If you love high risk and high return, these Mutual Funds are for you
If there is a need for a higher return then a fund manager may invest in high risk funds like international funds
Some investors are not afraid of taking risks and want to accumulate a lot in a short time. That’s why they invest in assets that give high returns. Some investors understand the risk involved in the stock market. But some don’t know that there are high-risk products even in mutual funds.
So, if you are investing in such a fund then you need to track it carefully and you have to assess it from time to time.
In most of the cases, such high risk mutual fund gives a good return to the investors. So if you are ready to take higher risk along with higher return, then these funds are just for you.
Sweta Jain, CFP and founder of Investography says that there are lot of equity schemes where there is high risk. Large-cap, large and midcap, multicap, flexible, focused, small-cap, thematic funds are a few such names.
Midcap and small fund invest in small and medium-sized firms like startups. That’s why there is very high risk in them. So if someone is looking to invest for 5 to 10 years then you can invest in them. Because in the long term it is expected that these companies will perform good.
If we talk about sectoral mutual funds then sectoral mutual funds are those that invest in specific sectors like infrastructure, pharma, banking etc. They can double your money in a few years. But the thing to keep in mind is that there is very high risk. So if an investor is well informed about a specific sector then he can look to invest in such funds.
Large cap fund
Large cap funds invest in blue chip companies of the country. Since they are big firms, the return is relatively stable and less risky as compared to midcap-small caps. But they are also ultimately equity funds, that’s why there is a risk of losing money. So investors who are willing to accept risk and are looking to invest for the medium to long term, have to stay invested for at least 5 years. In the fund of funds, the manager invests in those funds which further invest in different funds. These are of various kinds like Domestic fund of funds, ETF based Fund of funds, global fund of funds etc.
In this investors get the benefit of diversification and the risk depends on the fund manager. If there is a need for a higher return then a fund manager may invest in high risk funds like international funds. Now the question is who should invest in them.
If you have a high risk appetite then you can invest in those funds and get high returns. But keep in mind that you have to carefully track your investment. If there are a lot of benefits of high risk mutual funds then a lot of risks are also there. This fund is more apt for young investors who has long term investment horizon.
And as a precaution consult your financial advisor before investing.