UTI Long Duration Fund NFO – Is it a Safe Bet for Long-Term Investors?

UTI Mutual Funds has launched Long Duration Fund NFO that would open for subscription on 6th March, 2023. UTI Long Duration Fund invests in fixed income securities that typically mature in long term. Long Duration Funds have provided 7% to 8% annualized returns in the last 5-10 years. Should you invest in the UTI Long Duration Fund NFO? What are the risk factors an investor should consider before investing in such funds?

Also Read: 5 Debt Mutual Funds with Highest SIP returns of 8% to 9% in last 10 years

What are Long Duration Mutual Funds?

Long duration funds invest in long term fixed income securities which typically have a Macaulay duration above 7 years. These funds have the potential to deliver higher returns along with higher risk for a medium-term to long term financial goal.

UTI Long Duration Fund NFO – Issue Details, Dates Review

UTI Long Duration Fund NFO – Issue Details

This is an open-ended mutual fund. Here are the NFO issue details.

Scheme Opens 06-Mar-23
Scheme Closes 15-Mar-23
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 500 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load < 3 year – 1% >= 3 year – Nil
Risk Moderate
Benchmark CRISIL Long Duration Fund AIII Index
Fund Manager Mr. Sunil Patil
Max TER 2.25%

UTI Long Duration Fund NFO – Investment Objectives

The investment objective of this scheme is to generate income through investments in a range of debt and money market instruments for long term.

However, there can be no assurance that the investment objective of the scheme will be achieved.

Performance of existing Long Duration Mutual Funds

Let us look at the performance of existing Long Duration Funds.

Scheme Name 1 Yr 3 Yrs 5 Yrs 10 Yrs
ICICI Prudential Long Term Bond Fund 2.8% 3.7% 7.2% 8.0%
Nippon India Nivesh Lakshya Fund 3.8% 4.6%

Why should you invest in UTI Long Duration Fund NFO?

Here are a few reasons to invest in such schemes.

1) These funds provide better returns when interest rates are expected to be stable or coming down. Post covid pandemic, we could see interest rates going down and in the last 1-2 years, the interest rates have increased and almost reached peak level. While there could be scope for some more rate hike, it is going to be stable for next few years or might even come down. This provides an opportunity to invest in long duration funds.

2) Such long duration funds provide indexation benefits (above 3 years) which makes it more tax efficient.

Major risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) These funds would provide similar or slightly higher returns compared to bank FD’s however comes with risk. Investors are better off investing in bank FDs.

2) Long duration funds could be highly volatile in the short term as these have a higher degree of interest rate risk. If you are an investor who keeps track mutual funds daily/weekly/monthly basis, you should avoid such funds.

3) Investors should read the NFO prospectus for complete risk factors.

Also Read: Five Equity Funds with Highest Returns in one year

Should you invest in the UTI Long Duration Fund NFO?

UTI Long Duration Fund invests in fixed income securities that have a maturity period over 7 years time frame. These funds are highly volatile in the short term, however, can provide stable returns in medium to long term. Also, these funds are tax efficient as investors can get indexation benefit if invested for over 3 years.

On the other side, such funds can provide 7% to 9% annualized returns and comes with risk. Even bank FD’s are now offering between 6% to 7.5% interest rates.

Moderate risk investors who are willing to invest for long term and happy with such moderate returns, can invest in such funds.

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Suresh KP


  1. If TER is 2.5%, annualized yeild is between 7 to 8%, then how this fund will be used to get returns to beat inflation?

  2. Sir,
    In this rising interest rate scenario, it would be prudent to invest in bank FDs rather than a long duration fund with the risk of falling NAVs at every successive hike in bank rate.

    1. The main advantage to invest in such long duration funds is post tax returns. Since debt funds get indexation benefits, post tax returns would be higher compared to bank FDs.

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