6 High Return-Low Risk Mutual Funds (As per Value Research)
8 min read
Investors always wanted to take low to moderate risk and expect high returns. However, in reality, the opposite often occurs. If you are taking low risk, you can expect only low returns. High returns can be expected by taking high risk. Value Research Online provides Risk Grade and Fund Return Grade for all mutual fund schemes. One can filter based on these parameters to get low risk and high return mutual fund schemes. In this article we would provide 6 High Return-Low Risk Mutual Funds as per Value Research Online and our view about such funds.
What are High Return and Low Risk Grades as per Value Research?
Value Research Online provides various ratios and grades to mutual fund schemes. It provides return grades as well as risk grades. Earlier we covered Top Rated Mutual Funds as per Value Research.
Let us understand them first.
What is Value Research Fund “Risk” Grade?
As per Value Research Online, the risk grade captures a fund’s risk of losing your investment. The risk of investing in a mutual fund not only includes the possibility of losing money, but also the chance of earning less than you would have on a guaranteed investment. That’s they cover under ‘Risk Grade’. Below is the list of risk grades assigned to mutual funds.
High – Top 10%
Above Average – Next 22.5%
Average – Middle 35%
Below Average – Next 22.5%
Low – Bottom 10%
What is Value Research Fund “Return” Grade?
Value Research Fund Return Grade captures a fund’s risk-adjusted return in comparison to other funds in the category. The returns, though adjusted for dividend, bonus or rights, are not adjusted for loads. The fund’s monthly/weekly return is compared with the monthly/weekly risk-free return to arrive at the fund’s total return over the risk-free return. The monthly average risk-adjusted return is compared with the average category return to arrive at the final score.
The return score of a fund is then assigned according to the following distribution:
High – Top 10%
Above Average – Next 22.5%
Average – Middle 35%
Below Average – Next 22.5%
Low – Bottom 10%
6 High Return-Low Risk Mutual Funds (As per Value Research)
Here is the list of 6 mutual funds where Value Research Online rated as high return-low risk grade.
HDFC Retirement Savings Fund Equity Plan
ICICI Prudential Blue Chip Fund
ICICI Prudential Retirement Fund – Pure Equity Plan
JM Flexicap Fund
Motilal Oswal Midcap Fund
SBI Contra Fund
You can also look at Best Mutual Funds for next 10 Years if you are looking for recommendations based on your risk appetite and tenure of investment.
6 High Return-Low Risk Mutual Funds – Deep Dive into these funds
Lets deep dive into these funds. No specific order followed here.
#1 – HDFC Retirement Savings Fund Equity Plan
Investment Strategy:
The investment objective of the Investment Plans under the Scheme is to provide long-term capital appreciation / income by investing in a mix of equity and debt instruments to help investors meet their retirement goals.
Absolute Returns:
1 Year Returns – 36.5%
2 Year Returns – 64.2%
3 Year Returns – 99.6%
5 Year Returns – 189.1%
Since Inception – 400.3% (1 Lakh turned to Rs 5 Lakhs)
Annualised Returns:
1 Year Returns – 36.5%
2 Year Returns – 28%
3 Year Returns – 25.8%
5 Year Returns – 23.6%
Since inception returns – 21.7%
Our View about the fund:
This fund is pure equity fund that invests 90% in equity and 10% in TREPS.
Out of its equity portfolio, it invests 49% in large cap, 9% in midcap, 17% of small cap companies and balance in other stocks.
As part of equity portfolio, this fund invests in ICICI Bank, HDFC Bank, Reliance, SBI, Infy, Bajaj Auto, Airtel, L&T, ITC and Axis Bank.
Investors should note that this is an open ended retirement solution oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier).
With 0.68% expense ratio for direct plans and Beta of 0.8, this fund generated 21.7% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years and 5 years time frame.
High risk investors who are looking to lock their money for 5 years so that they can get the compounding benefit can invest in such funds. Others can consider simple equity mutual funds where there is no such lock-in period.
