Low risk mutual funds, true to their name, offer minimal risk and a guaranteed stable return. They primarily invest in real estate and government bonds to stay ahead of inflation. By focusing on debt instruments, these funds bolster your portfolio’s risk-reward balance. Selecting the top low-risk mutual funds can make all the difference in your investment journey.
An index monitors asset prices, including equities, commodities, and currencies. A futures contract, a derivative, compels traders to buy or sell the underlying asset at a predetermined price on a specific future date.
10 Best Low Risk Mutual Funds
Here is an educational list of low risk mutual funds. This is meant to be informative and not recommendatory:
| Name | Sub Category | AUM | Expense Ratio | CAGR 5Y | SEBI Risk Category | Tracking Error |
|---|---|---|---|---|---|---|
| Tata Arbitrage Fund | Arbitrage Fund | 11828.86 | 0.30 | 6.16 | Low | 1.01 |
| Edelweiss Arbitrage Fund | Arbitrage Fund | 11768.88 | 0.38 | 6.12 | Low | 0.99 |
| Invesco India Arbitrage Fund | Arbitrage Fund | 15280.69 | 0.39 | 6.12 | Low | 0.99 |
| Kotak Equity Arbitrage Fund | Arbitrage Fund | 43514.53 | 0.43 | 6.05 | Low | 0.94 |
| Nippon India Arbitrage Fund | Arbitrage Fund | 14796.07 | 0.38 | 5.97 | Low | 0.98 |
| Axis Arbitrage Fund | Arbitrage Fund | 4938.62 | 0.31 | 5.95 | Low | 0.98 |
| HSBC Arbitrage Fund | Arbitrage Fund | 2274.14 | 0.28 | 5.89 | Low | 1.08 |
| Baroda BNP Paribas Arbitrage Fund | Arbitrage Fund | 1059.62 | 0.38 | 5.88 | Low | 1.13 |
| UTI Arbitrage Fund | Arbitrage Fund | 4887.58 | 0.36 | 5.86 | Low | 0.99 |
| ICICI Pru Equity-Arbitrage Fund | Arbitrage Fund | 19732.62 | 0.30 | 5.83 | Low | 0.93 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The funds mentioned are taken from Tickertape Mutual Fund Screener on 19th June 2024. They are sorted based on their 5-yr CAGR (highest to lowest) and belong to the Growth Plan. The tracking error is set to ‘Mid’.
🚀Pro Tip:You can useTickertape’s Mutual Fund Screenerto research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of the Best Low Risk Mutual Funds
Here is a brief overview of the best low risk mutual funds listed above:
Tata Arbitrage Fund
The Tata Arbitrage Fund is managed by Tata Asset Management Ltd., which is a part of the Tata Group, one of India’s largest and most respected conglomerates. The fund aims to provide investors with stable returns by exploiting arbitrage opportunities in the equity markets.
As of 19th June 2024, the fund has an Asset Under Management (AUM) of ₹11,828.86 crore and an expense ratio of 0.30%. It has a 5-year CAGR of 6.16%. This fund is categorised as Low risk by SEBI and has a tracking error of 1.01%.
Edelweiss Arbitrage Fund
Managed by Edelweiss Asset Management Ltd., the Edelweiss Arbitrage Fund focuses on capturing arbitrage opportunities in equity markets to provide consistent returns. Edelweiss Financial Services Limited was established in 1996 and has since grown to offer a diverse range of financial products.
The fund’s AUM is ₹11,768.88 crore with an expense ratio of 0.38%. It has delivered a 5-year CAGR of 6.12%. The SEBI Risk Category for this fund is Low, with a tracking error of 0.99%.
Invesco India Arbitrage Fund
Invesco India Arbitrage Fund is managed by Invesco Asset Management (India) Private Limited, a subsidiary of Invesco Ltd., a global investment management firm founded in 1935. The fund leverages arbitrage opportunities to provide minimal-risk returns.
