Top High Risk Mutual Funds with High Returns in India
High risk mutual funds might come with a significant share of risks when compared to other mutual funds. Apart from the high risk, these mutual funds have showcased higher returns compared to other mutual fund plans. So, if you’re comfortable with taking on more risks in exchange for the potential of higher returns, these funds can be suitable for you. For those seeking a balance, moderate risk mutual funds could be a more stable choice while still aiming for reasonable growth. Let’s have a look at the best options for those aiming higher.
List of Best High Risk High Return Mutual Funds in India
Here is a list of high risk high return mutual funds that you might consider investing in.
| Name | Sub-Category | AUM (in Cr.) | CAGR 3Y (%) | Expense Ratio | CAGR 5Y (%) | Volatility (%) |
|---|---|---|---|---|---|---|
| Quant Small Cap Fund | Small Cap Fund | 26,330.82 | 26.37 | 0.64 | 46.53 | 19.85 |
| Bank of India Small Cap Fund | Small Cap Fund | 1,537.17 | 23.26 | 0.47 | 37.94 | 18.00 |
| Nippon India Small Cap Fund | Small Cap Fund | 61,027.03 | 27.10 | 0.68 | 35.76 | 17.29 |
| Canara Rob Small Cap Fund | Small Cap Fund | 12,590.85 | 21.23 | 0.44 | 34.82 | 16.65 |
| Quant Infrastructure Fund | Sectoral Fund - Infrastructure | 3,936.99 | 23.28 | 0.66 | 34.80 | 22.43 |
| Edelweiss Small Cap Fund | Small Cap Fund | 4,256.07 | 22.99 | 0.38 | 33.86 | 16.09 |
| Tata Small Cap Fund | Small Cap Fund | 9,463.78 | 25.22 | 0.34 | 33.71 | 17.69 |
| Quant Mid Cap Fund | Mid Cap Fund | 8,940.54 | 23.38 | 0.58 | 33.16 | 19.66 |
| Motilal Oswal Midcap Fund | Mid Cap Fund | 20,055.68 | 33.45 | 0.57 | 32.96 | 16.90 |
| ICICI Pru Commodities Fund | Thematic Fund | 2,609.08 | 18.68 | 0.93 | 32.69 | 21.36 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the top high returns mutual funds in India in the list is from 21st November, 2024. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!
Top 10 High Risk Mutual Funds Overview
Let’s look at the high-risk mutual funds in detail.
Quant Small Cap Fund
Quant Money Managers Limited (QMML), established in 1995, focuses on delivering consistent performance through a data-driven approach to fund management. This fund is positioned as a top performer in the small-cap category, offering a 3-year rolling return of 40.48% and a Sharpe Ratio of 1.56, demonstrating strong risk-adjusted returns. As one of the highest risk mutual funds, it appeals to investors comfortable with high volatility.
Bank of India Small Cap Fund
Managed by Bank of India Investment Managers, a subsidiary of Bank of India, this fund benefits from the institution’s extensive legacy and expertise in financial services. With a focus on small-cap opportunities, it has achieved a 3-year rolling return of 31.74% and a Sharpe Ratio of 1.43, providing stable growth with moderate risk.
Nippon India Small Cap Fund
Nippon India Mutual Fund, one of the largest AMCs in the country, offers this fund as a high-performing option in the small-cap segment. Backed by strong fund management practices, it has delivered a 3-year rolling return of 36.71% with a Sharpe Ratio of 1.54, showcasing its efficiency in balancing risk and reward. This mutual fund is among the list of high returns mutual funds 2024
Canara Robeco Small Cap Fund
Canara Robeco AMC, a joint venture with a strong presence in Indian markets, brings disciplined management to this fund. Designed to capture small-cap growth, it has recorded a 3-year rolling return of 31.23% and a Sharpe Ratio of 1.38, making it a steady performer for investors. This fund is an alternative for those seeking moderate risk mutual funds with consistent growth.
Quant Infrastructure Fund
A part of Quant Money Managers’ diverse portfolio, this fund focuses on the infrastructure sector. Its 3-year rolling return of 40.73% and Sharpe Ratio of 1.4 highlight its ability to capitalise on opportunities in this space, making it a notable choice for sector-focused investments. As one of the highest risk mutual funds, this is ideal for investors keen on infrastructure exposure.
