Aggressive Mutual Funds

With aggressive mutual funds, your money is invested predominantly in equity and equity-related instruments and the remaining in debt securities. These funds offer higher returns and capital appreciation and are suitable for investors with high-risk appetite.

These funds invest 65% to 80% in equity instruments

Less volatile than pure equity funds

Automatic rebalancing of funds

Get an average annual return of 18% to 29%.

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What are Aggressive Mutual Funds?

Aggressive mutual funds are open-ended hybrid mutual fund schemes which predominantly invest in equity and equity-related instruments. These funds invest 65% to 80% of the corpus in equity instruments and the remaining 20% to 35% in debt securities.

Aggressive funds are a type of hybrid fund, investing your money in both equity and debt securities. It enables you to earn higher returns when the equity market performs well and provides stable income during market changes.

However, the investments are dispersed throughout both asset groups. All of this implies that during a market correction, these funds will decline less than pure equities funds. But keep in mind that they will collapse. Debt funds just act as a safety net in such situations.

Why Add Aggressive Mutual Funds to Your Portfolio?

Yearly returns as high as 18% - 29%
Stable income during market volatility
Less risk in comparison to pure equity mutual funds
Ideal for investors with moderate risk tolerance

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Advantages of Investing in Aggressive Mutual Funds

Investing in aggressive growth mutual funds enables tax benefits and diversification. Apart from that, there are also a few more key advantages of investing in aggressive mutual funds, that are discussed below.

Diversification Portfolio
Aggressive mutual funds offer portfolio diversification by investing in both equity and debt instruments. It ensures that your returns are not highly impacted due to equity market changes and also safeguards the principal by investing in debt instruments.
Rebalancing of Funds
One of the key advantages of aggressive mutual funds is the automatic rebalancing process of asset allocation within the authorised limit. As per the SEBI mandate, these mutual funds must allocate 20% of the assets to debt instruments.
Less Volatile Than Equity Mutual Funds
Aggressive growth stock mutual funds are less risky than other equity mutual funds, as they invest in both equity and debt instruments. In case the market falls and equities suffer, the investment in debt instruments will safeguard the investors.
Taxation Benefit
According to the SEBI mandate, aggressive mutual funds invest between 65% and 80% in equity instruments. The remaining portion of the assets are invested in debt securities, providing fixed income. Hence, investors can take advantage of equity taxation under current tax regulations.
Mode of Investment
For some mutual funds, you only get the option to invest in a lump sum amount. However, in case of putting funds in the best aggressive mutual funds, you can use either SIP (Systematic Investment Plan) or lump sum mode. With SIP you get the option to pay at fixed intervals, thus helping you manage your finances effectively.
Easy to Invest
In the case of aggressive funds, the need to buy different types of funds to get exposure to multiple asset classes gets negated. This eases the effort to track your funds as the fund managers mostly take care of allocating your assets between the classes, making your investment process simple and hassle-free.

Who Should Consider Investing in Aggressive Mutual Funds?

Investing in aggressive mutual funds is suitable for both new and experienced investors. However, before you opt for this investment instrument, make sure to know who should consider investing in the best aggressive mutual funds.

First Time Equity Investors
Aggressive mutual funds are ideal for investors wanting to invest in equity mutual funds for the first time with a lower risk level than pure equity funds. The investment in debt securities ensures that during the change in the market, the investment value does not drop like pure equity funds.
Investors with a 5-Year Investment Horizon
Since these mutual funds predominantly invest in equity and equity-related instruments, you are not required to have a long investment horizon. You can invest in these funds if you have a moderate investment horizon for about 3 to 5 years. It will enable the fund to reach its full potential during this horizon and help you achieve your financial goal.
Investors near their Retirement Age
Investors approaching their retirement age and have not prepared for their retirement corpus can invest in the best aggressive growth mutual funds. It will help build their post-retirement investment fund by letting them earn higher returns.

Points to Consider Before Investing in Aggressive Mutual Funds

Before investing in aggressive mutual funds, you must keep these pointers in mind to make your investment grow.

