Best Aggressive Growth Mutual Funds for high capital returns
Aggressive growth funds are a category of mutual funds that seek to invest in companies with aggressive growth prospects (new companies and those in trending sectors). As a result, they offer above-average returns compared to their counterpart standard growth funds. However, they carry higher investment risks in terms of volatility.
Top Aggressive Growth Mutual Funds in India to invest in 2022
The following table exhibits top-performing aggressive growth mutual funds and their returns with time.
Who should invest in aggressive growth mutual funds?
Any investor who is seeking higher than average returns can invest in aggressive growth funds. However, investing in these funds is recommended for investors who have a long-term perspective and are willing to invest their money for a term, say at least five years or more.
Aggressive growth funds work on the principle of high risk and high reward. To generate the best returns, these funds invest in small-cap companies that can perform better in the future, so there is uncertainty involved related to the company and its share price volatility.
All in all, growth funds are high-risk investment instruments. Investors who want to conserve their capital or have a conservative risk profile should avoid investing in these funds. You should consider investing in these funds only if you have a high-risk appetite. Budding investors with long-term investment goals can choose to invest in them. If you are close to your retirement, then it would not be a prudent choice for you to invest in these funds.
Taxation on gains from aggressive growth mutual funds
The aggressive growth mutual funds get taxed similar to equity funds. The tax rate depends on the duration you stay invested and gain from the funds. Depending on the investment duration, you may generate Short-term capital gains (STCG) and Long-term capital gains (LTCG) and be taxed accordingly.
In both cases, the gains are added to the investor's yearly incomes and taxed as per their applicable slab rate.
Risks involved in Aggressive growth mutual funds
While aggressive growth funds boast a tremendous potential to generate higher returns than their counterparts, investing in them can be an extremely risky bet. One of the major risks of aggressive funds is they are highly volatile, where the stock prices experience a sudden rise and drop. Therefore, they are best suited for people with more risk tolerance.
Return potential of aggressive growth funds with time
Aggressive growth funds are one such class of funds that can help you accumulate as much possible return from your investment over the long term. Like other mutual funds, aggressive growth funds focus on offering high returns. Here the significant investment is on stocks and equities, with a small percentage of the portfolio also kept for bonds, cash, and other fixed-income assets. These funds are often well-diversified as they invest in multiples and a variety of assets & industries. So when the value of one asset drops, others are there to balance the losses, and thus they deliver better returns than standard funds.
Also, time plays a crucial role in these fund investments as the returns vary with the years. A growth fund may yield 17% in one year, but it can lose 5% in the subsequent year and yield 8% higher in the coming year. When investors stay invested in these funds for a long horizon, such as five or ten years, this longer time frame allows the portfolio to recover from such fluctuations within the market and thereby enabling them to achieve expected returns.
Advantages of aggressive growth funds
Investing in aggressive growth funds means gaining more benefits along with superior returns. Here are some reasons investors should invest in aggressive growth funds and what makes them so attractive.
Why should you invest in aversive growth funds?
Aggressive growth funds have tremendous potential to deliver superior returns to investors in the long run. Investors who aim for higher capital growth must diversify their portfolios with at least a small portion of aggressive growth funds. These funds have significant exposure to companies that have the potential to grow and help generate high returns for investors. Although, this way of investment attracts a risk of greater instability in share prices. But since these fund units are bought and sold quickly, the chances of incurring losses decrease, and profitability persists.
Aggressive growth funds are one of the best ways to get exposure to equity markets and gain significant returns. However, do not forget that these funds involve a higher level of risks, and investors should do thorough research about this investment scheme and how the related strategies work before investing.
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