Is this the right time to book profits on a long-duration mutual fund scheme?

Yes, we can say so. After a recent step by RBI, called operation twist, the market is showing better yields on long-term investments as compared to short-term investments. Long term bonds enjoy a ‘term premium’ as these are considered to be riskier among the investors due to the uncertainty associated with the long-term horizon. Investors expect higher yields as a reward for holding investment over the longer-term. RBI is making serious efforts to bring uniformity in the yield curve of the economy as a whole, so as to serve investors with better returns in the future. 

Also, the underlying sentiment in the bond market suggests that room for further upside in long-dated bonds is limited.  Moreover, it is more likely that the Government would be unable to meet its fiscal target this year, which means there will be a wider fiscal gap in government’s planned expenditure in relation to its expected income. This implies that the Government is going to borrow more, this could turn to be a piece of bad news for the bond market as an additional supply of bonds will bring down bond prices, which means that this could be a great time to sell your current investment in bonds and book the profit. However, you can also continue with your investment and start buying these bonds at a lower price.