5 High-Risk, High-Reward Mutual Funds Worth Considering

High-risk funds have the potential to contribute to the creation of long-term wealth. People can also plan their long-term financial goals such as retirement, world travel, buying a dream home, getting married, and more by investing in these funds. High-risk funds are long-term investments designed to be invested in with a long-term horizon of more than 5 years.  

These funds are ideal for investors who are willing to take high risks in their investments. But these funds are very volatile in nature. That's why these high-risk funds in a portfolio need to be actively managed from time to time. High-risk mutual funds generally offer generous dividends to investors. So if you are willing to take high risk for big returns, you may prefer to invest in below listed five funds. However, we at Cube Wealth suggest you consult a financial advisor or a Cube Wealth Coach before investing in any assets.

1. Kotak Emerging Equity Fund

Kotak Emerging Equity Fund is a mid cap fund and has similar risks as in a mid cap stock. It has performed well over the years. The Kotak Emerging Equity Fund Direct Growth has been there from 01 Jan 2013 and the average annual returns provided by this fund is 13.01% since its inception. 

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• Risk: High
• 1-Year Returns: 8.5%
• 3-Year Returns: 23.3%
• 5-Year Returns: 11.7%
• AUM: ₹23,334.64 crores

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2. 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. The Motilal Oswal Midcap Fund Direct Growth has been there from 24 Feb 2014 and the average annual returns provided by this fund is 20.73% since its inception. 

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• Risk: High
• 1-Year Returns: 8.5%
• 3-Year Returns: 23.3%
• 5-Year Returns: 11.7%
• AUM: ₹3,626.84 crores

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3. ICICI Prudential Small Cap Fund

The scheme seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap stocks. The ICICI Prudential Small Cap Fund Direct Plan Growth has been there from 02 Jan 2013 and the average annual returns provided by this fund is 12.49% since its inception.

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• Risk: High
• 1-Year Returns: 6.7%
• 3-Year Returns: 30.1%
• 5-Year Returns: 12.5%
• AUM: ₹4,598.77 crores

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4. Kotak Small Cap Fund

The scheme seeks to generate capital appreciation from a diversified portfolio of equity and equity related securities by investing predominantly in small cap. The Kotak Small Cap Fund Direct Growth has been there from 01 Jan 2013 and the average annual returns provided by this fund is 5.73% since its inception.

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• Risk: High
• 1-Year Returns: 6.7%
• 3-Year Returns: 30.1%
• 5-Year Returns: 12.5%
• AUM: ₹8,498.04 crores

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5. PGIM India Midcap Opportunities Fund

The scheme seeks to achieve long-term capital appreciation by predominantly investing in equity & equity related instruments of mid cap companies. The PGIM India Midcap Opportunities Fund Direct Growth has been there from 02 Dec 2013 and the average annual returns provided by this fund is 7.06% since its inception.

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• Risk: High
• 1-Year Returns: 8.5%
• 3-Year Returns: 23.3%
• 5-Year Returns: 11.7%
• AUM: ₹7,557.96 crores

Before adopting any investment strategy, it's advisable to download the Cube Wealth app and consult a Cube Wealth Coach who can provide guidance based on your risk tolerance.

FAQs

1. Should I invest in a very high risk mutual fund?

Ans. Higher the risk, higher the reward. Investing in high-risk mutual funds has a good potential to earn significant returns. High risk Mutual Funds usually provide great dividends to investors. Therefore, if you are willing to take a high-risk to earn good returns, then you can prefer Investing in these listed funds.

2. Which type of fund is the highest risk?

Ans. Equity Mutual Funds as a category are considered 'High Risk' investment products. An Equity Fund is considered to be a high-risk, high return fund. Equity funds invest in stocks/shares of companies.

3. What are high risk funds to give an example?

Ans. Examples of high-risk mutual funds include small cap or mid-cap equity funds and funds invested in high-yield debt securities with less-than-desirable credit ratings like Kotak Emerging Equity Fund, Motilal Oswal Midcap Fund, ICICI Prudential Small Cap Fund, Kotak Small Cap Fund, PGIM India Midcap Opportunities Fund, Nippon India Nifty Smallcap 250 Index fund, Quant Small Cap Fund, etc.

4. What are 3 high risk investments?

Ans. High-risk investments may offer the chance of higher returns than other investments might produce, but they put your money at higher risk. This means that if things go well, high-risk investments can produce high returns. The one of the three primary high risk investments is Cryptocurrencies that are digital currencies which aim to operate independently of a central bank. Crypto refers to the encryption used to the transactions of the currency safe. Second is ETFs stands for exchange-traded fund, is a fund that uses financial derivatives and debt to attempt to amplify the returns of an underlying index. And the third is Hedge funds, which is a managed investment fund that pools capital from a large number of investors in order to invest in a variety of different opportunities and asset classes.

5. What is high risk in SIP?

Ans. Every investment has risk involved either less or more. Likewise, while investing in SIPs there are a lot of risks to look into before investing like

Risk 1: The risk of SIP getting a negative return or price risk.

Risk 2: The risk being able to get your money back quickly or liquidity risk.

Risk 3: The risk of downgrade of a security or credit risk.

Risk 4: The risk of the company not paying the owners of the bond their due or default risk.

Conclusion

For investors seeking high-risk, high-reward opportunities, the five mutual funds discussed in this overview offer avenues for potential significant returns. These funds often target emerging industries or volatile sectors, making them more susceptible to market fluctuations. Before considering these options, it's crucial to understand your risk tolerance, financial objectives, and time horizon. While high-reward potential exists, the risks are equally substantial. Diversification and a long-term perspective can help mitigate these risks, but consulting with a financial advisor to create a well-balanced investment strategy is advisable. When used prudently and in line with your investment goals, these mutual funds can add an element of excitement and growth potential to your portfolio.

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