INVESTMENTS
HYBRID MUTUAL FUND
What is hybrid Fund?
An investment vehicle that exhibits diversity across two or more asset classes is known as a hybrid fund. Typically, these funds make a combination of bond and equity investments. Another name for them would be asset allocation funds.
Hybrid funds use a balanced portfolio to provide short-term income and long-term asset growth. The fund management divides your investment into different amounts of debt and equity according to the fund's investment goal. To profit from changes in the market, the fund management may purchase or sell securities.
KEY KNOWLEDGE
Understanding of Hybrid Fund
A diverse portfolio is provided to investors by hybrid funds. The word "hybrid" denotes the fund strategy's multi-asset class investment component. Generally speaking, it may also indicate that the fund employs a different mixed management strategy.
Asset allocation funds are a popular term for hybrid funds. Asset allocation funds are versatile tools in the financial industry. These funds give investors the chance to use a single fund to invest in a variety of asset types.
Balanced funds are also a type of hybrid fund. Balanced funds often follow a standard asset allocation proportion, such as 60/40.
Hybrid funds also include target date funds and lifecycle funds. To provide diversity, these funds invest across a number of asset groups. Unlike normal hybrid funds, target date funds start with a more aggressive portfolio part and gradually rebalance to a more conservative portion for usage by a designated utilization date.
A blend fund (or blended fund) is a type of equity mutual fund that includes a mix of both value and growth stocks. These funds offer investors diversification among these popular investment styles in a single portfolio.
How does hybrid Fund Works?
Who should Invest in Hybrid Mutual Fund:
Benefits of Hybrid Fund:
Types of Hybrid Fund:
These funds must be invested in a minimum of three different asset classes, with a minimum of 10% percent allocated to each class. These funds offer investors exposure to a wider range of asset classes, with the asset allocation determined by the fund manager's opinion.
These investment plans have to allocate 20 to 35 percent to the debt asset class and a minimum of 65 to 80 percent to the equity asset class. Their minimal debt allocation offers the opportunity of significant profits at lower risk. They profit from the taxes imposed on equity-oriented plans.
Balanced Advantage Funds and Dynamic Asset Allocation are really dynamic investment plans that have the ability to go from a 100% debt to a 100% equity asset class. The fund's financial model serves as the foundation for recommending how assets should be allocated. Investors that wish to automate their asset allocation might consider these funds.
A minimum of 10 to 25 percent of the assets in these schemes must be allocated to equities and equity-related products. Debt instruments are to be used to invest the remaining 75–90%. These funds seek to increase total return by generating income from the portfolio's debt component and using the little amount of equity as a kicker. If you're ready to accept a little bit more risk and are seeking for debt plus rewards, this is a decent alternative.
These funds use debt, equity, and derivatives investments to try and strike a balance between risk and return. By lowering directional stock risk, derivatives lower volatility and produce a steady return. Growth and debt are provided by the equity asset, while consistent, steady returns are provided by the derivative. These schemes allocate 0 to 35 percent of their investments to loan asset classes and 65 to 100 percent to equity assets.
Investment Objectives: The primary objective of the Scheme is to generate income and capital appreciation through investments in Government securities market. The aim is to generate returns commensurate with minimal credit risk by investing in securities created and issued by the Central Government and/or a State Government and/or repos/reverse repos in such government securities as may be permitted by RBI.
Holding Analysis
Equity Sector Allocation
Debt Sector Allocation
Investment Objectives: ICICI Prudential Equity & Debt Fund Direct-Growth is a Aggressive Hybrid mutual fund scheme from Icici Prudential Mutual Fund. This fund has been in existence for 10 yrs 10 m, having been launched on 01/01/2013. ICICI Prudential Equity & Debt Fund Direct-Growth has ₹26,183 Crores worth of assets under management (AUM) as on 30/09/2023 and is medium-sized fund of its category. The fund has an expense ratio of 1.11%, which is higher than what most other Aggressive Hybrid funds charge. Currently, the fund has a 70.07% allocation to equity and 27.49% to Debt.
Holding Analysis
Equity Sector Allocation
Debt Sector Allocation
Investment Objectives: ICICI Prudential Multi Asset Fund Direct-Growth is a Multi Asset Allocation mutual fund scheme from Icici Prudential Mutual Fund. This fund has been in existence for 10 yrs 10 m, having been launched on 01/01/2013. ICICI Prudential Multi Asset Fund Direct-Growth has ₹24,931 Crores worth of assets under management (AUM) as on 30/09/2023 and is medium-sized fund of its category. The fund has an expense ratio of 1.0%, which is higher than what most other Multi Asset Allocation funds charge. Currently, the fund has a 59.57% allocation to equity and 11.59% to Debt.
Holding Analysis
Equity Sector Allocation
Debt Sector Allocation
Investment Objectives: Bank of India Mid & Small Cap Equity & Debt Fund Direct-Growth is a Aggressive Hybrid mutual fund scheme from Bank Of India Mutual Fund. This fund has been in existence for 7 yrs 4 month, having been launched on 29/06/2016. Bank of India Mid & Small Cap Equity & Debt Fund Direct-Growth has ₹493 Crores worth of assets under management (AUM) as on 30/09/2023 and is small fund of its category.
Holding Analysis
Equity Sector Allocation
Debt Sector Allocation
Investment Objectives: HDFC Balanced Advantage Fund Direct Plan-Growth is a Dynamic Asset Allocation mutual fund scheme from Hdfc Mutual Fund. This fund has been in existence for 10 yrs 10 months, having been launched on 01/01/2013. HDFC Balanced Advantage Fund Direct Plan-Growth has ₹63,981 Crores worth of assets under management (AUM) as on 30/09/2023 and is medium-sized fund of its category.
Holding Analysis
Equity Sector Allocation
Debt Sector Allocation
Frequently Asked Questions:
There are 7 such categories of hybrid funds that have been identified by the regulator. These include Balanced Hybrids, Arbitrage Funds, Equity Savings Funds, Conservative Hybrid Funds, Aggressive Hybrid Funds, multi asset class funds and dynamic asset allocation funds. Let us look at each of them in detail.
Hybrid funds are considered to be riskier than debt funds but safer than equity funds. They tend to offer better returns than debt funds and are preferred by many low-risk investors.
Hybrid funds are commonly known as asset allocation funds. In the investment market, asset allocation funds can be used for many purposes. These funds offer investors an option for investing in multiple asset classes through a single fund.
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