The fund has an AUM of ₹15,280.69 crore and an expense ratio of 0.39%. It has a 5-year CAGR of 6.12% and a 10-year CAGR of 6.62%. It is categorised under Low risk by SEBI and has a tracking error of 0.99%.
Kotak Equity Arbitrage Fund
The Kotak Equity Arbitrage Fund is managed by Kotak Mahindra Asset Management Company Limited, a part of Kotak Mahindra Bank, which was established in 1985. The fund focuses on equity arbitrage opportunities to offer stable returns.
The fund manages an AUM of ₹43,514.53 crore and has an expense ratio of 0.43%. It has a 5-year CAGR of 6.05% and a 10-year CAGR of 6.67%. The SEBI Risk Category is Low, with a tracking error of 0.94%.
Nippon India Arbitrage Fund
Managed by Nippon Life India Asset Management Limited, Nippon India Arbitrage Fund aims to provide consistent returns through arbitrage opportunities. Nippon Life Insurance Company, the sponsor, was founded in 1889 and is one of Japan’s leading insurers.
The fund’s AUM is ₹14,796.07 crore, with an expense ratio of 0.38%. It has a 5-year CAGR of 5.97% and a 10-year CAGR of 6.72%. This fund falls under the Low risk category as per SEBI and has a tracking error of 0.98%.
Axis Arbitrage Fund
The Axis Arbitrage Fund, managed by Axis Asset Management Company Ltd., focuses on capturing arbitrage opportunities to deliver stable returns. Axis Bank, the parent company, was founded in 1993 and is one of India’s leading private sector banks.
The fund has an AUM of ₹4,938.62 crore and an expense ratio of 0.31%. It has achieved a 5-year CAGR of 5.95%. It is categorised under Low risk by SEBI with a tracking error of 0.98%.
HSBC Arbitrage Fund
Managed by HSBC Asset Management (India) Private Ltd., the HSBC Arbitrage Fund leverages arbitrage opportunities in the equity market for low-risk returns. HSBC, the global financial services company, was founded in 1865.
The fund’s AUM is ₹2,274.14 crore and it has an expense ratio of 0.28%. The fund has delivered a 5-year CAGR of 5.89%. The SEBI Risk Category is Low, with a tracking error of 1.08%.
Baroda BNP Paribas Arbitrage Fund
The Baroda BNP Paribas Arbitrage Fund is managed by Baroda BNP Paribas Asset Management India Pvt. Ltd., a joint venture between Bank of Baroda and BNP Paribas Asset Management. Bank of Baroda was founded in 1908.
The fund has an AUM of ₹1,059.62 crore and an expense ratio of 0.38%. It has a 5-year CAGR of 5.88%. It is classified as Low risk by SEBI and has a tracking error of 1.13%.
UTI Arbitrage Fund
The UTI Arbitrage Fund is managed by UTI Asset Management Company Ltd., which was established in 1964 and is one of the oldest mutual fund companies in India. The fund exploits arbitrage opportunities for consistent returns.
The fund’s AUM is ₹4,887.58 crore and it has an expense ratio of 0.36%. It has a 5-year CAGR of 5.86% and a 10-year CAGR of 6.48%. The SEBI Risk Category is Low, with a tracking error of 0.99%.
ICICI Pru Equity-Arbitrage Fund
Managed by ICICI Prudential Asset Management Company Ltd., the ICICI Pru Equity-Arbitrage Fund focuses on equity arbitrage strategies to provide low-risk returns. ICICI Bank, the parent company, was founded in 1994.
The fund’s AUM is ₹19,732.62 crore and it has an expense ratio of 0.30%. It has a 5-year CAGR of 5.83% and a 10-year CAGR of 6.55%. It is classified under Low risk by SEBI, with a tracking error of 0.93%.
What are Low Risk Mutual Funds?
