Such schemes spend more than seven years in debt instruments with a macaulay period. Both systems are particularly sensitive to changes in interest rates.
When the interest rate increases, these schemes ' returns are badly hit. In a falling rate environment, they will produce high returns.
These can be preferred by investors with a higher risk tolerance and a longer investment horizon. The age of the portfolio varies from
7 to 10 years. Bond prices (NAV) and interest rates are inversely correlated with the interest rate decrease benefits. Longer-term funds can yield higher returns,
but are more sensitive to changes in interest rates. Suitable For investors who want to invest money for longer periods of time but prefer less risky assets than
Long Duration Fund :
These mutual funds select investment bonds / debt so that the average portfolio maturity (residual) period exceeds 7 years (Macaulay duration).
Longer-term funds that yield higher returns, but are more sensitive to changes in interest rates.