How Do Medium Duration Mutual Funds Work?

Medium duration mutual funds pool investments from multiple investors to invest in a range of debt instruments, typically with a maturity of 3 to 4 years. These funds focus on balancing the risk and return by holding a combination of government bonds, corporate bonds, and other fixed-income securities. Fund managers actively assess interest rate trends, macroeconomic factors, and credit ratings to strategically manage the fund's duration.

By focusing on medium-term instruments, these funds aim to provide steady returns with a moderate level of risk, making them an attractive option for investors looking for stability and consistent growth in the debt space.