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Which mutual funds to invest for higher returns and what are the risk level associated with them

Which is the best type (Equity - large cap, mid & small cap, ELSS, diversified, balanced or debt) of mutual fund to invest for higher returns and what are the risk level associated with them?

Jun 29, 2016 by Ankush, Delhi  |   Mutual Fund

There is no thumb rule as to which category of funds (Equity - large cap, mid & small cap, ELSS, diversified, balanced or debt) is best or ideal for higher returns. This is simply because each fund category has different level of risks – Liquid funds being the least risky compared to sectoral funds which has the highest risk. Again, higher risk is associated with higher return also.

Therefore, you need to know two things – 1) Why you are investing and how long can you remain invested? Is it a short term investment, say less than a year. Or a medium term investment, say 1-3 years or a long term investment, say 3 years or more. Some investments could even be for 10-15 or 20 years 2) What is your risk taking appetite?

Only if you have answers for these two, can you decide which fund is best for getting highest short term and long term investments. To check which fund category you should invest, you may like to use this Calculator

Please also have a look below to understand the different category returns over different time period -

The different category returns over different time period

From the above chart, you can see how the returns fluctuate based on categories. As mentioned above, the highest return generating categories may be the highest risky as well.

Please also note that all AMCs indicate the risk level of each fund through RISKOMETER. While investing in a fund you must check the fund RISKOMETER which is displayed in the common application forms. To know more about RISKOMETER, please read common mutual fund investing mistakes to avoid

By reading the following article, we feel, you will be more clearer about returns of various categories and the ones most suited to your risk profile –

The right equity mutual funds when investing for the first time

The world of Mutual Funds

Mutual funds that you must have in your portfolio

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