Low risk mutual funds are designed to provide relatively stable returns while minimising risk. They are not entirely risk-free but generally offer better returns and greater tax efficiency compared to traditional investments like fixed deposits, making them a suitable choice for cautious investors.
Debt funds, a popular type of low risk funds, invest in money market instruments, government bonds, and other low-risk securities. Within debt funds, you’ll find various schemes, including liquid funds, dynamic bond funds, gilt funds, and ultra-short-term funds.
Although debt funds carry some interest rate and credit risk, investing in higher-rated bonds can help mitigate these risks. These funds focus on delivering optimal returns with minimal risk, making them an excellent option for parking idle funds for short periods.
How Do Low Risk Mutual Funds Work?
Low-risk high-return mutual funds in India may provide a stable and secure way to grow your wealth. Here’s a detailed overview of how these mutual funds operate:
Diversification
These low-risk mutual funds often spread investments across various assets, such as government bonds and money market instruments. This diversification may help in reducing the risk from market fluctuations, making them some of the safest mutual funds in India.
Professional Management
Professional fund managers, who are skilled and experienced, make informed investment decisions to optimise returns while managing risk. Their expertise can be crucial in navigating the complexities of the market and maintaining the low-risk nature of the fund.
Risk Mitigation
Low-risk mutual funds prioritise stable and reliable assets, often imposing restrictions on riskier investments. This approach helps in ensuring that the investment remains less risky and more stable over time.
Liquidity
One of the attractive features of low-risk mutual funds is their liquidity. These funds are relatively easy to buy and sell, providing you with quick access to your money whenever needed.
Returns
Although they focus on safety, low-risk mutual funds with high returns can offer regular dividends and aim for capital appreciation. This makes them particularly attractive for conservative investors looking for safe mutual funds with high returns.
How to Invest in Low Risk Mutual Funds?
Investing in low-risk mutual funds can be an excellent way to grow your wealth steadily while minimising financial volatility. If you are seeking a secure investment option that provides reasonable returns and safeguards your capital, low-risk mutual funds may be a suitable choice. Here’s a detailed guide to help you invest in these funds and build a safer financial future.
Define Your Financial Goals
Before diving into the world of low-risk mutual funds, it’s important to establish clear financial goals. Ask yourself what you aim to achieve with your investments. Whether you are saving for retirement, building an emergency fund, or funding your child’s education, understanding your objectives will help you choose the best low-risk mutual funds that match your needs.
Understand Your Risk Tolerance
Low-risk mutual funds are designed to minimise substantial financial losses. However, it’s essential to know your personal risk tolerance. Are you comfortable with slight fluctuations in your investments, or do you prefer absolute stability? Your risk tolerance will influence your fund selection.
Research Different Low-Risk Funds
Low-risk mutual funds come in various forms, including money market funds, bond funds, and dividend income funds. You may want to conduct thorough research to understand the different options available. Each type of fund has its own characteristics and benefits, so understanding these differences is crucial. You can start by comparing their historical performance to see how they have fared in different market conditions.
Additionally, it may be helpful to look at the expense ratios, which are the fees associated with managing the fund. Lower expense ratios can lead to better net returns over time. Furthermore, assessing the expertise of the fund managers can provide insights into their ability to make informed investment decisions that align with the fund’s objectives. By considering these factors, you can make more informed decisions about which low-risk mutual funds may suit your financial goals.
Diversify Your Portfolio
Diversification is a fundamental strategy to reduce risk. Spread your investments across various low-risk funds to avoid putting all your eggs in one basket. This approach can further protect your capital while potentially increasing your returns.
Analyse Past Performance
While past performance doesn’t guarantee future results, it can provide valuable insights. You can analyse the historical returns of the funds you are considering to better understand their performance. Looking for consistent, stable growth patterns that align with your investment objectives may help you achieve your financial goals with greater confidence and security.
Evaluate Fund Expenses
Every mutual fund comes with associated expenses, including management fees and operating costs. It’s important to keep an eye on the expense ratio, as these fees can impact your overall returns. Lower expense ratios can enhance your returns over time by reducing the cost of your investment.
