Best Low-Risk Mutual Funds

Conservative investors can benefit greatly from low-risk mutual funds. They help protect capital and earn moderate returns. These funds typically make investments in less erratic and stable assets. This comprises large-cap stocks, corporate bonds with high ratings, and government securities. Returns may be lower than high-growth funds, but the risk of losing capital is minimal. This makes them good for short- to medium-term goals.

Some of the best low-risk mutual fund categories include:

• Liquid Funds: Invest in short-term debt instruments with minimal risk and high liquidity. Ideal for emergency funds.
• Short Duration Debt Funds: These offer slightly higher returns than liquid funds, with low interest rate risk.
• Large-Cap Equity Funds: Invest in well-established, financially strong companies with stable performance.
• Balanced or Conservative Hybrid Funds: These funds invest in both debt and equity. They provide a balance of safety and moderate growth.

In 2025, funds such as ICICI Prudential Liquid Fund, HDFC Short Term Debt Fund, and Axis Bluechip Fund have demonstrated strong consistency in risk-adjusted performance. These are suitable for new investors, retirees, and those with low risk tolerance.