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Best High Risk Mutual Funds

High-risk mutual funds have a significant risk-reward dynamic when compared to most other mutual funds. In this context, risk denotes the probability of a person losing their investments. Low, moderate, and high are comparative degrees of this probability playing out, defined by SEBI’s risk-o-meter. To minimise the adverse impact of investing in mutual funds with substantial risks, seasoned investors aim for the best high risk mutual funds.

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Top 10 High Risk Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
IDBI Gold FundOtherHigh6.1%5₹41
Aditya Birla Sun Life Asset Allocator FoF FundOtherHigh3.9%5₹119
ICICI Prudential Regular Savings FundHybridHigh7.0%5₹3,285
Sundaram Equity Hybrid FundHybridHigh30.1%4₹1,954
Axis Gold FundOtherHigh3.4%4₹266
HDFC Gold FundOtherHigh3.2%4₹1,367
ICICI Prudential Balanced Advantage FundHybridHigh7.7%4₹39,761
ICICI Prudential Credit Risk FundDebtHigh5.7%4₹8,317
SBI Credit Risk FundDebtHigh4.5%4₹3,131
Axis Credit Risk FundDebtHigh4.4%4₹719
View All

Features of High Risk Mutual Fund

These are the salient features of the best high risk mutual funds – 

Type: There can be various categories of high-risk MFs – balanced advantage schemes, credit risk fund schemes, equity hybrid fund schemes, and the likes. 

Asset allocation: These High risk funds predominantly invest in stocks or bonds of developing or growing companies. The specific asset allocation depends on the type of high-risk mutual fund. 

Risk-reward ratio: High-risk mutual funds involve significant volatility, as the classification suggests. However, the best high risk mutual funds 2022 also offer sizeable returns.

Taxability

The treatment is carried out as per the concerned fund’s asset allocation. 

Long-term Capital Gains Tax: A 10% tax rate is applicable on gains exceeding Rs.1 lakh if the fund units are sold after one year. It only applies to schemes investing a more significant share in equity and equity-related instruments. In case a high-risk fund invests predominantly in debt securities, it’ll be treated as a debt fund for taxation. Thereby, gains realised after 3 years will be liable for a 20% tax + indexation benefits. 

Short-term Capital Gains Tax: Capital gains on equity-oriented high-risk funds held for less than a year attract taxation @15% + cess, notwithstanding the amount. Conversely, gains realised from debt-based funds within 36 months of investment are taxed per an investor’s income slab. For example, suppose an investor belongs to the 15% tax bracket. Herein, any gains from a debt high risk fund are added to their income and taxed @15%.

TDS: Dividend pay-outs of over Rs.5000 from equity-based high-risk mutual funds attract a 10% TDS. Tax deducted at source does not apply to debt-based funds. 

Who Are These Funds Suited For?

High-risk funds are most suitable for investors with in-depth knowledge about the market and a fair understanding of macroeconomic trends. In addition, investors who have a strong risk appetite and do not mind exposing their portfolio to volatility to generate higher earnings can consider the best high risk mutual funds

Investors shall also note that high-risk mutual funds usually offer more significant returns over a long time horizon, extending up to 10 years. That’s because the underlying bonds and stocks are mostly of companies in their growth phase. Usually, investors with an aggressive but patient investment approach may find this type of mutual fund suitable.  

Nonetheless, investors must weigh in a few things before parking their money in the best high-risk mutual funds

Investment goal: Investors must identify their long-term financial goals and set realistic benchmark before selecting a fund. 

Risk profile: The capacity to take risk differs among investors. One should consider the scale of losses one can digest before investing in high-risk mutual funds. Accordingly, investors should decide the investment quantum. 

Fund’s performance: Gaining an insight into a fund’s past performance often proves effective in decision-making. Investors can check a fund’s historical returns and compare them with other peer options for better understanding.

Expense ratio: Usually, the expense ratio varies among Asset Management Companies. Since the expense ratio impacts returns, investors must make it a point to find out about it before investing. 

Direct and regular plan: The best high risk mutual funds are available as direct and regular plans. Fund houses offer the former without the involvement of intermediaries and at a lower expense ratio. Conversely, to invest in regular plans, investors have to approach third-party agents like brokers, distributors, etc. Thus, regular plans involve a higher NAV and report lower NAVs. 

Major Advantages

These are among the top benefits of investing in the best high risk mutual funds 2022

Higher returns: The best high risk mutual funds are adept at generating comparatively higher returns than most other investment options. Debt-based funds invest in low-rated bonds, which can generate significant returns. Similarly, equity-based funds allocate their assets to stocks of growing companies, improving the chances of generating greater returns than large-cap funds. 