Investment Goal
As an investor, you must analyse your financial goal first. If you want to gain high returns by taking high risks, you must invest in these mutual funds. However, the predominant exposure to equity instruments increases the level of risk during market fluctuations.
Risk Factor
Since aggressive mutual funds predominantly invest in equities, the funds’ performance is highly volatile and can be affected by changing market conditions. These funds are ideal for investors with a high-risk tolerance.
Expense Ratio
Before investing in aggressive mutual funds, you must compare the expense ratio. Choosing the lowest expense ratio aggressive mutual fund will enable you to earn greater returns, as you have to pay fewer fees to the fund houses.
Fund’s Performance
Analysing the fund’s performance is crucial when selecting the right aggressive mutual fund according to your preference. It will help you understand how the fund is going to perform in the future in varying market conditions.
Taxation
The taxation of aggressive mutual funds is treated the same as equity funds. If you redeem the capital gains within one year, it is treated as short-term capital gains (STGC) and is taxed at 15%. However, in the case of long-term capital gains, it is not taxable up to Rs. 1 lakh and after that will be taxed at 10%.
Experience of Fund Manager
Having an idea about the fund manager's experience in this type of investment becomes a crucial consideration. If the fund manager does not effectively allocate your money in equity and debt funds, it can lead to a risky situation, with your returns being low. So always research the fund manager first before you choose the option to invest.

Limitations of Investing in Aggressive Mutual Funds

While investing in aggressive mutual funds has certain benefits, you must be aware of the following limitations of these funds to flourish your investment.

High Risk
Investing in aggressive mutual funds comes with high risk as they invest predominantly in equity-related instruments to generate high returns. It exposes you to higher risk due to the changing market situations.
More Volatile
Since aggressive mutual funds allocate a higher percentage of the total assets to equity instruments, it leads to higher volatility due to fluctuations in the market. The top aggressive growth mutual funds are more volatile than debt mutual funds.
High Expense Ratio
The expense ratio of aggressive mutual funds is usually higher as the fund managers invest the corpus in both equities and debt securities simultaneously as investments.

How to Start Investing in Aggressive Mutual Funds with INDmoney?

Investing in the best aggressive growth mutual funds is easy through INDmoney. You can follow these simple steps to start investing in mutual funds through us:

Step 1
Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).
Step 2
Once your Free investment account is ready, you can either search for Aggressive Mutual Funds or go to the mutual fund section and tap on Hybrid Funds Catalog.
Step 3
Choose an Aggressive Mutual Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.
Step 4
You can choose to set up SIP in Aggressive Mutual Funds or even invest as lumpSum. Once you are on the individual Aggressive Mutual Funds page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan.
Step 5
Choose the amount that you want to invest as SIP or LumpSum.
Step 6
Set up payments. If you choose to set up SIP in Aggressive Mutual Funds, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.

Should You Invest in Aggressive Mutual Funds?

Aggressive mutual funds are a type of hybrid fund that is less risky than pure equity funds. However, they have a high expense ratio and are more volatile than debt instruments. If you are a first-time equity investor, you can invest in these funds as investments in debt securities act as a cushion during unfavourable changes in the market.

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Frequently Asked Questions

Yes, investing in aggressive mutual funds has certain risks. However, the risks are lower than pure equity funds as the investment in debt instruments safeguards the principal in case of sudden market changes.

The aggressive mutual funds invest around 20% to 35% in debt securities. These investments minimise the volatility and risk of the fund.

Aggressive hybrid mutual funds are ideal for investors investing for the first time in equity and want to generate capital with a long-term investment horizon. It is also ideal for investors with moderate risk appetite and nearing retirement age.

No, aggressive mutual funds do not have a lock-in period, enabling you to redeem your gains according to your preference. However, if you redeem the gains within a year of investing, the fund managers may charge an exit load.

According to SEBI guidelines, aggressive mutual funds must invest 65% to 80% in equity and equity-related instruments and the remaining 20% to 35% in debt securities.

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