Edelweiss Small Cap Fund
Managed by Edelweiss Asset Management Limited, this fund is part of a rapidly growing AMC known for its innovative investment strategies. The fund focuses on small-cap stocks and offers a 3-year rolling return of 31.18% with a Sharpe Ratio of 1.47, delivering consistent growth for investors with a higher risk tolerance. It is among the best high risk high return mutual funds 2024.
Tata Small Cap Fund
Tata Asset Management, with over 25 years of expertise, manages this fund, which focuses on small-cap opportunities. Known for disciplined fund management, it has delivered a 3-year rolling return of 32.95% and a Sharpe Ratio of 1.74, reflecting superior risk-adjusted performance within its category.
Quant Mid Cap Fund
Another offering from Quant Money Managers Limited, this fund is tailored for mid-cap investments. With a focus on high-growth opportunities in mid-sized companies, it boasts a 3-year rolling return of 36.37% and a Sharpe Ratio of 1.18, making it an attractive choice for investors seeking mid-cap exposure. While not among the highest risk funds, it offers a compelling mix of growth and risk.
Motilal Oswal Midcap Fund
Managed by Motilal Oswal AMC, a leading player in the investment space, this fund is designed for mid-cap equity investments. Its outstanding performance is evident in its 3-year rolling return of 38.37% and a Sharpe Ratio of 2.68, making it one of the most efficient funds in terms of risk-adjusted returns.
ICICI Prudential Commodities Fund
ICICI Prudential AMC, India’s leading asset management company, oversees this fund focusing on the commodities sector. With a 3-year rolling return of 28.44% and a Sharpe Ratio of 0.97, the fund is suitable for investors looking for exposure to commodities with moderate returns and risk levels. This fund might interest those preferring moderate risk mutual funds with a unique sector focus.
What are High Risk Mutual Funds?
High risk mutual funds are investment plans that can carry a greater probability of both significant gains and substantial losses compared to other types of mutual funds. These funds typically invest in assets or securities with higher volatility and potential for larger returns. But they may also come with an increased level of uncertainty and the possibility of losing a significant portion of the invested capital. Understanding the meaning of very high risk mutual funds is crucial for investors looking to maximise returns.
Investing in small and medium-cap companies holds significant growth potential.
However, their stock prices may sharply decline in a bearish market or if they underperform. The best high return funds in India can sometimes focus on debt securities with higher yields but lower credit ratings. For those seeking balanced strategies, low risk high return mutual funds in 2024 may also be worth considering for better diversification.
On the other hand, the best high risk high reward mutual funds that concentrate on large-cap companies are considered relatively safer. However, even these funds face the inherent risks of the equity market.
Asset Management Companies (AMCs) conduct thorough research to assess the potential for attractive returns. It’s crucial for investors to examine the past performance of the best high risk mutual funds before making investment decisions.
How Do High-Risk Mutual Funds Work?
High risk high mutual funds operate by investing in volatile assets, such as growth stocks, small-cap companies, or sectors prone to market fluctuations. These funds pursue aggressive strategies with the potential for higher returns. While they come with increased uncertainty and short-term volatility, they attract investors seeking substantial profits during favourable market conditions. Portfolio diversification through medium risk mutual funds or low risk high return mutual funds in 2024 is a strategy often employed to balance risk.
Features of High Risk and High Return Mutual Funds
Here is a list of features of potentially very high risk mutual funds.
- Type: Comes in diverse categories, including balanced advantage schemes, credit risk fund schemes, equity hybrid fund schemes, and more.
- Asset Allocation: Invest primarily in stocks or bonds of emerging or growing companies, with the asset allocation tailored to the specific type of high-risk and high-return mutual fund.
- Risk Reward Return Ratio: While high risk high return mutual funds entail substantial volatility, as the name implies, the best ones in 2024 also present significant returns, reflecting a favourable risk-reward ratio.
Who Should Invest in High Risk Mutual Funds?
High risk mutual funds can be best suited for investors who can handle risk. It’s important to note that these funds typically yield significant returns over a more extended time horizon. Investors adopting an aggressive yet patient investment approach may find high risk high gain mutual funds fitting.