Long-term capital appreciation: High risk mutual fund performs best over 5-7 years, which is why they are considered suitable for long-term financial goals. Also, these funds are adept at generating inflation-adjusted returns. 

Tax benefits: Investors belonging to higher income tax slabs can enjoy more tax-efficient returns compared to bank fixed deposits. 

Opportunity to beat benchmarks: In a positive market cycle, these funds can outperform benchmarks.

Investment modes: Investors can invest in the top high risk mutual funds in two ways – Systematic Investment Plan or lump sum. In SIP, investors have the flexibility to invest a fixed amount in the fund scheme as per their financial standing. In the lump-sum investment method, individuals need to invest a specific amount at once. The minimum investment sum is Rs.500, mostly in the case of SIP. It may be Rs.1000 in the case of a lump sum. 

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

IDBI Gold Direct Growth

Fund Performance: The IDBI Gold Fund has given 15.9% annualized returns in the past three years and 10.38% in the last 5 years. The IDBI Gold Fund belongs to the Other category of IDBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in IDBI Gold Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹41Cr
1Y Returns6.1%

Aditya Birla Sun Life Asset Allocator FoF Direct Growth

Fund Performance: The Aditya Birla Sun Life Asset Allocator FoF Fund has given 12.64% annualized returns in the past three years and 9.97% in the last 5 years. The Aditya Birla Sun Life Asset Allocator FoF Fund belongs to the Other category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Asset Allocator FoF Fund via lump sum is ₹1,000 and via SIP is ₹1,000.

Min Investment Amt₹1,000
AUM₹119Cr
1Y Returns3.9%

ICICI Prudential Regular Savings Fund Direct Growth

Fund Performance: The ICICI Prudential Regular Savings Fund has given 9.47% annualized returns in the past three years and 8.99% in the last 5 years. The ICICI Prudential Regular Savings Fund belongs to the Hybrid category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Regular Savings Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹3,285Cr
1Y Returns7.0%

Sundaram Equity Hybrid Fund Direct Growth

Fund Performance: The Sundaram Equity Hybrid Fund has given 17.11% annualized returns in the past three years and 15.7% in the last 5 years. The Sundaram Equity Hybrid Fund belongs to the Hybrid category of Sundaram Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Sundaram Equity Hybrid Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹1,954Cr
1Y Returns30.1%

Axis Gold Direct Plan Growth

Fund Performance: The Axis Gold Fund has given 16.43% annualized returns in the past three years and 11.44% in the last 5 years. The Axis Gold Fund belongs to the Other category of Axis Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Axis Gold Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹266Cr
1Y Returns3.4%

HDFC Gold Direct Plan Growth

Fund Performance: The HDFC Gold Fund has given 16.27% annualized returns in the past three years and 11.09% in the last 5 years. The HDFC Gold Fund belongs to the Other category of HDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HDFC Gold Fund via lump sum is ₹5,000 and via SIP is ₹300.

Min Investment Amt₹5,000
AUM₹1,367Cr
1Y Returns3.2%

ICICI Prudential Balanced Advantage Direct Growth

Fund Performance: The ICICI Prudential Balanced Advantage Fund has given 11.47% annualized returns in the past three years and 10.6% in the last 5 years. The ICICI Prudential Balanced Advantage Fund belongs to the Hybrid category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Balanced Advantage Fund via lump sum is ₹500 and via SIP is ₹100.

Min Investment Amt₹500
AUM₹39,761Cr
1Y Returns7.7%

ICICI Prudential Credit Risk Fund Direct Plan Growth

Fund Performance: The ICICI Prudential Credit Risk Fund has given 8.48% annualized returns in the past three years and 8.21% in the last 5 years. The ICICI Prudential Credit Risk Fund belongs to the Debt category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Credit Risk Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹8,317Cr
1Y Returns5.7%

SBI Credit Risk Fund Direct Growth

Fund Performance: The SBI Credit Risk Fund has given 7.26% annualized returns in the past three years and 7.06% in the last 5 years. The SBI Credit Risk Fund belongs to the Debt category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Credit Risk Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹3,131Cr
1Y Returns4.5%

Axis Credit Risk Fund Direct Growth

Fund Performance: The Axis Credit Risk Fund has given 6.34% annualized returns in the past three years and 6.89% in the last 5 years. The Axis Credit Risk Fund belongs to the Debt category of Axis Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Axis Credit Risk Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹719Cr
1Y Returns4.4%

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