Aditya Birla Sun Life Medium Term Plan delivered a 9.8% three-year CAGR, ranking first among medium-duration debt funds as of June 25, 2026. While the fund outperformed its peers and benchmark, investors should note that debt fund returns depend on interest rate movements and the credit quality of the bonds held in the portfolio.
What Happened
Latest data from June 25, 2026, indicates that the Aditya Birla Sun Life Medium Term Plan has secured the top spot among medium-duration debt funds for the three-year period. The fund recorded a compound annual growth rate (CAGR) of 9.8 percent. This ranking focused on schemes with a minimum asset size of Rs 1,500 crore. In the same category, the SBI Medium Duration Fund currently manages the largest corpus, valued at Rs 6,395.2 crore.
Peer And Benchmark Performance
The fund's performance has outpaced several prominent competitors. For the three-year period, the Aditya Birla scheme returned 9.8 percent, compared with 7.9 percent for the Kotak Medium Term Fund and 7.8 percent for the ICICI Pru Medium Term Bond Fund.
Beyond beating peers, the fund also outperformed its benchmark index. Over the three-year period, it exceeded the benchmark return by 3.1 percentage points, as the benchmark index returned 6.7 percent. The gap was even wider over a one-year window, where the fund outperformed the benchmark by 6.6 percentage points.
Why Rankings And Returns Change
It is important for investors to note that rankings often shift depending on the time frame chosen. For instance, while the Aditya Birla fund led over the three-month and one-year periods, the Axis Strategic Bond Fund was the top performer over a one-month window, delivering a 1.9 percent return.
Mutual fund returns are not fixed and can vary based on the manager's strategy, such as how long they hold bonds (duration) and the quality of companies they lend money to (credit quality). A fund that performs well in one market cycle may not necessarily repeat that performance if interest rates or economic conditions change.
Risks In Medium-Duration Debt Funds
Unlike fixed deposits, debt mutual funds are subject to market risks. When interest rates in the economy rise, the prices of existing bonds usually fall, which can impact the net asset value (NAV) of the fund. This is known as interest rate risk.
Additionally, these funds face credit risk, which refers to the possibility that the companies whose bonds the fund holds may default on interest or principal payments. Investors should always review the portfolio to understand the quality of debt instruments held by the fund, as higher-yielding funds often take on higher credit risk to generate those returns.
What Investors Should Track
Investors evaluating these funds should look beyond just past returns. Key monitorables include the expense ratio of the fund, the average maturity of the portfolio, and the credit rating of the underlying bonds. Since debt markets react significantly to RBI policy changes, keeping an eye on the interest rate outlook is also essential. Before investing, it is helpful to check the fund's official fact sheet to see if the investment strategy aligns with your own risk appetite and time horizon.