Investment
Duration Funds
Also known as: Duration-based Debt Funds, Maturity Funds
Debt mutual funds that invest based on specific duration targets to match interest rate sensitivity.
Detailed Explanation
Duration funds are debt mutual funds that maintain a specific duration profile to manage interest rate risk. Short duration funds (1-3 years) are less sensitive to rate changes, while long duration funds (7+ years) are more volatile but offer higher potential returns when rates fall. Medium duration funds (3-4 years) provide balanced exposure. Duration matching with investment horizon is crucial for debt allocation.