Factors to Consider Before Investing in High Risk and High Return Mutual Funds
Before investing in the best high risk high return mutual funds, several key factors should be carefully considered:
- Investment Goals: High risk funds may align with goals that involve capital growth and are suitable for investors seeking potentially higher returns over an extended period.
- Risk Tolerance: Assess your risk tolerance and capacity to withstand market volatility. While high CAGR mutual funds involve a higher level of uncertainty and potential for losses, so understanding your comfort level with risk is crucial.
- Time Horizon: Consider your investment time horizon. The best mutual funds for high returns often require a longer holding period to ride out short-term market fluctuations and benefit from the growth potential of the underlying assets.
- Fund Performance: Evaluate the historical performance of the fund. Analyse past returns and compare them with similar funds to gauge consistency and effectiveness in delivering returns over different market conditions.
- Expense Ratio: Understand the expense ratio, which represents the annual fees as a percentage of the fund’s average net assets. Lower expense ratios, especially in low risk mutual funds with high returns, can contribute to higher overall returns.
- Diversification: Examine the fund’s diversification strategy. A well-diversified portfolio can help mitigate risk by spreading investments across different asset classes and sectors.
- Fund Manager Expertise: Assess the expertise and track record of the fund manager. A skilled and experienced fund manager can make strategic decisions to navigate the challenges of high risk high return mutual funds effectively.
How to Invest in High Risk High Return SIP Investments?
There are two avenues for investors to venture into high risk funds with high returns in India:
- Systematic Investment Plans (SIPs): Investors can regularly contribute a fixed amount to the fund based on their financial capacity. SIPs are also an excellent way to invest in low risk mutual funds in India in 2024 while maintaining consistency in contributions.
- Lump Sum Investments: This option requires individuals to commit a specific amount at once. While lump-sum investments may involve higher initial capital, they can also be used strategically for the best cagr mutual funds or best mutual funds for high returns.
Typically, SIPs have a minimum investment threshold of Rs. 500, whereas lump-sum investments may necessitate Rs. 1,000 or more.
Risks Involved While Investing in High Risk Mutual Funds
Investing in high return mutual funds comes with several inherent risks that investors should be aware of:
- Market Volatility: They can be more susceptible to market fluctuations, which can lead to rapid and significant changes in the fund’s value.
- Loss of Principal: The value of high risk investments can decline, and investors may not recover their initial capital.
- Economic Downturn: High risk high return SIP investments in India can be particularly sensitive to economic downturns. Economic challenges can negatively impact the performance of the underlying assets, leading to losses for investors.
- Industry and Sector Risks: Funds focused on specific industries or sectors may be vulnerable to adverse developments in those areas. Concentrated exposure increases the risk if a particular sector faces challenges.
- Liquidity Risks: Some high risk assets may lack liquidity, making it challenging to sell them quickly in the market. This illiquidity can exacerbate losses during turbulent market conditions.
- Interest Rate Risks: High risk funds, especially those holding bonds, are exposed to interest rate risks. These high interest mutual funds can lead to a decline in bond prices, affecting the fund’s overall performance.
- Long-Term Commitment: High risk funds may require a longer investment horizon to weather short-term market fluctuations. Investors should be prepared for a more extended commitment to potentially realise returns.
- Overconfidence Bias: Investors attracted to high risk funds may exhibit overconfidence in their ability to predict future movements.
Benefits of Investing in High Risk and High Return Mutual Funds
Here are some key advantages associated with investing in the best high risk mutual funds.
- Higher Returns: The top high risk mutual funds excel in delivering comparatively higher returns than many other investment options. Debt-based funds, focusing on low-rated bonds, can yield significant returns, while equity-based funds allocate assets to growing companies’ stocks, enhancing the potential for good returns than large-cap funds.
- Long-Term Capital Appreciation: High risk funds demonstrate optimal performance over 5-7 years, making them suitable for achieving long-term financial goals. Additionally, these funds are adept at generating returns that keep pace with inflation.
- Tax Benefits: Investors in higher income tax brackets can enjoy more tax-efficient returns compared to traditional bank fixed deposits. Even when considering high return low risk mutual funds, high-risk funds may offer superior post-tax returns depending on the investor’s financial goals.
- Opportunity to Beat Benchmarks: During positive market cycles, high risk high return funds have the potential to outperform benchmark indices.
