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Choosing a Mutual Fund

Kamlesh Thakur wants to know about low risk & high return funds that he can choose from

What is the ceiling amount to invest in mutual funds in one financial year? What are low risk and high return mutual funds? Can you please name a few such funds?
-Kamlesh Thakur

There is no ceiling amount to invest in mutual funds in one financial year. But for tax purposes, mutual fund investments in ELSS of up to Rs 1 lakh can be claimed as deduction from an assessee’s taxable income under section 80C.

Low risk and high return are grades given by Value Research. Return and Risk scores are measures used to rate funds. The Value Research Fund Rating is determined by deducting the fund’s risk score from its return score.

Value Research Fund Risk Grade captures the fund’s risk of loss while the Value Research Fund Return Grade captures a fund’s risk adjusted return in comparison to other funds in the category. Both Risk and Return Grades are classified into five grades each—top 10 per cent as High, next 22.5 per cent as Above Average, middle 35 per cent as Average, next 22.5 per cent as Below Average and bottom 10 per cent as Low.

Low risk and high return generally implies a well-rated fund. You can choose a four-star or five-star rated fund with a proven track record. Some well-rated large-cap equity diversified funds are DSPBR Top 10 Equity, Birla Sun Life Frontline Equity, HDFC Top 200 and HSBC Equity.

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