List of High Risk Mutual Funds in India (2026)

Very high-risk mutual funds are investment vehicles designed for investors who are willing to accept significant volatility in exchange for the potential of substantial long-term capital appreciation. These funds invest in highly volatile assets, such as small-cap stocks, sectoral and thematic equities, and emerging market securities, where the upside potential is high but the possibility of short-term drawdowns is equally significant. In this article, we explore the meaning, categories, benefits, risks, and key factors to consider when evaluating very high-risk mutual funds in India.

Top High Risk Mutual Funds

The following are the high risk mutual funds sorted as per 5Y CAGR:

Disclaimer: Please note that the above list of high risk Mutual funds is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Mutual Fund Screener and is subject to real-time updates.

Note: The data on the list of high-risk mutual funds is from 11th March 2026. This data is derived from the Tickertape Mutual Funds Screener.

• Plan: Growth
• SEBI Risk Category: Very Risk

Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

What are Very High Risk Mutual Funds?

Very high-risk mutual funds are those classified by SEBI’s riskometer at the highest end of the risk spectrum. These are funds that invest predominantly in highly volatile asset classes, including small-cap equities, sectoral and thematic stocks, emerging market funds, and credit risk debt instruments, where both the potential for exceptional returns and the risk of significant capital loss are substantially elevated compared to other fund categories.

Unlike conservative or moderate funds that aim to preserve capital while generating steady returns, very high risk mutual funds are built primarily for capital appreciation. They are not designed for investors seeking stability or predictable income, they are for investors with a high risk appetite, a long investment horizon, and the emotional resilience to stay invested through sharp market downturns without panic-selling.

Overview of Top High-Risk Mutual Funds

Parag Parikh Flexi Cap Fund

Parag Parikh Flexi Cap Fund invests across market capitalisations and includes selective international exposure. The fund follows a value-oriented investment approach and focuses on businesses with strong fundamentals, governance standards, and long-term growth potential while maintaining diversification across sectors and geographies.

HDFC Balanced Advantage Fund

HDFC Balanced Advantage Fund dynamically allocates between equity and debt based on market valuations and risk conditions. The strategy aims to balance capital growth with risk management by adjusting equity exposure during different market phases.

HDFC Flexi Cap Fund

HDFC Flexi Cap Fund invests across large-cap, mid-cap, and small-cap companies without strict allocation limits. The fund seeks capital appreciation by identifying businesses with strong earnings visibility and sustainable competitive advantages across sectors.

HDFC Mid Cap Fund

HDFC Mid Cap Fund focuses on mid-sized companies that demonstrate strong growth potential and improving fundamentals. The fund aims to capture earnings expansion opportunities in the mid-cap segment while maintaining diversification across sectors.

SBI Equity Hybrid Fund

SBI Equity Hybrid Fund invests in a combination of equity and debt securities to balance growth potential and income generation. The equity allocation provides exposure to market opportunities, while the debt component aims to moderate volatility.

ICICI Pru Multi-Asset Fund

ICICI Prudential Multi-Asset Fund invests across multiple asset classes including equity, debt, and commodities. The diversified allocation allows the fund to participate in different market segments while managing risk through asset diversification.

ICICI Pru Large Cap Fund

ICICI Prudential Large Cap Fund invests primarily in large-cap companies with established market positions and stable earnings profiles. The fund focuses on businesses with strong balance sheets and consistent performance across market cycles.

Nippon India Small Cap Fund

Nippon India Small Cap Fund invests predominantly in small-cap companies with scalable business models and growth potential. The fund aims to identify emerging businesses across sectors that may benefit from structural economic expansion.

ICICI Pru Value Fund

ICICI Prudential Value Fund follows a value investing strategy that focuses on companies trading below their intrinsic value. The fund seeks opportunities where market prices do not fully reflect long-term business fundamentals.

Kotak Midcap Fund

Kotak Midcap Fund invests primarily in mid-cap companies that show strong earnings visibility and business scalability. The fund aims to capture growth opportunities in the mid-cap segment while maintaining sector diversification.

How to Invest in Very High-Risk Mutual Funds?

You can easily start to invest in high-risk funds by following these steps:

• To invest in the best high-risk mutual funds, you can visit a mutual fund investment platform such as smallcase.
• The next step is to research and identify the high-risk mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
• Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode, either a one-time lump sum or a high-risk mutual fund SIP, and complete the process.

Taxation on High-Risk Funds (2026 Rules)

Understanding the tax treatment of very high-risk mutual funds is essential for accurately estimating post-tax returns and making informed investment decisions. The applicable tax depends on the type of fund (equity-oriented or debt-oriented) and the holding period at the time of redemption.

Riskometer Classification in India

SEBI mandates that every mutual fund scheme in India display a riskometer, a visual risk gauge, that classifies each fund into one of six risk categories:

Funds classified as Very High Risk on the SEBI riskometer are the subject of this article. These are funds where the risk of short-term capital loss is significantly elevated, though the potential for long-term wealth creation is among the highest across all fund categories.

