Advantages of Medium Duration Mutual Funds
Investing in Medium Duration Mutual Funds comes with advantages for those looking for a rounded approach, to their portfolios.To begin with these funds offer an income stream by providing interest and dividend payments making them an appealing choice, for individuals seeking reliable cash flow.
1. Steady Income: Medium duration funds focus on bonds and debt instruments with maturities ranging from 3 to 7 years, providing a consistent income stream through interest and dividend payments.
2. Moderate Risk: These funds strike a balance between short-term and long-term funds, offering a moderate risk-reward profile. They are less susceptible to interest rate fluctuations compared to long-term funds, making them a more stable option.
3. Diversification: Medium duration funds invest in a variety of fixed-income securities, such as government bonds, corporate bonds, and other debt instruments. This diversification helps in spreading risk and reducing the impact of a poor-performing asset.
4. Tax Efficiency: Investors holding medium duration funds for the long term may benefit from lower capital gains tax rates. The potential tax advantages make them attractive for those looking to optimise their tax liabilities.
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