The rate of risk associated with mutual fund investment is categorized as low, moderate and high. High-Risk mutual funds refer to funds, usually invested in stocks of small & medium sized companies, that have a potential of delivering higher returns in the future. In other words, high-risk funds tend to have higher risk for investors, but they also have excellent potential and ability to provide high returns. Investors willing to take high risk are required to actively review the performance of these funds from time to time. Here you will learn about the top best high-risk mutual funds in India ranked by last 5-year performance.
Aggressive residents and NRI investors with investment horizons of 7 -10 years or more can invest in high-risk mutual fund schemes. However, you need to demonstrate patience as these companies invest in stocks and bonds of companies which are in the initial phase of growth.
Best High Risk Mutual Funds
| Fund Name | Expense Ratio | Current Value | Return (p.a.) |
|---|---|---|---|
| PGIM India Midcap Opportunities Fund | 0.44% | Rs. 11.35 lakh | 25.79% |
| Nippon India Small Cap Fund | 0.86% | Rs. 11.35 lakh | 25.78% |
| Kotak Small Cap Fund | 0.59% | Rs. 11.03 lakh | 24.59% |
| Axis Small Cap Fund | 0.51% | Rs. 10.94 lakh | 24.28% |
| ICICI Prudential Small Cap Fund | 0.81% | Rs. 10.9 lakh | 24.12% |
| SBI Small Cap Fund | 0.71% | Rs. 10.58 lakh | 22.88% |
| DSP Small Cap Fund | 0.94% | Rs. 10.19 lakh | 21.31% |
| Edelweiss Mid Cap Fund | 0.47% | Rs. 9.86 lakh | 19.96% |
| Kotak Emerging Equity Fund | 0.49% | Rs. 9.93 lakh | 20.24% |
| HDFC Small Cap Fund | 0.82% | Rs. 10.1 lakh | 20.93% |
| Nippon India Growth Fund | 1.04% | Rs. 9.82 lakh | 19.8% |
| Invesco India Mid Cap Fund | 0.72% | Rs. 9.39 lakh | 17.94% |
| UTI Mid Cap Fund | 0.99% | Rs. 9.33 lakh | 17.67% |
| Tata Midcap Growth Fund | 0.98% | Rs. 9.08 lakh | 16.58% |
| Axis Midcap Fund | 0.53% | Rs. 9.01 lakh | 16.26% |
Features of High Risk Mutual Fund
Listed below are the key features of best high-risk mutual funds:
- Type: High risk mutual funds exist in several different types of mutual fund schemes – equity funds, balanced advantage funds, credit risk funds, equity hybrid funds, etc.
- Asset Allocation: These funds invest the major part of money in equity stocks or bonds of emerging small & medium size companies.
- Reward-risk Ratio: High-risk mutual funds are highly volatile in nature. However, they provide great dividends to investors.
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Who Should Invest in High Risk Mutual Funds
High-risk mutual funds are suitable for investors with in-depth knowledge about the market, who actively review the performance of funds. If you are looking to invest in this type of funds, you need to have a strong risk appetite and be ready to expose your portfolio to volatility to earn higher returns.
As these funds mostly invest in stocks and bonds of companies in their growth phase, investors need to stay invested for a longer period, for 7 years or more. Hence, these funds are suitable for aggressive but patient investors with investment horizons of at least 7 years. Following are important factors you need to consider before investing in high-risk mutual funds.
- Investment goal: To invest in these funds, it is important to decide your long-term financial goals.
- Fund’s performance: A fund’s past performance helps investors to make decisions. You can compare the returns delivered by various mutual fund schemes to finalize the right high risk mutual fund.
- Risk profile: Risk tolerance varies among investors. Before investing in a high-risk mutual fund scheme, you must figure out how much capital you can afford to lose. Accordingly, you can decide the investment amount and a scheme.
- Expense Ratio: Expense ratio varies from one fund house to another. Higher expense ratio can reduce the return you get. Hence, you must consider it before investing in a mutual fund.
- Direct and regular plan: Investors can choose between direct and regular investment plans to invest in high-risk mutual funds. In case of direct investment, intermediaries are not involved and the expense ratio is lower. On the other hand, investors need to consult third-party agents, brokers and distributors, to invest in regular plans, which results in a higher expense ratio.
NRIs willing to invest in high-risk mutual funds in India can download SBNRI App to choose from 3000+ mutual fund schemes or to ask any questions related to mutual fund investment.
SBNRI is an authorised Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671
Taxability
Whether residents or NRIs, capital gains from high-risk mutual fund investments are subject to income tax for NRI.
| Fund Type | Short-term Capital Gains (STCG) Tax | Long-term Capital Gains (STCG) Tax |
|---|---|---|
| Equity mutual funds | 15% | 10% without indexation benefits |
| Debt & other types of funds | At tax slab rate | 20% with indexation benefits |
Wrapping it up
AMCs invest in stocks and bonds of small & medium sized companies that tend to pose higher risks for investors, but these companies have potential to be top businesses in the future, generating higher returns. Professional Small & Mid Cap Fund Managers can identify such high-potential stocks. Investors can choose a systematic investment plan (SIP) to invest in high-risk mutual funds efficiently.
Before investing in the Indian market, NRIs must consult market experts to make informed decisions. You can get detailed mutual fund advisory from experts at SBNRI. You can download SBNRI App from the Google Play Store or App Store to ask any questions related to mutual fund investment, NRI account opening online and tax filing in India. To ask any questions related to Mutual Funds, click on the button below. Also visit our blog and YouTube channel for more details.