#2 – ICICI Prudential Blue Chip Fund
Investment Strategy:
The scheme seeks to generate long term capital appreciation and income distribution to investors from a portfolio that is predominantly invested in equity and equity related securities of large cap companies.
Absolute Returns:
1 Year Returns – 37.3%
2 Year Returns – 57.5%
3 Year Returns – 79.8%
5 Year Returns – 140.2%
10 Year Returns – 468.3% (1 Lakh turned to Rs 5.68 Lakhs)
Annualised Returns:
1 Year Returns – 37.3%
2 Year Returns – 25.3%
3 Year Returns – 21.6%
5 Year Returns – 19.1%
10 Year Returns – 17.0%
Our View about the fund:
This fund is a large cap fund that invests 90% in blue-chip stocks and 10% in TREPS.
Out of its equity portfolio, it invests 82% in large cap, 4% in midcap and balance on other stocks.
As part of equity portfolio, this fund invests in ICICI Bank, Reliance, L&T, Maruti, Infosys, Axis Bank, Bharti, Ultratech, HDFC Bank and Sun Pharma.
With 0.83% expense ratio for direct plans and Beta of 0.87, this fund generated 16.5% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years time frame.
We have indicated this mutual fund scheme as part of 15 Most Recommended Mutual Fund Schemes too.
Large cap funds provide stable returns and comes with moderate to high risk. If you are moderate-to-high risk appetite investor and willing to invest for 5+ years, you can invest in such funds.
#3 – ICICI Prudential Retirement Fund – Pure Equity Plan
Investment Strategy:
The scheme seeks to generate long-term capital appreciation and income generation to investors from a portfolio that is predominantly invested in equity and equity related securities.
Absolute Returns:
1 Year Returns – 55.4%
2 Year Returns – 75.8%
3 Year Returns – 125.7%
5 Year Returns – 192%
Since Inception – 198.2% (1 Lakh turned to Rs 2.98 Lakhs)
Annualised Returns:
1 Year Returns – 55.4%
2 Year Returns – 32.4%
3 Year Returns – 31.1%
5 Year Returns – 23.8%
Since inception returns – 23.4%
Our View about the fund:
This fund is pure equity fund that invests 94% in equity and 6% in TREPS.
Out of its equity portfolio, it invests 53% in large cap, 15% in midcap, 13% in small cap companies and balance on other stocks.
As part of equity portfolio, this fund invests in Bharti, DLF, L&T, Ambuja Cements, Ultratech, Tech Mahindra, Maruti, Lupin, Bharat Earth Movers and Inox Winds.
Investors should note that this is an open ended retirement solution oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier).
With 0.64% expense ratio for direct plans and Beta of 0.8, this fund generated 23.4% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years and 5 years time frame.
High risk investors who are willing to lock their money for 5 years so that they can get the compounding benefit can invest in such funds. Others can consider simple equity mutual funds where there is no such lock-in period.
#4 – JM Flexicap Fund
Investment Strategy:
The scheme which aims to provide capital appreciation by investing primarily in equity and equity related securities of various market depending upon valuation discount or premium amongst Large / Mid & Small cap stocks, the fund will keep varying the weights to capture the value while keeping an optimum Risk / Return profile.
Absolute Returns:
1 Year Returns – 63.5%
2 Year Returns – 96.6%
3 Year Returns – 122%
5 Year Returns – 209.9%
10 Year Returns – 584.3% (1 Lakh turned to Rs 6.84 Lakhs)
Annualised Returns:
1 Year Returns – 63.5%
2 Year Returns – 40.0%
3 Year Returns – 30.4%
5 Year Returns – 25.35%
10 Year Returns – 21.1%
Our View about the fund:
This flexicap mutual fund invests 100% in equity stocks consisting large cap, mid cap and small-size companies.
Out of its equity portfolio, it invests 32% in large cap, 20% in midcap and 25% in small cap stocks and balance on other stocks.
As part of equity portfolio, this fund invests in ICICI Bank, HDFC Bank, L&T, SBI, Bharti, M&M, REC, Schaeffler India, HDFC and ITC.
