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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)
Kotak Asset Allocator FundOtherHigh37.8%5star460
Principal Equity Savings FundHybridHigh30.8%5star101
SBI Multi Asset Allocation FundHybridHigh23.0%5star460
HDFC Credit Risk Debt Fund DebtHigh9.2%5star8,607
ICICI Prudential Credit Risk FundDebtHigh7.8%5star8,053
Sundaram Equity Hybrid FundHybridHigh46.3%4star1,957
HDFC Dynamic PE Ratio Fund of FundsOtherHigh34.1%4star29
Aditya Birla Sun Life Balanced Advantage FundHybridHigh31.5%4star5,485
ICICI Prudential Balanced Advantage FundHybridHigh27.9%4star35,737
Nippon India Balanced Advantage FundHybridHigh31.3%4star4,799
View All Top 10 High Risk Mutual Funds

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 2021 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 2021

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.

Kotak Asset Allocator Fund Direct Growth

Fund Performance: This fund has given 21.27% annualized returns in the last three years. In the last year, its returns were 37.78%. It has continually hit its benchmark in the Other segment.

Why to invest: It is one of the most remarkable Other mutual funds in India. This fund has constantly outperformed other similar funds, providing 37.78% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM460Cr
1Y Returns37.8%

Principal Equity Savings Fund Direct Growth

Fund Performance: This fund has given 14.79% annualized returns in the last three years. In the last year, its returns were 30.81%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 30.81% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM101Cr
1Y Returns30.8%

SBI Multi Asset Allocation Fund Direct Growth

Fund Performance: This fund has given 14.51% annualized returns in the last three years. In the last year, its returns were 22.97%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 22.97% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM460Cr
1Y Returns23.0%

HDFC Credit Risk Debt Fund Direct Growth

Fund Performance: This fund has given 9.74% annualized returns in the last three years. In the last year, its returns were 9.19%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 9.19% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM8,607Cr
1Y Returns9.2%

ICICI Prudential Credit Risk Fund Direct Plan Growth

Fund Performance: This fund has given 9.52% annualized returns in the last three years. In the last year, its returns were 7.78%. It has continually hit its benchmark in the Debt segment.

Why to invest: It is one of the most remarkable Debt mutual funds in India. This fund has constantly outperformed other similar funds, providing 7.78% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹100. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹100
AUM8,053Cr
1Y Returns7.8%

Sundaram Equity Hybrid Fund Direct Growth

Fund Performance: This fund has given 19.47% annualized returns in the last three years. In the last year, its returns were 46.26%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 46.26% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹100. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹100
AUM1,957Cr
1Y Returns46.3%

HDFC Dynamic PE Ratio FoF Direct Growth

Fund Performance: This fund has given 16.21% annualized returns in the last three years. In the last year, its returns were 34.1%. It has continually hit its benchmark in the Other segment.

Why to invest: It is one of the most remarkable Other mutual funds in India. This fund has constantly outperformed other similar funds, providing 34.1% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM29Cr
1Y Returns34.1%

Aditya Birla Sun Life Balanced Advantage Fund Direct Growth

Fund Performance: This fund has given 15.34% annualized returns in the last three years. In the last year, its returns were 31.49%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 31.49% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹100. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹100
AUM5,485Cr
1Y Returns31.5%

ICICI Prudential Balanced Advantage Direct Growth

Fund Performance: This fund has given 15.28% annualized returns in the last three years. In the last year, its returns were 27.94%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 27.94% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹500
AUM35,737Cr
1Y Returns27.9%

Nippon India Balanced Advantage Fund Direct Growth

Fund Performance: This fund has given 15.02% annualized returns in the last three years. In the last year, its returns were 31.31%. It has continually hit its benchmark in the Hybrid segment.

Why to invest: It is one of the most remarkable Hybrid mutual funds in India. This fund has constantly outperformed other similar funds, providing 31.31% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹100. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹100
AUM4,799Cr
1Y Returns31.3%

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