan Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 25.8%
- Rating: 5
- Fund Size: ₹5,614 Cr
- Investment: ₹500 (lump sum/SIP)
JM Flexicap Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 66.1%
- Rating: 5
- Fund Size: ₹2,472 Cr
- Investment: ₹1,000 (lump sum), ₹100 (SIP)
Quant Large and Mid Cap Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 69.3%
- Rating: 5
- Fund Size: ₹2,954 Cr
- Investment: ₹5,000 (lump sum), ₹1,000 (SIP)
SBI Contra Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 48.7%
- Rating: 5
- Fund Size: ₹30,520 Cr
- Investment: ₹5,000 (lump sum), ₹500 (SIP)
Tata Small Cap Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 48.7%
- Rating: 5
- Fund Size: ₹7,083 Cr
- Investment: ₹5,000 (lump sum), ₹100 (SIP)
Quant ELSS Tax Saver Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 61.5%
- Rating: 5
- Fund Size: ₹9,860 Cr
- Investment: ₹500 (lump sum/SIP)
Bandhan Tax Advantage (ELSS) Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 16.8%
- Rating: 5
- Fund Size: ₹5,160 Cr
- Investment: ₹500 (lump sum/SIP)
SBI Long Term Equity Fund
- Category: Equity
- Risk: Very High
- 1Y Returns: 59.0%
- Rating: 5
- Fund Size: ₹23,887 Cr
- Investment: ₹500 (lump sum/SIP)
Motilal Oswal Large and Midcap Fund
- Category: Equity
- Risk: Moderately High
- 1Y Returns: 55.9%
- Rating: 5
- Fund Size: ₹4,292 Cr
- Investment: ₹500 (lump sum/SIP)
Conclusion
Investing in long-duration mutual funds can be a rewarding strategy for those willing to take on higher risks for the potential of substantial returns. The funds listed above are some of the best options available in India, offering diverse opportunities for long-term wealth accumulation. By carefully selecting and regularly monitoring your investments, you can achieve your financial goals and secure a prosperous future.
