A Guide to Investing in Conservative Mutual Funds

Last Updated: 13 Jun 2024

When you invest your money in any financial instruments, you would expect valuable returns. Today, there are several investment options for investors based on your goals, risk appetite, and expected returns

One of the popular investment options among investors in India is Mutual Funds. Mutual fund investments provide relatively higher returns than traditional investment options like Fixed Deposits and Recurring Deposits. Other benefits include it being suitable for all types of investors. You can invest in a mutual fund even if you have a low-risk appetite and yet earn good returns.

The risk that comes with mutual funds can be reduced all while earning some returns. This is where conservative mutual funds come into the picture.

What are conservative mutual funds?

Conservative mutual funds are a type of balanced funds. When you invest in them, an amount is invested in debt instruments. About 75% to 90% of the investment is made in debt securities while 10% to 25% in equity.

A conservative fund is for someone who has a low risk appetite. It is also for people who want some benefits of equity and the security of debt investments. Conservative funds reduce the risk of losing out money.

Who should invest in conservative mutual funds?

A new investor can learn the art of investing in mutual funds with conservative funds. They will have a debt fund at the same time they can get some returns from equity funds. Conservative mutual funds offer returns at a reduced risk. Investment in a conservative fund is allocated in debt securities, equity, cash and cash equivalents. Debt and cash investments are allocated a bigger proportion.

The capital appreciation might not be high when you invest in conservative mutual funds. Investors who want to increase their returns in the future might not have profits with conservative funds.

Benefits of conservative mutual funds

• Secured Profits

  The investment in debt securities can get returns with reduced risk. Your profits won’t be impacted a lot by the market.

• Low Risk

  Conservative mutual funds aren’t impacted by the market as the investment is made in debt securities. People who want to get returns without taking a lot of risk can invest in conservative funds

• Diversified Investment

  Conservative mutual funds diversify the investment. While they invest a lot in debt, they will also invest in stocks thus balancing the risk

Conservative mutual funds make sure you have a balanced finance investment. The investment is made in stocks to increase returns and in debt to reduce risk