Top Penny Stock Mutual Funds to Invest Online in 2024
Low-priced stocks, known as penny stocks with small market capitalization are traded at very low prices., usually below Rs 10. However, due to its speculative nature due to high volatility, limited financial information, it is potentially prone to risks. While some investors may be attracted to penny stocks due to its low prices and potential returns, others find it quite challenging. Therefore, in India, mutual fund investments in penny stocks have tried to bridge the gap for those who are hesitant to invest in penny stocks.
In this blog, we will learn more about the penny stocks held by mutual funds and what are the top penny stock mutual funds that you might want to invest in.
What are Penny Stock Mutual Funds?
As the name suggests, penny stocks mutual funds are mutual fund schemes that primarily invest in penny stocks in India. Like any other mutual fund, penny stocks owned by mutual funds are managed by professional fund managers. Professional fund managers conduct thorough research and analysis, making investment decisions on behalf of investors. Thus, these mutual funds generally adopt a high-risk, high-reward strategy, aiming for substantial returns.
List of Best Penny Stocks Mutual Funds in India 2024
Let’s have a look at the penny stocks held by mutual funds that you can consider investing in India.
| Mutual Fund | Penny Stock |
|---|---|
| HDFC Flexi Cap Fund | Hindustan Construction Co. Ltd. |
| DSP Equity Savings | Vodafone Idea |
| SBI Large and Midcap Fund | Gayatri Bio Organics |
| HDFC Capital Builder Value | Sadbhav Infrastructure Ltd |
| HDFC Infrastructure Fund | MEP Infrastructure Developers |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the top penny stock mutual funds in India in the list is from 2nd January 2024. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!
Top Penny Stocks Mutual Funds Overview
Now, let’s discuss the mutual funds that invest in penny stocks below.
HDFC Flexi Cap Fund
HDFC Flexi Cap Fund is a diversified equity mutual fund that offers flexibility in investing across market capitalizations. This fund likely holds shares of Hindustan Construction Co. Ltd., a penny stock.
DSP Equity Savings
DSP Equity Savings is a hybrid mutual fund aiming for capital appreciation and income generation through a mix of equities, debt, and arbitrage opportunities. Vodafone Idea, a penny stock, is potentially part of the portfolio of DSP Equity Savings.
SBI Large and Midcap Fund
SBI Large and Midcap Fund is designed to invest in a blend of large-cap and mid-cap stocks, providing a balanced approach to growth and stability. This fund is likely to have Gayatri Bio Organics, a penny stock, in its portfolio.
HDFC Capital Builder Value
HDFC Capital Builder Value is an equity-oriented mutual fund with the objective of long-term capital appreciation by investing in undervalued stocks. Investors in this mutual fund indirectly own shares in Sadbhav Infrastructure Ltd.
HDFC Infrastructure Fund
HDFC Infrastructure Fund focuses on investments in the infrastructure sector, aiming for capital appreciation through a diversified portfolio of stocks in this industry. Investors in HDFC Infrastructure Fund indirectly invest in MEP Infrastructure Developers through their holdings in the mutual fund.
How Do Penny Stock Mutual Funds Work?
The top penny stocks mutual funds are low-priced mutual funds of small companies. These stocks may experience abrupt and substantial increases in value. They are characterized by infrequent trading activity and a limited number of shareholders. Investors may benefit from the top penny stock mutual funds.
Factors to Consider Before Investing in the Best Penny Stocks Mutual Funds
Before investing in the best penny stock mutual funds, consider the following factors:
- Risk Tolerance: Assess your risk tolerance as penny stocks mutual funds can be highly volatile. Ensure that the level of risk aligns with your investment preferences.
- Fund Manager’s Expertise: Evaluate the experience and track record of the fund manager. A skilled and knowledgeable manager can navigate the challenges associated with penny stocks more effectively.
- Diversification: Check the fund’s diversification strategy. Diversified portfolios can help mitigate risks associated with individual penny stocks.