Additionally, understanding the structure of these fees and how they are applied can help you make more informed investment choices. By carefully evaluating the fund expenses, you can select funds that offer the potential for better net returns while aligning with your risk tolerance and investment objectives.
Features of Low Risk Mutual Funds
- Optimal Risk Reward Ratio: Low-risk mutual funds invest in high-rated securities, aiming to provide a balance between safety and returns. Unlike volatile equity mutual funds, these funds may offer more stability, making them potentially suitable for short-term investments.
- Strategic Asset Allocation: These funds primarily focus on debt instruments such as government bonds, T-bills, and debentures. Fund managers often carefully select securities with excellent credit ratings and a history of strong returns, which may help in ensuring optimal performance.
- Diverse Fund Types: Low-risk mutual funds offer a variety of schemes tailored to different investment goals. You can choose from options like liquid funds, ultra-short-term funds, gilt funds, or dynamic bond funds to align with your objectives.
- Short-Term Gains: These funds are designed for short-term, low-risk investments, emphasising stability due to their investments in high-rated and government securities.
- Capital Protection and Returns: Low-risk mutual funds aim to provide optimal returns while safeguarding your capital, which might appeal to conservative investors.
- Tax-Efficient Choice: Investors in higher tax brackets may benefit from tax savings by choosing low-risk mutual funds over traditional bank deposits. These funds offer long-term tax advantages, thanks to the indexation benefits provided by debt fund investments.
Factors Affecting Investment in Low Risk Mutual Funds
Investing in very low-risk mutual funds involves several factors that may influence your choices and outcomes. Here are some key determinants to consider:
Risk Tolerance and Investment Goals
Your personal risk tolerance and financial objectives play a crucial role in determining whether low-risk mutual funds align with your investment strategy. If you prioritise capital preservation and are risk-averse, these funds may be suitable. However, if you seek higher returns and have a higher risk tolerance, you might need to explore other options.
Market Conditions
The overall economic and market climate significantly impacts low-risk mutual funds. They typically perform well in stable economies. During times of uncertainty, they might outshine riskier investments due to their focus on stability and capital protection.
Interest Rate Environment
Interest rates directly affect returns, especially for funds invested in debt instruments. Rising rates can decrease bond values, affecting the fund’s net asset value, while falling rates can increase bond prices, potentially leading to capital gains.
Fund Management
The expertise and strategies of the fund manager play a critical role in the fund’s performance. Skillful managers who select high-quality securities and manage the portfolio effectively can significantly impact returns.
Expense Ratios
You may want to keep an eye on expense ratios, as lower expenses could enhance your returns by allowing you to retain more of your investment gains over time.
Tax Considerations
Understanding the tax implications, such as capital gains taxes and dividend distributions, specific to low-risk mutual funds may help you optimise your after-tax returns.
Economic Indicators
Monitoring key economic indicators like inflation rates and GDP growth may provide insights into the economy’s health and its potential impact on your low-risk mutual fund investments.
Who Should Invest in Low Risk Mutual Funds?
If you are a conservative investor, you may want to explore low-risk mutual funds. These funds focus on safeguarding your capital and providing consistent income. Types of low-risk mutual funds include liquid funds, ultra-short duration funds, and money market mutual funds, all known for their low-risk profiles.
- Liquid Funds: These funds invest in short-term securities like treasury bills, commercial paper, and high-quality debt instruments, with a maturity period under 91 days. They offer flexibility with a short investment horizon of up to three months, providing an easy exit option compared to fixed deposits. You might consider parking your emergency funds in liquid funds for easy access.
- Ultra-Short Duration Funds: For a slightly longer horizon of up to six months, ultra-short duration funds offer liquidity and regular income. Though they come with a bit more risk than liquid funds, they can potentially yield higher returns than traditional bank fixed deposits.
