Purpose of Medium Duration Mutual Funds
Medium Duration Mutual Funds serve as a vital component in an investor’s portfolio, offering a balanced approach to financial objectives. Medium Duration Mutual Funds are designed with purposes in mind which makes them appealing to a range of investors. Firstly they aim to generate income for investors through interest and dividend payouts making them particularly attractive for those seeking cash flow. Additionally, medium duration funds target moderate capital appreciation, providing investors with the potential for growth without the aggressive nature associated with long-term funds.
1. Income Generation: Medium duration funds aim to deliver a consistent and reliable source of income to investors through interest and dividend payouts.
2. Moderate Capital Appreciation: While not as aggressive as long-term funds, medium duration funds seek to provide investors with a balanced potential for capital growth.
3. Lower Interest Rate Risk: Designed to have lower sensitivity to interest rate fluctuations, medium duration funds offer stability in changing market environments.
4. Portfolio Diversification: These funds play a crucial role in diversifying a portfolio, spreading risk across various fixed-income instruments and enhancing overall stability.
5. Balanced Risk-Reward Profile: Medium duration funds aim to strike a harmonious balance between risk and reward, offering investors a moderate risk profile while still providing growth potential.