Aggressive growth funds are a sub-category of hybrid funds that invest in equity shares of companies and debt instruments. Modern aggressive growth mutual funds are much less risky when compared to traditional equity funds and can deliver huge returns in the long run. But they come with a relatively higher expense ratio.
An aggressive growth fund usually purchases a company’s initial public offering (IPO) and sells it off to produce huge profits, or invest in derivatives to increase gains. This means that they produce great results in economic upswings and take massive hits during downturns.
Scroll down to know the 5 best Aggressive Growth Mutual Funds In India, who should invest, benefits, and taxability.
|Fund Name||Risk||3 Year Returns||1 Year Returns|
|Sundaram Aggressive Hybrid Fund Direct-Growth||Very high||16.18%||15.04%|
|Aditya Birla Sun Life Financial Planning FoF Aggressive Plan Direct-Growth||Very high||17.28%||13.62%|
|Edelweiss Aggressive Hybrid Fund Direct-Growth||Very high||18.72%||19.12%|
|IDFC Asset Allocation Aggressive Direct Plan-Growth||High||13.98%||12.39%|
|Motilal Oswal Asset Allocation Passive FoF Aggressive Direct-Growth||Very high||13.50% total returns||NA|
Aggressive growth funds are perfect for first-time equity investors as they have the perfect balance of equity and debt instruments. These types of funds eliminate the need to invest in different funds as they invest in various asset classes. With the perfect amount of diversification, these ensure that the losses if any are not hard on investors.
The main advantage of aggressive growth mutual funds would probably be the automatic rebalancing to keep the asset allocation well under the prescribed limit. These mutual funds have to invest at least 20 per cent in debt instruments. During bull markets, the percentage of money invested in equity goes up. During bear markets, the percentage is in favour of debt instruments. This ensures that the losses endured aren’t whiplashing.
Aggressive growth funds are less risky compared to other equity funds due to the perfect mix of equity and debt instruments. They are relatively less volatile as well. These funds are so designed that the debt component of the funds takes the brunt of a bear market.
First, an investor needs to analyze their investment goal. These goals may vary from investor to investor owing to the difference in their financial objectives. Aggressive growth mutual funds are for people who are willing to take high risks to gain very high rewards. While the combination of equity and debt instruments are mixed in an aggressive growth fund, the investor needs to prepare for hits in economic downturns.
Aggressive growth funds mainly invest in stocks. This implies that the performance of these funds are volatile and impacted by market conditions. While these funds generate huge returns in bull markets, they can suffer significant losses in the bear market. Aggressive growth funds are for investors with a high-risk appetite.
The history of fund performances always aids the investors in choosing the right funds and investing wisely. Analyzing the performances gives an idea of whether the funds were able to live up to the objectives and helps in gauging how it will perform in the future. Comparing the chosen fund performance to other similar funds in the market will also aid the investor in choosing the right fund.
Fund houses impose a fee on investors to handle the administrative expenses. This fee is called the expense ratio. This is usually a small percentage of a scheme’s total assets and it varies from one fund to another, but it’s important to analyze before investing when it comes to aggressive growth funds. While the ratio may seem small, it might be huge in absolute monetary terms.
When it comes to taxation, aggressive growth funds are treated as equity funds. The capital gains earned on exit within 1 year are treated as Short Term Capital Gains (STCG) and are taxed at 15 per cent. If an investor holds investments for more than a year, the gains are classified as Long Term Capital Gains (LTCG) and are free if the profits fall under ₹ 1 Lakh, but taxed at 10 per cent if the gains exceed ₹ 1 Lakh. Dividend gains earned from these funds are generally added to the investor’s income and are taxed based on the tax bracket they fall under. If these gains exceed ₹ 5000, TDS will be applied.
These types of funds are best-suited for investors seeking maximum capital gains without the risk level of other equity funds. Aggressive growth mutual funds primarily invest in equity shares, and the risk associated is very high. While the portfolio comprises debt instruments, and thus makes these funds less risky when compared to other equity funds, they are still considered high-risk high returns.
Aggressive growth funds invest in companies that have vigorous growth trajectories. This is why these funds perform better than regular growth funds. Investors with a high-risk high-gain appetite, who want to improve their portfolios through huge capital gains can invest in these types of funds.
That was everything you needed to know about aggressive growth mutual funds to invest wisely. It’s always advised to have the help of a financial advisor if you’re a beginner in investing. Also bear in mind that, mutual funds are subject to market risks, so read all the scheme related documents carefully. With Navi, investing in your favourite fund is easier than ever. With options to invest overseas too, we excel in providing a hassle-free platform for smooth investments. What are you waiting for? Invest today!
Aggressive growth funds are a category of hybrid funds that are much less risky. They are relatively less volatile, but they have a higher expense ratio. These are perfect for first-time investors as well as seasoned investors. However, it is advisable to talk to a financial advisor before investing. You can also start investing through Navi Mutual Funds.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Ans: Aggressive growth mutual funds are best-suited for first-time investors stepping into equity investments.
Ans: Direct plans are usually offered to investors directly and don’t involve distributors or brokers. In regular plans, third parties are involved. So, the expense ratio of a direct plan is lesser when compared to that of a regular plan.
Ans: People having a high risk appetite and are planning to invest for longer periods of time can opt to invest in this type of fund. The mix of equity and debt instruments makes it perfect for first-time equity investors.
Ans: These funds are generally high-risk, but not as risky as other equity funds owing to the debt component.
Ans: Look for terms like strategic equity, capital opportunity, capital appreciation, or aggressive growth.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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