- Money Market Funds: If you are looking at a one-year investment horizon, money market funds are worth considering. These funds invest in short-term, low-interest-rate-risk instruments. They help you preserve capital and earn steady income while keeping your investments less vulnerable to market fluctuations.
How to Choose the Best Low Risk Mutual Funds?
Assess Your Investment Horizon
The first step in choosing the best low risk mutual funds may involve assessing your investment horizon. You should consider how long you plan to keep your money invested. Low-risk funds typically suit investors with a longer time frame, as they offer stability and security. The longer your investment horizon, the more you might benefit from these low risk mutual funds.
Define Your Investment Objectives
Clearly defining your investment objectives is crucial. Are you looking for capital preservation, regular income, or a mix of both? Different low risk mutual funds cater to specific goals, so understanding your objectives can guide your selection of the best mutual funds with low risk.
Match Investment Style
Mutual funds come in various styles, such as equity, debt, or a blend of both. Your investment style should align with your risk tolerance and objectives. Low-risk funds often focus on fixed-income securities and may be categorised as income or balanced funds. Ensuring that your investment style suits your needs can help in achieving your financial goals with low risk mutual funds.
How are Returns Calculated on Low Risk Mutual Funds?
Understanding how returns are calculated for low risk mutual funds is essential for informed investing. Here are key factors that impact return calculations:
- Net Asset Value (NAV): NAV reflects the fund’s current worth and changes daily. Your return is the difference between purchase and sale NAVs, plus any distributions.
- Dividends and Interest Income: Low-risk funds like liquid and money market funds earn returns through dividends and interest income. Calculating returns involves summing these amounts received.
- Capital Gains: These gains occur when the fund manager buys and sells assets. They are calculated based on asset purchase and sale prices, considering transaction costs.
- Total Return: To determine the fund’s overall return, you combine NAV changes, dividends, interest income, and capital gains.
Example of a Low Risk Mutual Fund Returns
To offer a more detailed perspective on the historical returns of the XYZ Low Risk Mutual Fund, here are the annual returns expressed in Indian Rupees (INR):
- Year 1: 4.5%
If you had invested ₹10,000, your return would have been ₹450. - Year 2: 3.8%
A ₹10,000 investment would have yielded ₹380 in returns. - Year 3: 3.2%
A ₹10,000 investment would have generated ₹320 in returns. - Year 4: 3.6%
An investment of ₹10,000 would have returned ₹360. - Year 5: 4.1%
A ₹10,000 investment would have provided ₹410 in returns.
These figures are for illustrative purposes and do not guarantee future results. Nevertheless, they showcase the consistent and steady returns historically delivered by the XYZ Low Risk Mutual Fund, making it an attractive choice for investors seeking capital preservation and stability in their investments.
Taxation on Low Risk Mutual Funds as per the Union Budget for 2024-25
The taxation on capital gains from your mutual fund investments is based on their holding periods and asset allocation. A few revisions were made to the tax rates, depending on their types, in the Union Budget 2024-25. In order to select the best low risk mutual funds, it is important to learn about these revisions as well. They include:
Equity Mutual Funds
- Short-Term Capital Gains (STCG): The gains from equity mutual funds held for less than 12 months are now taxed at 20%. This is an increase from the previous tax rate of 15%.
- Long-Term Capital Gains (LTCG): For equity mutual funds held for over a period of over 12 months, gains are classified as long-term capital gains. The new budget introduces these key changes to the LTCG:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Debt Mutual Funds
- Short-Term Capital Gains (STCG): If you sell your debt fund units within a period of 36 months, the gains are classified as short-term capital gains. The STCG will be taxed according to your income tax slab rate.
- Long-Term Capital Gains (LTCG): For debt funds held for a period over 36 months, the gains are classified as long-term capital gains. The new budget outlines a few changes on the LTCG for debt funds, including:
- Tax Rate: A flat 12.5% tax rate applies to these gains.
