What is the safest type of mutual fund?
Money market mutual funds = lowest returns, lowest risk
BlackRock Exchange Portfolio (STSEX)
Easily one of the top-rated examples of the safest mutual funds, the BlackRock Exchange Portfolio (MUTF:STSEX) seeks long-term growth of capital and consequent long-term growth of income, per its prospectus.
Fund Name | Category | Risk |
---|---|---|
Mirae Asset Overnight Fund | Debt | Low |
Axis Overnight Fund | Debt | Low |
Kotak Equity Arbitrage Fund | Hybrid | Low |
Nippon India Arbitrage Fund | Hybrid | Low |
The Bottom Line
Safe assets such as U.S. Treasury securities, high-yield savings accounts, money market funds, and certain types of bonds and annuities offer a lower risk investment option for those prioritizing capital preservation and steady, albeit generally lower, returns.
Liquid funds and ultra-short-term funds (one month to one year) are known for its low risk, and understandably their returns are also low (6% at best). Investors choose this to fulfil their short-term financial goals and to keep their money safe through these funds.
Mutual funds are managed and therefore not ideal for investors who would rather have total control over their holdings. Due to rules and regulations, many funds may generate diluted returns, which could limit potential profits.
In the category of market-linked securities, mutual funds are a relatively safe investment. There are risks involved but those can be ascertained by conducting proper due diligence.
Equity mutual funds are the best option for long term investment.
Inflation is the biggest risk which eats up the returns generated by your investments in mutual funds. If your investments are not generating higher returns than the prevailing inflation rate, then you are just losing money from your investment.
- Kotak Flexicap Fund Direct Growth. ...
- Bandhan Flexi Cap Fund-Direct Plan-Growth. ...
- Navi Flexi Cap Fund Direct Growth. ...
- Canara Robeco Flexi Cap Fund Direct Plan Growth Option. ...
- Sundaram Flexi Cap Fund Direct Growth. ...
- Samco Flexi Cap Fund Direct Growth. ...
- SBI Flexicap Fund Direct Growth.
What are the 3 safest investment types?
Investment Type | Safety | Liquidity |
---|---|---|
Money market mutual funds | High | High |
Treasury Inflation-Protected Securities (TIPS) | High | High |
High-yield savings accounts | High | High |
Series I savings bonds | High | Low |
The safest place to put your retirement funds is in low-risk investments and savings options with guaranteed growth. Low-risk investments and savings options include fixed annuities, savings accounts, CDs, treasury securities, and money market accounts. Of these, fixed annuities usually provide the best interest rates.
Money market funds and other securities held in the Vanguard Brokerage Account are eligible for SIPC coverage. Securities in your brokerage account are protected up to $500,000. To learn more, visit the SIPC's website. Up to $250,000 by FDIC insurance.
One of the strategies for compounding money through mutual funds is to use the 8-4-3 rule, where the compounding effect grows exponentially. In the initial 8 years, the compounding effect shows good results, but its speed increases in the next 4 years and super-exponentially in the following 3 years.
Market Conditions: High-risk mutual funds are heavily influenced by overall market conditions, including economic indicators, interest rates, inflation, and geopolitical events. These funds often perform well in bullish markets but can experience significant losses during market downturns or economic crises.
Fund | AUM (In Crs) | 5 Yr Return (%) |
---|---|---|
ICICI Prudential All Seasons Bond Fund Direct Plan Growth | ₹11737 Cr | 8.58 % |
Kotak Dynamic Bond Direct Growth | ₹2486 Cr | 8.05 % |
SBI Dynamic Bond Fund Direct Growth | ₹2997 Cr | 8.35 % |
ICICI Prudential Corporate Bond Fund Direct Plan Growth | ₹25494 Cr | 7.59 % |
Mutual funds come with many advantages, such as advanced portfolio management, dividend reinvestment, risk reduction, convenience, and fair pricing. Disadvantages include high fees, tax inefficiency, poor trade execution, and the potential for management abuses.
One of the key benefits of mutual funds is the diversification they offer. Instead of putting all your money into one or two stocks or bonds, mutual funds invest in a broad range of assets. This diversification can help reduce the risk of losing money if a particular sector or company performs poorly.
According to experts, you should think about buying mutual funds when their NAV (Net Asset Value) is lower than their unit price. This will assist you to maximise your returns. Additionally, you should think about investing when the markets are at their lowest point. You can then purchase the shares at lower prices.
Mutual fund companies are well regulated
All mutual fund houses operate under stringent regulations to protect every investor's interests. These regulations are put in place by SEBI (Securities and Exchange Board of India), a government agency responsible for the supervision and functioning of the capital markets.
Should I invest in mutual funds in 2024?
Large cap, mid cap, and value funds are the best mutual funds to invest in 2024 based on their past one-year returns. Investing in mutual funds has always been a popular choice for investors seeking long-term growth and diversification.
- Quant Mid Cap Fund. 12.49%
- Quant Small Cap Fund. 11.38%
- Quant Large & Mid Cap Fund. 10.19%
- Quant Large Cap Fund. 9.95%
- ITI Mid Cap Fund. 9.49%
- Kotak Multicap Fund. 9.45%
- Quant Focused Fund. 9.34%
- SBI Long Term Equity Fund. 9.31%
Of course, you might also consider ETFs vs. mutual funds. Both are investment funds offering built-in diversification. However, unlike mutual funds, ETFs trade like stocks during regular market hours and may subject you to fewer taxes.
The mutual fund category most often providing the highest return is small-cap funds. Read on to know the current risks associated. A small-cap mutual fund is by default, most often, the category with the highest returns, especially this year with a massive 51.8 per cent return.
- Canara Robeco Equity Tax Saver Fund.
- Motilal Oswal ELSS Tax Saver Fund.
- DSP ELSS Tax Saver Fund.
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