- Performance History: Review the fund’s historical performance, keeping in mind that past performance does not guarantee future results. Look for consistent returns and adherence to the fund’s investment strategy.
- Fees and Expenses: Understand the fund’s fee structure, including expense ratios and any additional charges. Lower expenses can contribute to higher returns over time.
- Investment Goals: Clearly define your investment goals and time horizon. Top penny stock mutual funds can be suitable for those with a higher risk tolerance and a more aggressive investment approach.
- Liquidity: Assess the liquidity of the fund’s underlying assets. Liquidity issues can impact the ability to buy or sell shares at desired prices.
Who Should Invest in Penny Stocks Owned by Mutual Funds?
Investors seeking potentially high returns and willing to take on higher risks might consider investing in the mutual funds holding penny stocks. These funds are suitable for those with a higher risk tolerance, as penny stocks can exhibit significant price volatility. Additionally, investors looking for professional management and diversification within the penny stock space may find mutual funds a more structured and risk-managed approach to navigate this niche market.
Risks Involved While Investing in Penny Stocks Mutual Funds
Investing in the top penny stock mutual funds can be quite challenging. These stocks are thinly traded, which means they are difficult to buy and sell quickly. Moreover, the top penny stock mutual funds can be susceptible to price manipulation and fraud, making them quite difficult to invest in.
Another concern is the limited transparency associated with the top penny stock mutual funds. Many of these stocks lack coverage from analysts or financial news sources, impeding access to reliable information. This opacity complicates the process of making well-informed investment decisions for investors in this niche market.
Benefits of Investing in Penny Stocks in Mutual Funds
Despite the associated risks, opting for the top penny stock mutual funds can offer investors the opportunity for substantial returns. These funds have the potential for rapid growth, delivering significant gains in a brief timeframe. Furthermore, professional fund managers can oversee penny stock mutual funds, leveraging their expertise to identify undervalued stocks for potentially higher returns.
Additionally, for investors aiming to diversify their portfolio, top penny stock mutual funds may present an excellent choice. By investing in various penny stocks, these mutual funds can effectively mitigate the overall risk of the portfolio.
How to Invest in the Best Penny Stocks in Mutual Funds?
Investors have the option to invest in the top penny stock mutual funds either via a registered mutual fund distributor or directly through the mutual fund’s website. It’s crucial to conduct thorough research and seek guidance from a financial advisor to ensure alignment with investment goals and risk tolerance.
To Wrap It Up…
Investing in the top penny stock mutual funds in India presents a high-risk, high-reward option. Despite the potential for substantial returns, investors should be mindful of the inherent risks. Thorough research and due diligence are imperative before venturing into penny stock mutual funds. Like any investment, seeking guidance from a financial advisor is essential to ascertain alignment with your investment goals and risk tolerance.
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Frequently Asked Questions(FAQs) on Top Penny Stock Mutual Funds
Due to high volatility and inherent risks, penny stocks bought by mutual funds can be suitable for short-term, speculative plays, not long-term holds.
The penny stocks holding by mutual funds typically invest in stocks with low market prices, often below Rs. 5 per share. These funds may target small and speculative companies, aiming for potentially high returns but also presenting higher risks.
Yes, penny stock mutual funds are regulated by the Securities and Exchange Board of India (SEBI). SEBI categorizes mutual funds based on their investment mandate, specifying the minimum and maximum percentage they can invest in different asset classes like large-cap, mid-cap, and small-cap stocks.
Returns on the top penny stock mutual funds vary widely. They can provide high returns, but the volatility of penny stocks entails higher risks. Past performance doesn’t guarantee future results. However, it’s important to do your own research and/or consult a financial advisor before investing.
Consider investing in Penny Stock Mutual Funds when you have a high-risk tolerance, seek potential high returns, and can withstand the volatility associated with these stocks. Investors should comprehend both the growth potential and challenges confronted by agricultural companies.