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
- Change in Holding Period for Specified Mutual Funds: Previously, debt mutual funds with a holding period of over 36 months were taxed based on the investor’s tax slab, classified as Long-Term Capital Gains (LTCG). Now, for specified mutual funds where over 65% of the investment is in debt, the holding period for taxation has been reduced to over 24 months. These funds will still be taxed according to the investor’s tax slab as either LTCG or STCG.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
Hybrid Mutual Funds
Short-Term Capital Gains (STCG)
The tax on short-term capital gains depends on the fund’s asset allocation when it comes to hybrid mutual funds. Here is a breakdown of STCG tax rates according to their asset allocation in hybrid funds:
- Equity-Oriented Hybrid Funds (more than 65% in equity): The gains from units sold within 12 months are taxed at 20%.
- Debt-Oriented Hybrid Funds (less than 65% in equity): The gains from units sold within three years are taxed according to your income tax slab.
Long-Term Capital Gains (LTCG)
The capital gains tax on hybrid mutual funds that extend the specified period (12 or 36 months) is known as the long-term capital gain tax. The tax treatment under this condition is as follows:
- Equity-Oriented Hybrid Funds: The gains from units held for over a period of 12 months are taxed at 12.5%. The gains up to Rs. 1.25 lakh are tax-free.
- Debt-Oriented Hybrid Funds: The gains from units held for over a period of 36 months are taxed at 12.5% without indexation benefits. This means the entire gain is taxed at this rate, without adjustment for inflation.
| Type of Hybrid Fund | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) | Indexation Benefit |
| Equity-Oriented Hybrid Funds | 20% for holdings less than 1 year | 12.5% for holdings over 1 year, with gains up to Rs. 1.25 lakh tax-free | Not available |
| Debt-Oriented Hybrid Funds | Taxed as per income tax slab for holdings less than 3 years | 12.5% for holdings over 3 years | Not available |
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
Challenges of Investing in Low Risk Mutual Funds
Investing in low-risk mutual funds can be a wise financial move for conservative investors. However, there are several challenges to consider:
- Lower Potential Returns: Low-risk mutual funds are known for their stability, but this also means they typically offer lower returns compared to higher-risk investments. If you’re seeking substantial growth in your investments, you might need to consider alternative options with potentially higher risk.
- Inflation Risk: One of the primary challenges of low-risk mutual funds is the risk of not keeping pace with inflation. Inflation erodes the real value of your investments over time, and if your returns don’t outpace inflation, your purchasing power may decrease.
- Market Conditions: While low-risk funds aim to minimise market volatility, they are not entirely immune to it. Economic downturns, interest rate fluctuations, or changes in market conditions can affect the performance of these funds, even if to a lesser extent than high-risk investments.
- Interest Rate Risk: Low-risk mutual funds often invest in fixed-income securities. When interest rates rise, the value of these securities may decrease, leading to potential capital losses. It’s essential to understand how these safe mutual funds with high returns are managed in varying interest rate environments.
Benefits of Investing in Low Risk Mutual Funds
In 2024, the top low-risk mutual funds offer a comprehensive range of benefits:
- Swift Goal Attainment: You may achieve your short-term financial objectives within a year effortlessly.
- Minimal Risk: These safe mutual funds to invest in eliminate credit risk, remain resilient to interest rate fluctuations, and mitigate inflation’s impact, although with minimal exposure.
- Supplementary Income: These funds not only safeguard your capital but also serve as an additional income source.
- Tax-Efficient Investments: You may enjoy significant tax savings, especially if you are in higher income brackets, by leveraging long-term capital gains and indexation benefits.
- Superior Returns: These funds provide capital security along with enhanced returns compared to fixed deposits.
- On-Demand Liquidity: Say goodbye to cash crunches during financial emergencies; you can access your funds swiftly.
To maximise your ROI and meet your investment objectives, considering these aspects carefully before making your investment decisions may be beneficial.
