Question

For an investor with a 3-year goal and moderate risk appetite, which fund category is MOST appropriate?

Accepted Answer

Conservative hybrid fund or short-duration debt fund — A 3-year horizon with moderate risk appetite calls for a conservative hybrid fund (75-90% debt, 10-25% equity) or a short-duration debt fund. These offer more stability than equity with marginally better returns than pure short-term debt. Sectoral, small-cap, and long-duration gilt funds carry excessive risk for a 3-year horizon.