Moderate Risk Mutual Funds

Moderate risk mutual funds are investment vehicles designed to offer a balance between risk and return, catering to investors who seek a middle ground between aggressive growth and capital preservation. These funds typically invest in a mix of equities (stocks) and fixed-income securities (bonds), striving to achieve a diversified portfolio that can provide both capital appreciation and income. The allocation between stocks and bonds in these funds can vary, but it usually aims to maintain a moderate level of risk and volatility.

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Best Moderate Risk Mutual Funds to Invest in India 2024

Fund Categories
AMC/Fund Houses
ICICI Prudential Asset Management Company LimitedHDFC Asset Management Co LtdSBI Funds Management LtdKotak Mahindra Asset Management Co LtdNippon Life India Asset Management LtdAditya Birla Sun Life AMC LtdAxis Asset Management Company LimitedUTI Asset Management Co LtdMirae Asset Investment Managers (India) Private LimitedDSP Asset Managers Private LimitedTata Asset Management LimitedBandhan Asset Management Company LimitedDSP Investment Managers Private LimitedHSBC Asset Management(India)Private LtdIDFC Asset Management Company LimitedCanara Robeco Asset Management Co. Ltd.Franklin Templeton Asst Mgmt(IND)Pvt LtdEdelweiss Asset Management LimitedQuant Money Managers LimitedInvesco Asset Management (India) Private LtdPPFAS Asset Management Pvt. LtdMirae Asset Mutual FundSundaram Asset Management Company LtdMotilal Oswal Asset Management Co. LtdMirae Asset Global Inv (India) Pvt. LtdBaroda BNP Paribas Asset Management India Pvt. Ltd.LIC Mutual Fund Asset Management LimitedPGIM India Asset Management Private LimitedDaiwa Asset Mgmt. (India) Pvt. Ltd.Mahindra Manulife Investment Management Pvt. Ltd.Fund PineBridge Mutual FundJM Financial Asset Management LimitedUnion Asset Management Co. Pvt. Ltd.Baroda Asset Management India LimitedPrincipal Asset Management Private LimitedWhiteOak Capital Asset Management LimitedBajaj Finserv Asset Management LimitedJPMorgan Asset Management India Pvt. Ltd360 ONE Asset Management LimitedEdelweiss Mutual FundBank of India Investment Managers Private LimitedITI Asset Management LimitedNavi AMC LimitedNJ Asset Management Private LimitedICICI Prudential Asset Mgmt.Company LimitedFranklin Templeton Asset ManagementIDBI Asset Management LimitedQuantum Asset Management Co Pvt. Ltd.Samco Asset Management Pvt LtdHelios Capital Asset Management (India) Private LimitedGroww Asset Management Ltd.Trust Asset Management Private LimitedTaurus Asset Management Company LimitedShriram Asset Management Co LtdZerodha Asset Management Private LimitedOld Bridge Asset Management Private LimitedING Investment Mgnt (India) Private Ltd.Baroda BNP Paribas Mutual Fund
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Advantages of Investing in Moderate Risk Mutual Funds

  • Balanced Growth and Income

    Investing in moderate risk mutual funds offers a balanced approach to achieving both growth and income. These funds typically combine equities, which provide capital appreciation, and fixed-income securities, which offer steady income. This dual focus allows investors to benefit from potential market gains while receiving regular income, making it an attractive option for those seeking a well-rounded investment strategy.

  • Diversification

    Moderate risk mutual funds inherently provide diversification by investing across multiple asset classes, sectors, and geographies. This spread of investments helps to mitigate risk, as poor performance in one area can be offset by better performance in another. Diversification reduces the overall volatility of the portfolio and protects investors from significant losses in any single investment.

  • Lower Volatility Compared to Equities

    While moderate risk mutual funds do invest in stocks, their inclusion of bonds and other fixed-income securities helps to dampen the volatility typically associated with pure equity investments. This results in a smoother investment experience, reducing the potential for drastic fluctuations in portfolio value. Investors who are wary of the high volatility of stock markets can find moderate risk funds to be a more stable alternative.

  • Potential for Higher Returns than Low-Risk Funds

    Moderate risk mutual funds offer the potential for higher returns compared to low-risk funds, which primarily invest in bonds or money market instruments. By including equities in their portfolio, moderate risk funds can achieve better growth over time. This makes them suitable for investors who are willing to accept a moderate level of risk in exchange for higher long-term returns.

  • Professional Management

    These funds are managed by professional fund managers who have the expertise to make informed investment decisions. They continuously monitor market conditions and adjust the fund's holdings to optimize performance. This professional management provides investors with the confidence that their money is being handled by experienced professionals, which can be particularly beneficial for those who lack the time or knowledge to manage their investments actively.

  • Flexibility

    Moderate risk mutual funds offer a degree of flexibility that can be advantageous for investors. Fund managers have the ability to adjust the asset allocation in response to changing market conditions, which helps to manage risk and capitalize on opportunities. This dynamic approach allows the fund to remain aligned with its investment objectives, providing a balanced and adaptive strategy that can respond to both market upturns and downturns.

