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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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For investors seeking stability and steady returns in the Indian market, low-risk mutual funds offer an attractive option. These funds typically invest in instruments such as government securities, high-quality bonds, and blue-chip stocks, prioritising capital preservation over aggressive growth. With a focus on minimising risk, these mutual funds aim to provide consistent returns while offering investors peace of mind amidst market volatility.
Top 10 Low Risk Mutual Funds
Category / Scheme Name
Fund Size (in Rs. Crs)
NAV
Exit Load
1Y CAGR (%)
2Y CAGR (%)
3Y CAGR (%)
5Y CAGR (%)
Canara Robeco Bluechip Equity Fund - Growth
10,090
46.57
Within 1Y: 1%
13.97
18.45
16.04
-
ICICI Prudential Value Discovery Fund - Growth
32,754
325.96
Within 12M: 1%
24.29
29.77
18.24
-
Kotak Bluechip Fund - Reg - Growth
6,370
425.93
Within 1Y: 1%
14.52
19.66
15.38
-
Nippon India Large Cap Fund - Reg - Growth
15,855
65.8
Within 7D: 1%
22.71
29.32
16.27
-
HDFC Index Fund-NIFTY 50 Plan
9,446
183.62
Within 3D: 0.25%
14.09
19.88
14.47
-
ICICI Prudential Nifty 50 Index Fund - Reg - Growth
4,977
194.81
Nil
14.06
19.81
14.39
-
UTI Nifty 50 Index Fund - Growth
12,092
132.93
Nil
14.2
20.06
14.69
-
Aditya Birla Sun Life Liquid Fund - Reg - Growth
32,542
372.6
See Exit Load*
6.83
6.89
-
5.5
HDFC Liquid Fund - Growth
47,502
4,538.64
See Exit Load*
6.74
6.79
-
5.42
ICICI Prudential Liquid Fund - Reg - Growth
38,982
342.34
See Exit Load*
6.76
6.8
-
5.42
1. Canara Robeco Bluechip Equity Fund - Growth
This fund has demonstrated a stable growth pattern with a NAV of Rs. 10,090. It has recorded a one-year return of 13.97%, which is impressive. The fund's three and five-year returns are 18.45% and 16.04%, respectively. However, there is an exit load of 1% if the fund is redeemed within a year, which might impact your net gain if you plan a short-term investment.
2. ICICI Prudential Value Discovery Fund - Growth
This fund has a high NAV of Rs. 32,754, indicating strong performance. The one-year return is at a robust 24.29%, with three and five-year returns at 29.77% and 18.24%, respectively. Similar to the Canara Robeco fund, this fund also levies an exit load of 1% if a withdrawal is made within 12 months.
3. Kotak Bluechip Fund - Reg - Growth
With an NAV of Rs. 6,370, this fund has shown a steady one-year return of 14.52%. Its three-year and five-year returns are 19.66% and 15.38%, respectively. However, it carries an exit load of 1% if the funds are withdrawn within a year, which is a risk factor to consider for short-term investors.
4. Nippon India Large Cap Fund - Reg - Growth
This fund boasts an NAV of Rs. 15,855 and a strong one-year return of 22.71%. Its three and five-year returns stand at 29.32% and 16.27%, respectively. The fund has an exit load of 1% if redeemed within 7 days, which might discourage investors seeking immediate liquidity.
5. HDFC Index Fund-NIFTY 50 Plan
This index fund carries an NAV of Rs. 9,446 and has % a one-year return of 14.09%. Its three and five-year returns are 19.88% and 14.47%, respectively. The absence of an exit load is a significant advantage for investors seeking flexibility in their investment timeline.
6.ICICI Prudential Nifty 50 Index Fund - Reg - Growth
With an NAV of 4,977, this index fund has a one-year return of 14.06%. It has three and five-year returns of 19.81% and 14.39%, respectively. The absence of an exit load allows investors to redeem their investments anytime without any financial implications.
7.UTI Nifty 50 Index Fund - Growth
This fund has an NAV of 12,092 and a one-year return of 14.2%. Its three and five-year returns are relatively high at 20.06% and 14.69%, respectively. Like the other index funds, it has no exit load, providing investors with greater flexibility.
8.Aditya Birla Sun Life Liquid Fund - Reg - Growth
This liquid fund has a high NAV of Rs. 32,542 and relatively lower returns, with the latest annual return at 6.83%. The exit load details are not specified, which investors should inquire about before investing.
9.HDFC Liquid Fund - Growth
This fund boasts an NAV of 47,502, the highest among the listed funds. However, its returns are lower, with the latest annual return at 6.74%. The exit load details are not provided, which might require additional inquiry.
10.ICICI Prudential Liquid Fund - Reg - Growth
With an NAV of Rs. 38,982, this fund offers an annual return of 6.76%. Like the other liquid funds, the exit load details are not specified, which could impact the net returns for investors planning a short-term investment.
Read Also: What is CAGR
What are Low-Risk Mutual Funds?
Mutual funds with low risk refer to investment vehicles that are specifically designed to minimise the potential for loss and volatility. These funds typically invest in assets with stable returns, such as Government Securities and high-quality bonds, rather than higher-risk assets like stocks or speculative ventures.
One of the key characteristics of low-risk mutual funds is their lower volatility, meaning they are less likely to experience significant fluctuations in value. Additionally, these funds adopt a conservative investment approach, prioritising capital preservation and steady income generation over aggressive growth.
When assessing the risk associated with mutual funds, investors often rely on several factors, including ratings provided by credit agencies and historical performance data. These ratings evaluate the creditworthiness and stability of the fund's underlying securities, providing investors with valuable insights into potential risks.
Read Also: What is Mutual Fund ?
Features of Low-Risk Mutual Funds
Low-risk mutual funds employ a diversification strategy that minimises risk for investors. By spreading investments across various asset classes, such as bonds, stocks, and cash equivalents, these funds can mitigate the impact of any investment performing poorly.
The rationale behind this approach is that different asset classes have distinct risk profiles and tend to perform differently under varying market conditions. Therefore, when one asset class experiences a decline, other asset classes may still generate returns, offsetting potential losses.
Furthermore, low-risk mutual funds prioritise conservative investment strategies, focusing on fixed-income securities and high-grade bonds. These types of investments are characterised by their stability, consistent income generation, and lower susceptibility to market volatility.
Who are these Funds Suited for?
Investor profiles best suited for low-risk mutual funds include individuals nearing retirement or those with a low-risk tolerance. Capital preservation becomes a priority as retirement approaches, and the potential for significant losses is less desired.
Low-risk mutual funds offer a conservative investment option, focusing on stable income generation and reduced market volatility. These funds are also suitable for investors with a low-risk tolerance, who prefer a more cautious approach to investing and prioritise the protection of their principal amount.
Besides, low-risk mutual funds may be ideal for individuals seeking steady, reliable income without exposing their investments to excessive market fluctuations. For example, conservative investors looking to supplement their retirement income might find low-risk mutual funds appealing.
Read Also: What is TER?
Advantages of Low-Risk Mutual Funds
Low-risk mutual funds offer several advantages, making them an attractive option for conservative investors seeking capital preservation and stability in market fluctuations.
Conclusion
Low-risk mutual funds offer a safe avenue for investors seeking steady returns and capital preservation. However, investors must evaluate their risk appetite and investment objectives before choosing these funds. Consultation with a financial advisor is highly recommended for a more tailored investment strategy. This will ensure the chosen funds align well with individual financial goals and risk tolerance levels.
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