High Risk Mutual Fund: A Gamble Between Risk and Reward
The world of investing is all about taking risks. It totally depends upon the investor, how he/she approach the risk. There is a general belief that who take high risk always get high returns. Using this principle, most of the investors always associate themselves with a high level of uncertainty with high level of returns or low level of uncertainty with low potential returns. While the principle of the theory of risk and return does describe the investment choice quite well, it does not describe how people think about those choices. Indeed, people tend to believe the opposite, that risk and expected return are negatively correlated. They believe that the stocks they like will earn a high expected return with low risk. That’s a psychological behaviour, which was better explained by the theory of “perspective of affect “. Affect is the perspective when certain fund or stock is named or mentioned. Even before any analysis is conducted, they judge whether the stock or fund house is good or bad. But a good investment comes with high returns with low risk.
Mutual funds do follow the same philosophy with regards to returns. Some of the equity funds are most suited for this plan. The best way to enter these funds is through the SIP (Systematic Investment Plan). It provides an excellent way to reduce the risk and increase the returns. It helps you to reduce the effect of volatility. But if various studies are to be considered, opting for investment with higher return potential without taking the risk associated with them seriously could be disastrous. In the mutual fund industry, High risk mutual fund mainly refers to this fund which provides with high return. It is also called as a High risk adjusted return. But as an investor, one needs to keep actively and thoroughly review the performance of these funds from time to time. Let’s look at some of the high-risk mutual funds to invest according to economic times:
- Mirae Asset Tax saver Direct G
- Kotak Direct Saver Direct- G
- Canara Robeco equity tax saver
- Axis Long term equity Direct
- HDFC LT Advantage G
- Invesco India Tax Plan Direct Plan G
- SBI Tax Advantage Series G
So, before investing in these it’s better to look at the rating, especially that of the risk as well as its returns. It will give you a perspective about which mutual fund to buy. Also, if you are a new investor, then it’s better to avoid investing in these mutual funds. But any investor who has an idea about the market and willing to take a high risk can invest in these funds. But one key thing to remember is that these funds are affected by market volatility, so it will be better if an investor stay invested for a longer period, so that the chances of making good profit will be quite higher.
Looking for some investment advice? Hop on to www.gulaq.com and talk to the experts.
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.