Groww Logo
Home>Personal Finance>Hybrid Funds>Conservative Mutual Funds
SHARE

Conservative Mutual Funds

Hybrid funds come in all shapes and sizes – there are schemes for the aggressive as well as conservative investors. Since these schemes invest in both equity and debt securities in varying proportions, it is safe to say that there is a hybrid fund for every type of investor. Many investors with a lower risk tolerance prefer the conservative approach to investments which prioritizes the preservation of capital over returns. While most low-risk investors opt for debt funds, Conservative Mutual Funds offer a great investment opportunity to them. Here, we will explore Conservative Funds and talk about some important aspects of these funds.

What are Conservative Mutual Funds?

Conservative Mutual Funds have a portfolio of debt and equity securities with a relatively lower risk. They primarily invest in debt securities (around 75-90%) with a small portion allocated to equity and equity-related instruments (around 10-25%). The small exposure to equity allows these schemes to earn better returns than pure debt schemes. Further, conservative funds usually invest in high-quality debt securities and large-cap stocks. These funds endeavor to offer regular income as well as capital appreciation while focusing on capital preservation. They have lower exposure to equities as compared to aggressive funds and have a clear focus of offering inflation-beating returns. 

Click here for Best Conservative Mutual Funds

Who should invest in Conservative Funds?

Conservative funds follow the guiding principle of capital preservation and take minimal risks for wealth generation. Hence, it is ideal for low-risk investors and people who are retired or nearing retirement. Since there is an exposure to high-quality stocks, low-risk investors get an opportunity to earn better returns as compared to investing in a pure debt fund. Further, these funds are also ideal for investors seeking regular returns as well as those with long-term financial goals with lower risk tolerance.

Factors to consider before investing in Conservative Mutual Funds in India

Here are some important aspects that you must consider before investing in conservative funds in India:

Risks and Returns

Conservative funds allocate around 75-90% of their total assets to debt securities and money market instruments with a 10-25% exposure to equity (typically large-cap stocks). Hence, they are considered to be riskier than pure debt funds. However, they are better than other hybrid schemes with a similar asset allocation but with small/mid-cap stocks in their portfolio. The returns are commensurate with the quality of debt securities and stocks. As an investor, you need to analyze the portfolio well before investing.

Expense Ratio

Like all other mutual funds, conservative funds also charge a small fee for offering fund management services called the expense ratio. It is important to choose a scheme with a lower expense ratio as it can otherwise lower your gains.

Invest according to your Investment Plan

Most conservative investors prefer investing in debt funds with a portfolio of high-quality securities. However, to beat inflation, investing in equity is essential. However, as a conservative investor, before plunging into the world of stocks, it is important to create an investment plan in sync with your investment objectives.

Taxation

For taxation purposes, Conservative funds are treated similar to debt funds with the following tax rules:

  • Short-term capital gains (STCG) are added to the taxable income of the investor and taxed according to the applicable tax slab
  • Long-term capital gains (LTCG) are taxed at 20% with indexation

Before investing in a conservative mutual fund, ensure that you know your priorities well. If you want to grow your wealth over the long term, then you might want to look for ways to increase your exposure to stocks. However, if your objective is capital preservation and minimal risk and you are ok with lower returns, then you can look at other investment avenues. However, if you want to outperform inflation with your investments with low levels of risk, then conservative funds can be a good choice.

List of AMC in India

Asset Management Company

Axis Mutual Fund

PGIM India Mutual Fund

BOI Axa Mutual Fund

Kotak Mutual Fund

Sundaram Mutual Fund

Union Mutual Fund

Nippon Mutual Fund

Invesco Mutual Fund

Taurus Mutual Fund

HDFC Mutual Fund

LIC Mutual Fund

Edelweiss Mutual Fund

SBI Mutual Fund

JM Financial Mutual Fund

Navi Mutual Fund

ICICI Prudential Mutual Fund

Baroda Mutual Fund

Mahindra Mutual Fund

Aditya Birla Sunlife Mutual Fund

Canara Robeco Mutual Fund

Quantum Mutual Fund

UTI Mutual Fund

HSBC Mutual Fund

PPFAS Mutual Fund

Franklin Templeton Mutual Fund

IDBI Mutual Fund

IIFL Mutual Fund

IDFC Mutual Fund

Indiabulls Mutual Fund

Quant Mutual Fund

DSP Mutual Fund

Motilal Oswal Mutual Fund

Shriram Mutual Fund

TATA Mutual Fund

BNP Paribas Mutual Fund

Sahara Mutual Fund

L and T Mutual Fund

Mirae Asset Mutual Fund

ITI Mutual Fund

ⓒ 2016-2022 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 3.2.5
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  ICICI PRUDENTIAL |  HDFC |  NIPPON INDIA |  ADITYA BIRLA SUN LIFE |  SBI |  UTI |  FRANKLIN TEMPLETON |  KOTAK MAHINDRA |  IDFC |  DSP |  AXIS |  TATA |  L&T |  SUNDARAM |  PGIM |  INVESCO |  LIC |  JM FINANCIAL |  BARODA PIONEER |  CANARA ROBECO |  HSBC |  IDBI |  INDIABULLS |  MOTILAL OSWAL |  BNP PARIBAS |  MIRAE ASSET |  PRINCIPAL |  BOI AXA |  UNION KBC |  TAURUS |  EDELWEISS |  NAVI |  MAHINDRA |  QUANTUM |  PPFAS |  IIFL |  Quant |  SHRIRAM |  SAHARA |  ITI