Moderate risk mutual funds are good for diversifying your portfolio. Therefore, invest in best mutual funds with moderate risk if your investment horizon is 3 year to 5 years, and you do not want to invest in high risk funds.
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Top Best Mutual Funds with Moderate Risk for long-term growth
Till Date CAGR
|Aditya Birla Sun Life Savings Fund (G)|
|Aditya Birla Sun Life Money Manager Fund (G)|
|Aditya Birla Sun Life Savings Fund Fund Retail (G)|
|Aditya Birla Sun Life Money Manager Fund Plan Retail (G)|
|Aditya Birla Sun Life Savings Fund Discipline Advantage Pln (G)|
|HSBC Corporate Bond Fund (G)|
|UTI Liquid Cash Plan (G)|
|ICICI Prudential All Seasons Bond Fund Premium (G)|
|Axis Dynamic Bond Fund (G)|
|ICICI Prudential Ultra Short Term Fund (G)|
|Kotak Low Duration Fund Standard Plan (G)|
|Quant Liquid Plan (G)|
|Aditya Birla Sun Life Low Duration Fund Institutional (G)|
|Aditya Birla Sun Life Banking & PSU Debt Fund Retail (G)|
|ICICI Prudential Short Term Fund Institutional (G)|
|ICICI Prudential Short Term Fund (G)|
|ICICI Prudential Money Market Fund Retail (G)|
|ICICI Prudential Medium Term Bond Fund B (G)|
|HDFC Low Duration (G)|
|Nippon India Dynamic Bond Fund (G)|
As per SEBI’s guidelines, every mutual fund must disclose the fund’s risk-o-meter on a regular basis. The prescribed risk levels – low, low to moderate, moderate, moderately high, high, very high. The risk levels of a scheme are determined based on certain parameters. For example, for equity mutual funds, the risk levels depending on the market capitalisation value, volatility value and impact cost value. On the other hand, for debt funds, the risk levels depend on interest rate risk value, credit risk value and liquidity risk value.
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|Fund Name||Till Date CAGR||Expense Ratio|
|ICICI Prudential Liquid Fund||7.2%||0.29%|
|HDFC Floating Rate Debt Wholesale Plan||7.8%||0.48%|
|Aditya Birla Sun Life Savings Fund (G)||7.5%||0.5%|
|Nippon India Money Market Fund||7.4%||0.28%|
|SBI Magnum Low Duration Fund||7.4%||0.96%|
Moderate risk mutual funds are funds that invest in equity and debt instruments. The hybrid portfolio construction helps the funds generate inflation-beating returns in the medium term. These funds are less risky than pure equity funds and slightly more risky than pure debt funds (low-risk funds). Moderate risk funds are suitable for an investment horizon ranging between three to five years.
Different types of moderate risk mutual funds have different investment objectives. Dynamic bond funds are a type of debt funds. These funds aim to generate returns by switching between short-term and long-term bonds depending on the interest rate movements.
Dynamic asset allocation funds strategically manage their holdings between equity and debt schemes. The fund’s asset allocation is adjusted in response to market movements to provide the best return with the least amount of risk. On the other hand, short-duration funds offer more or less stable returns at moderate risk levels over a medium.
Therefore, moderate risk funds are suitable for investors who do not have very high-risk tolerance levels but are willing to take a certain level of risk. Moreover, some of these funds offer more or less stable returns in the medium term, thus are a good investment option to earn inflation matching or in the case of equity funds, inflation-beating returns.
Following are the features of moderate risk mutual funds:
Investors who wish to generate moderate returns at moderate risk levels can consider investing in moderate risk mutual funds. Thus, these funds are suitable for investors who wish to generate stable returns.
Risk-averse investors should be aware that these funds carry some risks due to their asset allocation. An equity-based fund, for example, is more susceptible to market volatility. While a debt-oriented scheme may be vulnerable to inflation and interest movements.
Short term funds and dynamic bond funds are good for diversification. These schemes will provide some cushion from stock market volatility. Furthermore, over a period of time, the fund manager uses interest rate changes to generate better returns than low risk funds. Thus, these funds are suitable to achieve medium-term financial goals, say 3 to 5 years.
Also, moderate risk funds are good for diversifying your portfolio. Therefore, invest in moderate risk mutual funds if your investment horizon is 3 to 5 years, and you are not a high-risk taker.
Following are the advantages of investing in moderate risk mutual funds:
Moderate risk funds invest across equity and debt schemes. Thus, the portfolio is subject to market volatility as well as interest rate risk and credit risk. However, the impact of these risks isn’t too high since the portfolio construction is well balanced between the two asset classes. Therefore, these funds are only suitable for individuals with moderate risk levels.
Different types of mutual funds have different risk levels. Equity schemes are highly risky investments. While a certain type of debt funds are low-risk investments. However, moderate risk funds try to offer the best of both worlds. Since these schemes invest across both equity and debt, they are able to generate moderate returns for investors in the medium term. Therefore, some moderate risk funds (equity oriented) help you diversify your holdings and generate better inflation-adjusted returns.