Best Mutual Funds With Moderate Risk
Mutual Funds have emerged a popular investment vehicle in India in the recent past due to the handsome consistent returns, relative ease and comfort to the investors, the variety of flexible options and last but not the least, because of the professional management of the industry. It has offered you multiple options catering to your risk appetite, your long terms financial goals and choice that suit a wide spread of budgets. Any investment is fraught with risks, and it is for you to perceive the right risk you are ready to handle with your funds and the objectives you want to achieve. It is thus important to assess your requirement relative to your risk perceptions to enable you to make the right choice for the best mutual funds.
Mutual Funds Evaluation
Your quest for the best mutual funds investments requires you to consider multiple parameters that determine the potential of the scheme. The traits are common to all the mutual funds in India. The process of evaluation of mutual fund investments is in the light of their performance spread over a considerable period of time. The parameters to especially explore are the benchmark impact, the fund manager, expense ratio and the asset under management (AUM) to determine the size. Consistent performance and positives from the parameters make a scheme a much sought after commodity.
Selection of best Mutual Funds in India
Adding to your portfolio with the best mutual funds in India needs a strategy to achieve a specific objective. Your self-analysis is an important tool in your hand to determine your ability to tolerate risk while balancing your portfolio with new investments. It is naturally incumbent upon you to learn the mechanisms and be aware of the various aspects that fix the antecedents of the Mutual Fund risk scale.
Mutual Fund Risk Measurement
The risk associated with Mutual Fund is measured in ratios, and they are defined on factors involved:
- Alpha: It is ascertained by comparing the returns with the associated benchmark.
- Beta: The market movements related to the benchmark and the sensitivity of the Mutual Fund to it is the measure of this ratio. If the Beta ratio is less than 1, it is deemed to be less volatile, and if it is over 1, it is more volatile.
- Standard Deviation: It measured by the difference in average returns. As an illustration, let us assume that the average returns are 12% and the standard deviation is 3%. It denotes that the returns may deviate either on the positive or negative side by 3%. Obviously, in this case, the returns are between 9% and 15%. Ultimately, it boils down to the fact a higher standard deviation would indicate higher volatility and thus, higher risk.
- Sharpe Ratio: It indicates the better performance of the Mutual Fund as compared to risk-free It also informs you of your earning relative to the risk taken.
SEBI Defined Risks in Mutual Funds
The market regulator SEBI has set norms for determining risks and their implications. It is a good reliable indicator when you wish to invest in Mutual Fund. There are five levels of risk in Mutual Funds, and every mutual fund house has to mandatorily specify the level of risk in each scheme launched by them. SEBI has also denoted color codes to identify the risk pattern – BROWN denotes low-risk mutual funds, Yellow medium risk mutual funds and BLUE denotes high-risk mutual funds. Interestingly, RED showcases funds as non-veg eatables:
- Low: It involves Liquid Funds where the risk is deemed to be low.
- Moderately Low: The funds where the risks are moderately low are Gilt funds, Income funds, and Medium-term bond funds.
- Moderate: The class of fund with moderate risk is Balanced funds and Long-term income funds.
- Moderately High: Index funds, Balanced funds, and Large Cap funds fall in the category of moderately high risk.
- High: The investment where the risk is deemed to be high is Small Cap funds, Mid Cap Funds, and Secure funds.
Best Mutual Funds Investments with Moderate Risk
It is not an easy task to sift through the enormous number of Mutual Funds in the market, analyze their performances and arrive at a decent list of the top performing ones to guide you to satisfy your moderate risk appetite. Based on the various defined parameters that are used as a tool to evaluate the mutual funds to invest in for the long term if you want to Invest in Mutual Funds with moderate risk appetite, the following list comprising ten mutual funds for investors with moderate risk appetite is compiled for you, to study and arrive at an informed decision:
HDFC Banking and PSU Debt FundHDFC Mutual FundLow Moderate26th March 2014DebtBanking and PSU33 on 6thNov-18
|Fund Name||Fund House||Fund Risk||Launch Date||Class||Category||NAV|
|Aditya Birla Sun Life Corporate Bond||Birla Sun Life Mutual Fund||Low Moderate||3rd March 1997||Debt||Corporate bond||61 on 6thNov-18|
|UTI Banking & PSU Debt Fund||UTI Mutual Fund||Moderate||3rd February 2014||Debt||Banking and PSU||75 on 6thNov-18|
|HDFC Corporate Bond Fund||HDFC Mutual Fund||Low Moderate||29th June 2010||Debt||Corporate Bond||19.82 on 6thNov-18|
|DHFL Pramerica Short Maturity Fund||DHFL Pramerica Mutual Fund||Moderate||21st January 2003||Debt||Short duration||32.48 on 6thNov-18|
|Kotak Corporate Bond Fund Standard Fund||Kotak Mahindra Mutual Fund||Low Moderate||21st September 2007||Debt||Corporate Bond||78 on 6thNov-18|
|Axis Strategic Bond Fund||Axis Mutual Fund||Moderate||28th March 2012||Debt||42 on 6thNov-18|
|Aditya Birla Sun Life Medium Term Plan Fund||Birla Sun Life Mutual Fund||Moderate||25th March 2009||Debt||Medium duration||43 on 6thNov-18|
|Reliance Strategic Debt Fund||Reliance Mutual Fund||Moderate||26th, June 2014||Debt||Medium duration||32 on 6thNov-18|
|ICICI Prudential Gilt Fund||ICICI Prudential Mutual Fund||13th August 1999||Debt||Gilt||13 on 6thNov-18|
|Reliance Gilt Securities Fund||Reliance Mutual Fund||Moderate||22nd August 2008||Debt||Gilt||25.00 on 6thNov-18|
|UTI Gilt Fund||UTI Mutual Fund||Moderate||21 January 2002||Debt||Gilt||36.66 on 6thNov-18|
|Franklin India Ultra-Short Bond Fund||Franklin Templeton Mutual fund||Moderate||21 December 2007||Debt||Ultra Short Duration||25.43 on 6thNov-18|
|DSP Bond Fund||DSP Mutual fund||Moderate||21 December 2007||Debt||Medium Duration||10.95 on 6thNov-18|
Every investment you make carries an inherent risk embedded within. It is a relative concept. A deposit in a bank carries a lower risk than investing in a mutual fund. It is equally true that your best mutual funds investments are less risky than when you invest directly in equity because of its volatility. Therefore, you have to judge your ability to withstand the risk involved to be taken in the context of your financial planning and your objectives. All said and done; the middle path seems to be to indulge in Mutual Funds comprising instruments bearing moderate risk, which can be your road to the accomplishment of adequate returns considering the risk you took.