THESE are the best mutual fund categories for conservative investors. Check list here
There are broadly two categories of investors: aggressive and conservative. The former category comprises risk-takers i.e., the ones who are willing to risk their investment to earn higher profits. Conversely, conservative investors are those who are willing to settle for slightly lower profits but cannot afford to lose whatever little they have.
In other words, a conservative investor is the one who prefers fixed deposits over bonds, debt over equity and importantly, mutual funds over stocks. For such investors, it is not ingenious to invest in a theme or sector. They are recommended to choose security instead of growth, and safety over rapid wealth creation.
Here, we list out some mutual fund categories which align with the risk appetite of conservative investors.
Large cap funds: These refer to those funds which invest at least 80 percent in large cap stocks, which refer to the top 100 stocks when ranked as per market capitalisation.
Flexi cap funds: These are the schemes which invest in the securities across market capitalisation i.e., large cap, mid cap and small cap. These funds invest at least 65 per cent in equity and equity-related instruments.
Conservative hybrid funds: These funds invest anywhere between 10 to 25 percent in equity and the remaining 75 to 90 percent in debt instruments.
Money market funds: By virtue of being debt mutual funds, they are relatively safer and invest in money market instruments with maturity of up to one year.
Liquid funds: These are debt and money market securities with maturity of up to 91 days only.
Dividend yield funds: These mutual funds invest predominantly in dividend yielding stocks with at least 65 percent in stocks.
For conservative investors, choosing the right mix of mutual fund categories is essential to ensure that capital is preserved while still allowing for modest growth. By focusing on stability and diversification, these funds can offer a balanced investment experience without the stress of high volatility. With the right guidance and regular portfolio review, conservative investors can meet their financial goals in a steady and disciplined manner.
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