There is a wide range of investment opportunities in India. But investors who want to spread their money across different stocks spanning diverse sectors tend to prefer mutual funds. Mutual fund offerings are tailor-made to factor in the various levels of risk involved. Conservative mutual funds, as the name suggests, are conservative in their approach to investment instruments. They are one of the safer bets out there.
Conservative mutual funds allocate around 75% of the funds for the purchase of fixed deposit-like, fixed income-generating securities. This helps to provide stability and security to the fund. They direct the rest 25% to equities, which offer scope for capital appreciation.
That said, there is always an inherent risk involved in any kind of investment. So you need to know how to pick the ones that are best for you. This list of what we consider some of the best conservative mutual funds in 2023 could be a good starting point.
Best conservative mutual funds in 2023
No matter how carefully you choose your investment, remember market dynamics are always in play. And there is always some risk involved. But if you still think a conservative mutual fund is something you want to explore, let us help you get started with your research with our list of the best conservative mutual funds in 2023, in our view. You could start by looking them up, but keep your research going to find one that’s best for you.
1. ICICI Prudential Regular Savings Fund
This is a conservative hybrid fund holding almost 22% in the form of equities. Of this, nearly 16% is directed to large-cap stocks. Over 60% of the investment is in debt instruments, and around 18% is in government securities. This mix ensures safety, stability, and decent returns.
2. Canara Robeco Conservative Hybrid Fund
This is yet another conservative hybrid mutual fund. Equities comprise around 22% of the fund’s holding, of which large caps account for over 13%. Debt instruments are held for over 70%, and nearly 44% of that flows into government securities. The focus is on deriving a reasonably steady income without sacrificing the safety of the capital.
3. Kotak Debt Hybrid Fund
This conservative hybrid fund holds around 24% of its investments in the form of equities. Of this, close to 14% is from large caps. Almost 70% of the funds’ investment is in debt holdings, and 53% of that is meant for government securities. Conservative investors are likely to favor this fund’s approach to portfolio management.
4. SBI Debt Hybrid Fund
This fund presently holds around 21% in the form of equity. Large-cap stocks account for around 10% of this equity. Debt instruments account for around 70%, with government securities comprising around 24%. There is a fair balance between safety and returns.
Notice that the difference between these conservative mutual funds and gilt mutual funds is the former invests closer to 10% in debt instruments. Since gilt funds hold more investments in debt instruments than conservative mutual funds, their investments can be considered more stable. However, there is a chance of better returns with conservative mutual funds.
Advantages of conservative hybrid funds
Before we conclude, let’s look at some of the advantages of conservative hybrid funds.
One of the main advantages that these funds offer is a higher return than fixed deposits. The fact that the fund invests the money across different asset classes helps secure better returns. The focus is on the capital appreciation and better income without high risk.
Conservative hybrid funds are also liquid assets. So they can be converted into cash easily compared to fixed deposits without incurring much financial loss. It is a great option to have during unexpected emergencies.
Choosing a mutual fund involves scrutinizing many parameters, like returns on investment, ease of purchase and sale, or servicing costs. The choice should also take personal investment preferences on board. We hope our list has taken you some way in finding the best conservative mutual fund for you.
What are the most conservative mutual funds?
The most conservative mutual funds would be those that have a higher investment in debt instruments. We have discussed some of the more conservative options in the article above.
What is the best conservative investment?
There is no agreement on the best conservative instrument because the answer depends on the risk appetite of the investor. The best conservative investment would be one where the capital is safe, secure, stable, and liquid, even as it generates a dependable source of steady income for the investor.
Please remember that in the world of investments, there are no guarantees of fool-proof, fail-safe options. Every option carries with it some percentage—big or small—of risk.
Which mutual funds are conservative?
Conservative mutual funds include ICICI Prudential Regular Savings Fund, Canara Robeco Conservative Hybrid Fund, and Kotak Debt Hybrid Fund, providing low-risk options with a mix of debt and equity.
What is the risk of conservative mutual fund?
Conservative mutual funds are low-risk, suitable for investors with a low to moderate risk appetite. They invest in low-risk securities, providing stability with modest returns.
Is Conservative Hybrid fund good?
Yes, Conservative Hybrid funds like SBI Conservative Hybrid Fund-Growth provide a balanced mix of debt and equity, offering potential returns with lower risk and stability.
What is a conservative fund?
A conservative fund is designed for low-risk tolerance investors. It typically allocates investments in lower-risk securities, providing stability and some benefits of equity with security.