Benefits of Investing in Very High Risk Mutual Funds

• High Long-Term Return Potential: The primary attraction of very high-risk mutual funds is their potential to deliver significantly higher returns over long investment horizons compared to conservative or moderate funds. Small-cap and sectoral funds have historically delivered strong CAGRs over 7–10 year periods, rewarding patient investors who stay the course through cycles of volatility.
• Inflation-Beating Returns: Given India’s long-term inflation trajectory, conservative investment options like fixed deposits or debt funds often struggle to generate real (inflation-adjusted) returns. Very high-risk funds, particularly equity-oriented small-cap and sectoral funds, have the potential to consistently outperform inflation over the long term, preserving and growing real wealth.
• Professional Fund Management: Very high-risk mutual funds are managed by experienced and specialised fund managers who actively monitor portfolio companies, evaluate sector-specific developments, and make strategic buy/sell decisions. This professional oversight helps investors access high-conviction, research-backed investment strategies in complex and volatile market segments.
• Diversification within High-Risk Segments: Even within the very high-risk category, mutual funds provide diversification across multiple companies within a sector or theme, reducing the single-stock risk that would arise from directly buying individual small-cap or sectoral stocks. This diversification offers a degree of risk mitigation even in highly concentrated investment strategies.
• Accessibility Through SIP: Very high-risk mutual funds can be accessed through Systematic Investment Plans (SIPs), allowing investors to invest small, regular amounts rather than a lump sum. SIPs enable rupee cost averaging, buying more units when prices fall and fewer when prices rise, which helps smooth out the impact of volatility over time and reduces the risk of poor entry timing.

Risks of Investing in Very High Risk Mutual Funds

• High Market Volatility: The most significant risk is sharp, unpredictable price swings. Small-cap funds can fall 40–60% during severe market corrections, and sectoral funds can underperform for multiple years if the sector they invest in goes out of favour. Investors must be psychologically prepared for extended periods of negative returns.
• Loss of Principal: Unlike fixed deposits, mutual funds, particularly very high-risk funds, do not guarantee capital protection. In adverse market conditions, investors may receive less than their original investment, especially if they exit during a market downturn.
• Concentration Risk: Sectoral and thematic funds invest entirely within a single sector or theme. If that sector faces regulatory headwinds, earnings disappointments, or macroeconomic challenges, the fund’s NAV can decline sharply with limited buffer from diversification across unrelated sectors.
• Liquidity Risk: Small-cap stocks and lower-rated credit instruments can face limited liquidity during market stress, making it difficult for fund managers to exit positions quickly without impacting prices. This can result in larger-than-expected NAV drawdowns during periods of market panic or redemption pressure.
• Currency and Geopolitical Risk: International and emerging market funds carry additional risks from currency depreciation, geopolitical tensions, and foreign regulatory changes, risks that are entirely outside the control of the Indian fund manager and can impact returns independent of the underlying portfolio’s performance.

Factors to Consider While Investing in High-Risk Mutual Funds

• Investment horizon: Very high risk mutual funds are subject to significant NAV volatility across market cycles. A longer holding period — generally seven years or more — is typically associated with a higher likelihood of the portfolio weathering short-term fluctuations.
• Risk tolerance and financial stability: These funds can experience considerable capital erosion during market downturns. Investors should evaluate whether their current financial position and psychological disposition are aligned with the level of volatility these funds may exhibit.
• Portfolio concentration risk: Very high risk funds often concentrate exposure within a specific market cap segment, sector, or theme. It is important to assess how such concentration interacts with an investor’s existing portfolio to avoid undue overexposure to a single area of the market.
• Fund manager track record across market cycles: The fund manager’s experience and consistency of performance across both bull and bear market phases is a relevant qualitative parameter, given the active decision-making involved in managing these fund categories.
• Allocation as a proportion of the overall portfolio: The proportion of capital allocated to very high risk funds warrants careful consideration in the context of an investor’s broader portfolio, overall risk profile, and long-term financial objectives.

Conclusion

Very high-risk mutual funds offer some of the most compelling long-term wealth-creation opportunities in India’s mutual fund universe, but they demand patience, discipline, and a genuine tolerance for volatility that not every investor possesses. The highest returns in India’s equity markets have historically come from segments like small-cap and sectoral funds, but only for those who stayed invested through corrections, held firm during drawdowns, and gave compounding the time it needs to work.

For investors who match the profile, aggressive, long-term, and experienced, very high-risk mutual funds can be a powerful engine of wealth creation within a well-constructed, diversified financial plan.

To research and evaluate very high-risk mutual funds independently, the Tickertape Mutual Fund Screener offers 50+ filters across riskometer, categories, returns, expense ratios, and fund ratings, helping you make informed, data-backed decisions tailored to your investment goals.

Frequently Asked Questions About High Risk Mutual Funds