Many new investors often tend to link mutual fund investments to a high amount of risk. However, mutual funds could have varying degrees of risk depending on the portfolio composition and fund objective. Investors can choose a mutual fund depending on their risk appetite.
Those who prefer higher returns may have to choose a high risk mutual fund investment. High risk mutual funds are schemes that primarily depend on the market movement forecasts. These mainly comprise equity funds and are ideal for aggressive investors who have some level of knowledge on stocks and market functioning. Here, we will explore high risk funds in detail and share some of the top performing high risk mutual fund recommendations.
Some mutual funds may be exposed to significant volatility in order to generate higher returns. However, these may also incur comparatively higher losses when markets do not perform well. Generally, equity funds are considered high risk.
Within equity funds, mid-cap or small-cap funds are rated higher on the riskometer. This is because mid-cap and small-cap funds invest in medium-sized firms and small growing companies, respectively. While these have higher opportunities for growth and their stock prices may rise up to give higher returns, the stock prices may also fall down because of reasons like poor performance of the company, market downturn, etc.
Asset Management Companies often conduct thorough research to determine the possibility of higher returns from investments before establishing a portfolio and offering it to investors.
Here are the factors to be considered by investors while determining their suitability for a high risk mutual fund investment:
Here are the important factors that must be considered while investing in high risk mutual funds:
Tax treatment of the returns generated from mutual funds are dependent on the timeline of investment. For instance, if an investor gets a capital gain of Rs. 50,000 from an investment in an equity fund, Short Term Capital Gains Tax of 15% is applicable if the amount is withdrawn within one year of investment. Thus, the tax payable will be Rs. 7,500.
If an investor makes a capital gain of Rs. 1.5 lakh on an investment in an equity fund and withdraws the amount after 1 year of investment, Long Term Capital Gains Tax of 10% is applicable on Rs. 50,000. Rs.1 Lakh is exempted from tax. Thus, the tax payable will be Rs. 5,000.
Investors can diversify their portfolio by including high-risk mutual funds within the same. However, it is important to take into account the expense ratio of a high-risk fund, along with the fund manager’s track record. The performance record of the AMC and that of the mutual fund against its benchmark index must be carefully studied before selecting a high risk mutual fund for investment.
Some of the top performing high risk mutual fund recommendations for 2021 are:
Mid-cap funds invest in stocks of mid-cap companies. Mid-cap is short form for medium or middle capitalisation. Mid-cap companies have a market capitalization ranging between Rs. 500 crores to Rs. 10,000 crores. BSE -Midcap Index comprises mid-cap companies. Mid-cap stocks are often under-researched and under-valued. Therefore, while these may be high risk, they may also have the potential to generate higher returns.
The scheme aims to generate long-term capital appreciation through investments in equity and equity-related securities. It focuses on investments predominantly in mid-cap companies. The fund invests 97.45% in Indian stocks of which 64.12% is in mid-cap stocks, 24.76% in small-cap stocks and 5.19% is in large-cap stocks.
| Inception Date | January 01, 2013 |
| Benchmark Name | NIFTY Midcap 100 Total Return Index |
| Fund Manager | Pankaj Tibrewal |
| Expense Ratio | 0.54% |
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 98.04% | 29.15% | 16.05% | 18.92% | 20.31% |
| Inception Date | January 1, 2013 |
| Benchmark Name | NIFTY Midcap 100 Total Return Index |
| Fund Manager | Harshad Patwardhan |
| Expense Ratio | 0.71% |
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 97.08% | 31.09% | 14.80% | 18.88% | 21.19% |
The fund aims to achieve long-term capital appreciation through investments predominantly in equity & equity related instruments of Mid-Cap companies. It has 95.3% investment in Indian stocks of which 60.49% is in mid-cap stocks, 12.55% is in large-cap stocks and 9.37% in small-cap stocks.
| Inception Date | January 01, 2013 |
| Benchmark Name | S&P BSE Mid Cap Total Return Index |
| Fund Manager | Shreyash Devalkar |
| Expense Ratio | 0.50% |
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 67.98% | 28.84% | 19.21% | 20.04% | 19.85% |
The scheme aims to provide long-term capital appreciation through investments predominantly in Mid-Cap companies. The fund invests 95.01% in Indian stocks of which 60.37% is in mid-cap stocks, 23.6% in small-cap stocks and 1.98% is in large-cap stocks.
| Inception Date | January 01, 2013 |
| Benchmark Name | NIFTY Midcap 100 Total Return Index |
| Fund Manager | Chirag Setalvad |
| Expense Ratio | 1.01% |
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 93.49% | 22.99% | 11.69% | 16.78% | 19.48% |
Small cap mutual funds are funds that invest a majority of the collected pool in stocks of small cap companies. Any company that has a market capitalization of under Rs. 500 crores falls under the small cap company segment. These are relatively smaller but have the potential to expand aggressively. Thus, small-cap mutual funds have higher potential of generating greater returns but carry higher degree of risk.