Limitations of investing in Moderate Risk Mutual Funds

  • Potential for Losses

    Moderate risk mutual funds, while designed to balance risk and return, still carry the potential for losses. The inclusion of equities exposes investors to market volatility, which can result in negative returns, especially during market downturns. Unlike low-risk funds, moderate risk funds are not entirely shielded from market fluctuations, which can impact the value of the investment.

  • Less Stable Income

    Compared to low-risk funds that primarily invest in fixed-income securities, moderate risk funds may provide less stable income. The dividends from equities can be less predictable and may fluctuate based on company performance and broader economic conditions. Investors relying on a steady income stream might find the variability of returns from moderate risk funds less reliable.

  • Less Stable Income

    Compared to low-risk funds that primarily invest in fixed-income securities, moderate risk funds may provide less stable income. The dividends from equities can be less predictable and may fluctuate based on company performance and broader economic conditions. Investors relying on a steady income stream might find the variability of returns from moderate risk funds less reliable.

  • Higher Fees

    Moderate risk mutual funds often come with higher management fees and expenses compared to low-risk funds. This is due to the active management required to balance the portfolio between different asset classes. These higher fees can reduce overall returns, especially in periods when the fund's performance is moderate or below expectations.

  • Inflation Risk

    While moderate risk mutual funds aim for higher returns than low-risk funds, they may still not always keep pace with inflation. If the fund's returns are lower than the inflation rate, the real value of the investment can decrease over time. This is a particular concern for investors looking to preserve or grow their purchasing power.

  • Interest Rate Sensitivity

    The bond component of moderate risk mutual funds is sensitive to changes in interest rates. When interest rates rise, the value of existing bonds typically falls, which can negatively impact the fund's performance. This interest rate risk can offset some of the gains made from the equity portion of the portfolio, leading to lower overall returns.

  • Complexity

    Moderate risk mutual funds can be more complex than low-risk funds due to their diversified investment strategy. Understanding the fund's asset allocation, risk profile, and performance drivers can be challenging for some investors. This complexity requires a higher level of due diligence and ongoing monitoring, which might not be suitable for all investors, particularly those with limited investment knowledge or time to manage their portfolios actively.

Points to consider before investing in Moderate Risk Mutual Funds

  • Investment Objectives

    Before investing in moderate risk mutual funds, it's essential to clearly define your investment objectives. Consider whether your goal is to achieve a balance between capital growth and income, or if you are looking to diversify your portfolio with a moderate level of risk. Ensure that these funds align with your long-term financial goals and that you are comfortable with the potential for both gains and losses.

  • Risk Tolerance

    Assessing your risk tolerance is crucial when considering moderate risk mutual funds. These funds involve a mix of equities and fixed-income securities, resulting in moderate volatility. Determine whether you can handle fluctuations in the value of your investment and the possibility of temporary losses. Your risk tolerance will help you decide if moderate risk funds match your comfort level and investment strategy.

  • Time Horizon

    Consider your investment time horizon before committing to moderate risk mutual funds. These funds are generally suitable for investors with a medium to long-term perspective, typically ranging from three to ten years. A longer time horizon allows for recovery from short-term market volatility and maximizes the potential benefits of compounding returns. Ensure that your investment timeframe aligns with the fund's strategy to meet your financial goals.

  • Asset Allocation

    Understanding the asset allocation within a moderate risk mutual fund is vital. Review the proportion of equities to fixed-income securities and ensure it aligns with your investment preferences and risk tolerance. A well-balanced allocation should provide a mix of growth potential and income stability. Evaluate whether the fund's allocation strategy meets your expectations for risk and return.

  • Fees and Expenses

    Examine the fees and expenses associated with moderate risk mutual funds. These funds often have higher management fees due to active portfolio management. Compare the expense ratios of different funds and consider how these costs will impact your overall returns. Understanding the fee structure helps you make informed decisions and select funds that provide value for your investment.

  • Historical Performance

    Review the historical performance of moderate risk mutual funds to gauge their track record. While past performance is not indicative of future results, it can provide insights into how the fund has managed market fluctuations and delivered returns over time. Compare the fund's performance to relevant benchmarks and peers to ensure it has consistently met its investment objectives and aligns with your expectations.

How to Start Investing in Moderate Risk Mutual Funds with INDmoney

Now that you have understood what Moderate Risk Mutual Funds are, you need to know how easily you can start your investment with INDmoney. Just follow these simple steps given below, to start your mutual fund investment journey with 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 a Moderate Risk Mutual Fund or go to the mutual fund section and tap on Fund of Funds from Discover All Categories.

  • Step 3

    Choose a Moderate Risk 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 a SIP in a Moderate Risk Mutual Fund or even invest as a lump sum. Once you are on the individual Moderate Risk Mutual Fund page, click from the bottom “One-time” for lump sum investment or “SIP” for a systematic investment plan.

  • Step 5

    Choose the amount that you want to invest as SIP or Lump Sum.

  • Step 6

    Set up payments. If you choose to set up SIP in a Moderate Risk Mutual Fund, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lump sum (one-time) then you can pay via UPI, net banking, NEFT, or RTGS.

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