With 0.23% expense ratio for direct plans and beta of 0.91, this fund generated 19.3% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years time frame.
Flexicap funds invests in large cap, midcap and small-size companies. Among them, investing in midcap and smallcap companies are high risk. These funds are for high risk investors who are willing to invest for over 5 years.
#5 – SBI Contra Fund
The scheme seeks to provide the investor with the opportunity of long-term capital appreciation by investing in a diversified portfolio of equity and equity related securities following a contrarian investment strategy.
Absolute Returns:
1 Year Returns – 48.3%
2 Year Returns – 77.2%
3 Year Returns – 123.9%
5 Year Returns – 232.3%
10 Year Returns – 498.3% (1 Lakh turned to Rs 5.9 Lakhs)
Annualised Returns:
1 Year Returns – 48.3%
2 Year Returns – 33.0%
3 Year Returns – 30.8%
5 Year Returns – 27.1%
10 Year Returns – 19.5%
Our View about the fund:
This value mutual fund invests 83% in equity, 7% in debt and 10% in TREPS.
Out of its equity portfolio, it invests 35% in large cap, 18% in midcap and 9% in small cap stocks and balance in other stocks.
As part of equity portfolio, this fund invests in SBI, HDFC Bank, Gail, Cognizant, ICICI Bank, Torrent Power, Tata Steel, Axis Bank, Whirlpool and ONGC.
With 0.65% expense ratio for direct plans and Beta of 0.81, this fund generated 17.6% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years returns.
Earlier we have indicated this fund as part of 5 Mutual Fund Schemes that generated highest returns in the last 20 years
This value fund majorly invests in large cap companies along with some component in midcap and small companies. Investment in midcap and smallcap companies are riskier. High risk appetite investors who are willing to invest for medium to long term can invest in such funds. These are not for low risk or moderate risk takers.
#6 – Motilal Oswal Midcap Fund
The scheme seeks to achieve long term capital appreciation by investing in quality mid-cap companies having long-term competitive advantages and potential for growth.
Absolute Returns:
1 Year Returns – 54.4%
2 Year Returns – 89.8%
3 Year Returns – 158.6%
5 Year Returns – 258.7%
10 Year Returns – 734.5% (1 Lakh turned to Rs 8.3 Lakhs)
Annualised Returns:
1 Year Returns – 54.4%
2 Year Returns – 37.6%
3 Year Returns – 30.2%
5 Year Returns – 29.0%
10 Year Returns – 23.6%
Our View about the fund:
As per investment objective, this mid cap mutual fund majorly invests in mid-size companies.
Out of its equity portfolio, it invests 6.9% in large cap, 13% in midcap and 23% in small cap stocks and balance in other stocks.
As part of equity portfolio, this fund invests in Jio Financial Services, Kalyan Jewelers, Persistent Systems, Tube Investments, Prestige Estates, Co-forge, Balakrishna Industries, Indus Towers, CG Power and Infra and Max Healthcare.
With 0.61% expense ratio for direct plans and Beta of 0.78, this fund generated 24.3% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years time frame.
This fund majorly invests in midcap and small-cap stocks. Invest in midcap and smallcap companies is riskier. High risk appetite investors who are willing to invest for medium to long term can invest in such funds. These are not for low risk or moderate risk takers.
Should you invest in high return-low risk fund as per Value Research?
Majority of the funds indicated above would fall under “Very High Risk” or “High Risk” category as per SEBI mutual fund classification. Yes, these have potential to generate high returns too. However, Value Research risk grade category refers to fund’s risk of losing your investment. The low beta of the funds also indicates the same. This means there are very less changes to lose your money. However, investors should note that the risk is still not eliminated. Consider funds based on your risk appetite, financial goals and tenure of investment.
Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified – Investment Adviser and NISM Certified – Research Analyst. He has been analyzing financial markets in the last 20 years.He can be reached at suresh@myinvestmentideas.com Latest posts by Suresh KP (see all)
