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Best Mutual Funds with Moderate Risk
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List of Moderate Risk Mutual Funds in 2025
Top 10 Moderate Risk Mutual Funds to invest in 2025
Below are the moderate risk mutual funds in india:
1. HDFC Floating Rate Debt Fund Direct (G)
HDFC Floating Rate Debt Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.5%, a 3 Years return of 7.1% and a 5 Years return of 7.0%. The fund has an expense ratio of 0.3% and an AUM of ₹15104 crores as of 2025-01-01. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.96% to debt and 3.04% to other assets.
2. Aditya Birla Sun Life Money Manager Fund Direct (G)
Aditya Birla Sun Life Money Manager Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.9%, a 3 Years return of 6.8% and a 5 Years return of 6.2%. The fund has an expense ratio of 0.2% and an AUM of ₹25834 crores as of 2025-01-01.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 0109.30% to debt and -9.30% to other assets.
3. SBI Long Term Equity Fund Direct (G)
SBI Long Term Equity Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 28.6%, a 3 Years return of 24.9% and a 5 Years return of 25.2%. The fund has an expense ratio of 0.9% and an AUM of ₹27847 crores as of 2025-01-01.The minimum SIP investment is ₹500 and the minimum lump sum investment is ₹500. The fund allocates 91.11% to equities and 8.89% to other assets.
4. HDFC Large and Mid Cap Fund Direct (G)
HDFC Large and Mid Cap Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 20.2%, a 3 Years return of 22.1% and a 5 Years return of 24.0%. The fund has an expense ratio of 0.8% and an AUM of ₹23989 crores as of 2025-01-01. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 97.42% to equities and 2.21% to other assets.
5. ICICI Prudential Bluechip Fund Direct (G)
ICICI Prudential Bluechip Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 17.4%, a 3 Years return of 17.4% and a 5 Years return of 19.1%. The fund has an expense ratio of 0.9% and an AUM of ₹63938 crores as of 2025-01-01.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 90.00% to equities, 0.49% to debt and 9.51% to other assets.
6. Kotak Nasdaq 100 FOF Direct (G)
Kotak Nasdaq 100 FOF Direct (G) is a International Equity fund that has delivered a 1 Year return of 28.8% and a 3 Years return of 14.4%. The fund has an expense ratio of 0.3% and an AUM of ₹3340 crores as of 2025-01-01. It was Launched on 2021-02-02. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.95% to equities and 0.05% to other assets.
7. Aditya Birla Sun Life Savings Fund Direct (G)
Aditya Birla Sun Life Savings Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 8.0%, a 3 Years return of 6.8% and a 5 Years return of 6.3%. The fund has an expense ratio of 0.4% and an AUM of ₹16278 crores as of 2025-01-01.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 098.49% to debt and 1.51% to other assets.
8. Kotak Gold Fund Direct (G)
Kotak Gold Fund Direct (G) is a Precious Metals fund that has delivered a 1 Year return of 19.2%, a 3 Years return of 15.2% and a 5 Years return of 13.2%. The fund has an expense ratio of 0.2% and an AUM of ₹2251 crores as of 2025-01-01.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 03.86% to other assets.
9. BHARAT Bond FOF - April 2031 Direct (G)
BHARAT Bond FOF - April 2031 Direct (G) is a Debt fund that has delivered a 1 Year return of 9.0% and a 3 Years return of 6.4%. The fund has an expense ratio of 0.1% and an AUM of ₹4627 crores as of 2025-01-01. It was Launched on 2020-07-23. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 097.20% to debt and 2.79% to other assets.
10. BHARAT Bond ETF FOF - April 2032 Direct (G)
BHARAT Bond ETF FOF - April 2032 Direct (G) is a Debt fund that has delivered a 1 Year return of 9.2% and a 3 Years return of 6.6%. The fund has an expense ratio of 0.1% and an AUM of ₹4568 crores as of 2025-01-01. It was Launched on 2021-12-15. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 096.01% to debt and 3.99% to other assets.
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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Top 5 Popular Mutual Funds (Direct Plan) with Moderate Risk 2024
| Fund Name | 3 Years Return | 5 Years Return |
| ICICI Prudential Liquid Fund Direct Plan Growth | 6.3% | 5.4% |
| Aditya Birla Sun Life Money Manager Fund Direct Plan Growth | 6.7% | 6.2% |
| Aditya Birla Sun Life Savings Fund Direct Plan Growth | 6.6% | 6.3% |
| Kotak Banking and PSU Debt Fund Direct Plan Growth | 6.4% | 7% |
| Aditya Birla Sun Life Low Duration Fund Direct Plan Growth | 6.7% | 6.7% |
Top 5 Popular Mutual Funds (Regular Plan) with Moderate Risk 2024
| Fund Name | 3 Years Return | 5 Years Return |
| Kotak Nasdaq 100 FOF Regular Plan Growth | 13.3% | NA |
| Kotak Gold Fund Regular Plan Growth | 16.2% | 13.6% |
| Mirae Asset ELSS Tax Saver Fund Regular Plan Growth | 13.2% | 20% |
| HDFC Gold Fund Regular Plan Growth | 16.6% | 13.9% |
| HDFC Overnight Fund Regular Plan Growth | 5.7% | 4.7% |
What are Moderate Risk Mutual Funds?
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.
Features of Moderate Risk Mutual Funds
Following are the features of moderate risk mutual funds:
- Asset Allocation: Moderate risk mutual funds invest across both equity and debt schemes. Furthermore, a certain type of moderate risk funds dynamically adjusts the allocation between debt and equity holdings as per the prevailing market conditions.
- Risk-Reward Ratio: Since moderate risk funds invest across both equity and debt, the funds offer steady risk-adjusted returns. In case a fund is generating negative returns, then losses will not be too high, rather will be moderate. Thus, these schemes offer a better risk-reward ratio when compared to pure equity schemes.
- Variety: Moderate risk mutual funds have a variety of funds under their category. For example, monthly income plans, dynamic bond funds, short term funds, hybrid funds, etc. Therefore, depending on your investment goal, you can choose a suitable type of scheme.
Who Should Invest in 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.
Advantages
Following are the advantages of investing in moderate risk mutual funds:
- Returns: Moderate risk funds invest largely in moderately risky instruments that generate consistent returns. Investors can obtain medium-term risk-adjusted earnings since the portfolio contains a mix of debt and equity securities.
- Taxation: Returns from moderate risk funds are more tax-efficient than fixed deposits. For tax purposes, dynamic funds are classified as equity funds. However, if the fund’s portfolio has less than 65% of its assets in equity schemes, then it is taxed like a debt fund.
The taxation of the dynamic bond fund and the short duration fund is the same as that of a debt fund. Short-term capital gains (with a holding period of less than three years) are taxable as per your income tax bracket. On the other hand, long-term capital gains (with a holding period of more than three years) are taxable at 20% with indexation. - Investment Goals: Moderate risk funds best suit a medium-term investment horizon, i.e., for a 3-5-years. Thus, if you wish to attain mid-term financial goals such as paying off unsecured debt, saving for a down payment, etc., you can consider investing in moderate-risk funds.
- Safer than High-Risk Investments: Moderate risk funds are considered to be safer than high-risk investments, i.e., pure equity schemes. Portfolio diversification provides investors with a cushion to withstand losses. In other words, the losses are moderate in comparison to pure equity funds.
- Investments: You can invest through either lump sum or SIP routes. Thus, depending on your investment goals and financial position, you can decide on a suitable option.
Disadvantages
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.