To Wrap It Up…
In summary, when it comes to low-risk mutual funds, a thorough understanding of your investment options is crucial. This article has highlighted the key aspects of low-risk mutual funds to provide you with valuable insights. It’s essential to remember that low-risk investments can offer more stability, but it’s equally important to assess your unique financial situation and consult with a financial advisor for a well-informed investment strategy. By diversifying your portfolio with low-risk mutual funds, you take a prudent step towards building a secure and prosperous financial future. Staying updated with market trends and adapting your investment strategy as needed is essential for long-term success in your financial journey.
Most Popular Mutual Funds:
As an investor to have a diversified mutual funds portfolio, you might also like to know more about these different types of funds for investing –
| Large Cap Mutual Funds | Mutual Fund Bulk Deals | SBI Mutual Funds for SIP | SBI MF for Long Term SIP | Sectoral Mutual Funds | Short Term Mutual Funds | Tax Saving Mutual Funds | Mid Cap Mutual Funds |
| Small Cap Mutual Funds | Pharma Mutual Funds | 80c Mutual Funds | 1 Year Mutual Funds | International Mutual Funds | Tata Mutual Funds | Mutual Fund Portfolio | Best Mutual Funds |
| High Risk Mutual Funds | Micro Cap Mutual Funds | AMCs | MNC Mutual Funds | Equity Mutual Funds | Overnight Funds | ICICI Pru Mutual Funds | HDFC Mutual Funds |
| Best Investment Plans | Fixed Income Mutual Funds | Penny Stock Mutual Funds | Retirement Mutual Funds | Floater Rate Funds | Aggressive Hybrid Funds | Multi Asset Allocation Funds | Children’s Funds |
| Medium Duration Funds | Debt Funds | Corporate Bonds | Ultra Short Term Funds | Value Funds | Contra Funds | Focused Funds | Funds of Funds |
| Money Market Funds | Arbitrage Funds | Gold Mutual Funds | Books on Mutual Funds | Best Mutual Funds for SIP | SBI Mutual Funds | Low Risk Mutual Funds | Dividend Paying Funds |
| Long Term Mutual Funds | Banking Mutual Funds | Gilt Funds | Mutual Funds for 10 Years | Monthly Income Mutual Funds | Nifty 50 Index Funds | Lumpsum Investment Funds | Blue Chip Mutual Funds |
| Low Expense Ratio Funds |
Frequently Asked Questions(FAQs) on Low Risk Mutual Funds
1. Which type of mutual fund has the lowest risk?
Debt funds, which include liquid funds, dynamic bond funds, gilt funds, and more, offer a low-risk investment option. They invest in money market instruments and government bonds, reducing the associated risk.
2. How to invest in mutual funds without risk?
Before making investment decisions, investors should weigh the fund’s historical performance, expense ratio, the expertise of its manager, and its investment goals. To mitigate risk, diversify your portfolio by investing in a range of funds rather than putting all your money in one basket.
3. What are the factors used to measure risk in mutual funds?
Assessing a mutual fund’s risk involves considering several factors:
1. Standard deviation, which measures volatility.
2. Beta, which gauges market sensitivity.
3. Historical performance in varying market conditions.
These parameters help us understand how the fund has managed risk.
4. Is high-growth possible for low risk mutual funds India?
Low-risk mutual funds focus on preserving capital and delivering steady returns, which might limit their growth compared to riskier investments. Although some low-risk funds can achieve moderate long-term growth, their primary goal is to minimise the chances of substantial losses.
5. How to choose the best low risk mutual fund?
When choosing from low risk category mutual funds, consider factors like your investment horizon, objectives, style, historical returns, and the fund managers’ experience. Before investing, balance these factors against your personal financial needs.
6. Are mutual funds high or low risk?
Mutual funds generally offer a safe investment option, ideal for diversification with low risk. However, mutual funds may not be the optimal choice for some investors, particularly regarding fees.
