Beta in the stock market or investment parlance is symoblic of the degree of volatility in an asset class and typically refer to those funds or stocks that show a high degree of sensitivity to changes in market returns. Also these funds while being highly volatile also are highly risky and hence at the same time have the potential to offer a higher return.
What are High beta funds?
As the name suggest with a potential to offer high returns these funds also at the same time tend to offer a higher return. Typically, these funds invest in just small cap and mid cap companies. So, with high volatility, investors with high risk appetite can put their bets in them for a period of not less than 7 years.
What are the benefits of investing in High risk funds?
These funds with over the years of investment can enable an investor to earn inflation beating return. Further with an active investment style into these funds, managers are able to lap up the stocks that in future have the potential to turn into market leaders and hence produce multibagger returns for its investors.
How to choose such High risk High return beta funds?
Besides the usual expense ratio, one needs to pay heed to the fund managers' allocation strategy, his or her market outlook. Also one should work out the fund's performance vis a vis market volatility. Further analysis of the fund in respect of different market conditions can be played out for better choice.
Top 5 High Risk High Return funds based on past performance i.e. performance track record and other considerations
|Mutual fund (high beta)||1-year return||3-year return||5-year return|
|SBI Small Cap fund direct plan||35.20%||28.00%||21.30%|
|Axis Midcap fund direct plan||27.80%||24.70%||20.80%|
|Kotak Emerging Equity fund direct plan||31.10%||25.70%||17.20%|
|HDFC Midcap Opportunities fund -Direct plan||29.80%||19.90%||14.10%|
|DSP Midcap fund-Direct plan||17.30%||18.50%||12.90%|
The funds discussed above are selected based on thorough analysis and past performance. One should definitely pick these mutual funds only after careful analysis and as per their risk profile.