The fund aims for long-term capital growth while offering sufficient liquidity through investments predominantly in a well-diversified basket of equity stocks of small cap companies. Fund invests 94.08% in Indian stocks of which, 73.07% in small-cap stocks and 9.38% is in mid-cap stocks.
| Inception Date | January 1, 2013 |
| Benchmark Name | S&P BSE Small Cap Total Return Index |
| Fund Manager | R. Srinivasan |
| Expense Ratio | 0.87% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 107.23% | 33.46% | 15.89% | 22.86% | 26.90% |
The scheme’s objective is to generate capital appreciation through a diversified portfolio of equity and equity related securities. It invests predominantly in small cap companies. Fund invests 93.91% in Indian stocks of which 65.63% in small-cap stocks, 15.34% in mid-cap stocks and 2.13% in large-cap stocks.
| Inception Date | January 01, 2013 |
| Benchmark Name | NIFTY Smallcap 100 Total Return Index |
| Fund Manager | Pankaj Tibrewal |
| Expense Ratio | 0.57% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 143.20% | 40.25% | 18.94% | 20.75% | 20.24% |
The fund aims for capital appreciation through investments predominantly in equity and equity related instruments. It focuses on investments in small-cap companies. The fund invests 98.15% in Indian stocks of which 77.52% is in small-cap stocks, 6.17% is in mid-cap stocks and 4.2% is in large-cap stocks.
| Inception Date | January 2, 2013 |
| Benchmark Name | NIFTY Smallcap 250 Total Return Index |
| Fund Manager | Samir Rachh |
| Expense Ratio | 0.99% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 129.36% | 31.76% | 15.02% | 21.77% | 20.15% |
The fund primarily invests in stocks of small-cap companies with the objective of achieving capital appreciation in the long run. 90.57% of the fund’s investment is in Indian stocks. Of this, 68.93% is in small-cap stocks and 10.9% is in mid-cap stocks.
| Inception Date | November 29, 2013 |
| Benchmark Name | NIFTY Smallcap 100 Total Return Index |
| Fund Manager | Anupam Tiwari |
| Expense Ratio | 0.36% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 97.39% | 34.99% | 22.03% | 20.73% | 24.97% |
Multi-cap funds are equity funds that aim for diversification through investment in stocks of companies with varying market capitalizations. The funds make investments in varying proportions to achieve the investment objective. A Multi-cap fund allows a fund manager the flexibility to switch investments in stocks of different market capitalisations. These are best suited for investors who have medium to high-risk appetite.
The scheme aims to achieve long-term capital appreciation through investments primarily in equity and equity related instruments. The fund consists of 65.39% investment in Indian stocks of which 33.97% is in large-cap stocks, 19.51% in small-cap stocks and 9.24% is in mid-cap stocks.
| Inception Date | May 28, 2013 |
| Benchmark Name | NIFTY 500 Total Return Index |
| Fund Manager | Raj MehtaRajeev Thakkar |
| Expense Ratio | 0.91% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 74.32% | 29.40% | 20.88% | 20.03% | 20.01% |
The fund aims to achieve long-term capital growth and regular income through 90% investment in equities and remaining 10% in debt and money market instruments. It adopts a top-down & bottom-up approach to investing. It also invests a portion of the pooled money in IPOs, emerging sectors & other similar primary market offerings.
| Inception Date | January 01, 2013 |
| Benchmark Name | S&P BSE AllCap Total Return Index |
| Fund Manager | Anil Shah |
| Expense Ratio | 1.17% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 76.26% | 19.14% | 12.70% | 16.66% | 17.28% |
The scheme aims to achieve long-term capital appreciation through investments predominantly in equity and equity related securities of companies across different market capitalizations. 98.02% of the pooled funds are invested in Indian stocks. Of this, 42.25% is invested in large-cap stocks, 33.93% in mid-cap stocks and 8.98% in small-cap stocks.
| Inception Date | January 2, 2013 |
| Benchmark Name | NIFTY 500 Total Return Index |
| Fund Manager | Ajay Tyagi |
| Expense Ratio | 1.22% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 82.27% | 26.25% | 17.25% | 17.52% | 16.35% |
The fund aims to achieve long-term capital appreciation through investments in equity and equity-related securities of large, mid and small companies. The fund adopts a bottom up investment approach for stock selection across the market capitalization range.
| Inception Date | January 01, 2013 |
| Benchmark Name | Nifty 500 Multicap 50:25:25 Total Return Index |
| Fund Manager | Amit Nigam, Pranav Gokhale |
| Expense Ratio | 0.93% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | Since Inception |
| 77.13% | 23.69% | 11.81% | 15.87% | 18.73% |
High-risk funds must be carefully studied before making an investment. It is advisable for new investors to gain sufficient market knowledge before utilising high risk mutual fund investments to gain additional returns in their portfolio.
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