- Flexible Investment Modes: Investors can choose between two investment modes – Systematic Investment Plan (SIP) or lump sum. This approach allows individuals to calculate what is high risk in SIP and determine returns using tools like the smallcase SIP calculator. In the lump-sum method, individuals invest a specific amount at once.
What are the Returns on the Best High Risk Mutual Funds & How are they Calculated?
High risk mutual funds with high returns, also known as aggressive or growth funds, typically invest in stocks, small-cap companies, or emerging markets. While they offer the potential for higher returns, they also carry significant risk in mutual funds.
To calculate the returns on high risk funds, the following methods are commonly used:
- Total Return: This represents the total change in the value of a mutual fund’s shares over a given period. This includes both capital appreciation and dividend income. It is calculated as the difference between the net asset value (NAV) of the fund at the beginning and end of the period, expressed as a percentage.
- Annualised Return: Calculated using the compound annual growth rate (CAGR) formula. Consider the fund’s returns and reinvestment of dividends over the period.
- Sharpe Ratio: Measures the excess return of a mutual fund compared to a risk-free investment, such as a government bond, relative to its volatility. A higher Sharpe ratio suggests better risk-adjusted performance, helping investors balance their exposure to risk in mutual funds.
- Sortino Ratio: This is a variation of the Sharpe ratio that focuses on downside risk rather than overall volatility. It penalises negative returns more heavily, providing a better measure of a fund’s performance in volatile markets.
- Maximum Drawdown: This represents the largest percentage decline in the value of a mutual fund’s shares from a peak. It provides an indication of the potential downside risk associated with the fund.
It is important to note that past performance is not necessarily indicative of future results, and high risk mutual funds can experience significant losses.
Taxation on High Risk Mutual Funds as per the Union Budget of 2024-25
The taxation on capital gains from your mutual fund investments is based on their holding periods and asset allocation. A few revisions were made to the tax rates, depending on their types, in the Union Budget 2024-25. It may be important to learn about these revisions when considering high risk mutual funds. These changes include:
Equity Mutual Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Debt Mutual Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
- Change in Holding Period for Specified Mutual Funds: Previously, debt mutual funds with a holding period of over 36 months were taxed based on the investor’s tax slab, classified as Long-Term Capital Gains (LTCG). Now, for specified mutual funds where over 65% of the investment is in debt, the holding period for taxation has been reduced to over 24 months. These funds will still be taxed according to the investor’s tax slab as either LTCG or STCG.
Hybrid Mutual Funds
| Type of Hybrid Fund | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) | Indexation Benefit |
| Equity-Oriented Hybrid Funds | 20% for holdings less than 1 year | 12.5% for holdings over 1 year, with gains up to Rs. 1.25 lakh tax-free | Not available |
| Debt-Oriented Hybrid Funds | Taxed as per income tax slab for holdings less than 3 years | 12.5% for holdings over 3 years | Not available |
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
To Wrap It Up…
In conclusion, high risk and high return mutual funds present investors with a unique set of opportunities and challenges. While the potential for significant returns exists, it is crucial for investors to approach these funds with a clear understanding of their risk tolerance, investment goals, and the intricacies of the funds themselves. As discussed earlier, the tax implications add another layer of complexity that necessitates careful consideration.
As always, please do your own research and/or consult a financial advisor before investing.
Frequently Asked Questions (FAQs) on High Risk Mutual Funds
The investment horizon for high risk mutual funds typically ranges from 5 to 10 years or more. Investors should comprehend both the growth potential and challenges before investing in the best high risk mutual funds.
The specific asset allocation will vary depending on the type of high-risk mutual fund, but these funds generally invest in riskier assets with the potential for higher returns.
High risk high return MFs have the potential to offer good returns than lower-risk funds, but they may also come with a higher degree of risk. The returns on high risk mutual funds can vary significantly from year to year, and investors should be prepared for the possibility of losses.
High risk mutual funds can be suitable for investors with a long-term investment horizon and a high risk tolerance. However, these funds might not be appropriate for investors who need to access their money in the short term or who are uncomfortable with the possibility of significant losses.
Some high risk mutual funds have lock-in periods, which means that investors cannot redeem their shares for a certain period of time.
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