Top Performing And Top Rated Hybrid Mutual Funds After The Category Saw The Most Traction In June Quarter

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oi-Roshni Agarwal

| Updated: Tuesday, July 13, 2021, 19:02 [IST]

Equities are currently seen to be overvalued and investors prefer a hybrid approach to investment i.e. an investment option that provides the best of both worlds ( herein debt and equity). Further to get a mix of such and other securities in a single instrument we have the option of hybrid mutual funds. As per the AMFI report for the June quarter, hybrid mutual funds saw the most inflow of Rs 27,220 crore.

What are hybrid mutual funds and whom will they suit for investment purpose?

Hybrid funds with a mix of securities in its portfolio including equity, debt, gold and real estate aims to achieve optimal diversification and hence for better returns for investors. So, this in a way reduces the risk that the typical equity fund carries as well as yield a higher return than debt instrument.

Hybrid mutual funds are thus suitable for every investor who wants to earn a better return than fixed income instruments but at the same time has a lower risk than typical equity investment.

Depending on the equity hybrid allocation, they can be of different types

– Conservative hybrid funds

– Aggressive hybrid funds

-Dynamic asset allocation funds/balanced advantage funds

-Multi-asset allocation funds

-Capital protection funds

-Fixed maturity plans-hybrid

1. HDFC Balanced Advantage Fund- Direct Plan-Growth (Adjusted NAV):

The fund has the highest assets under management of over Rs. 41,000 crore and is CRISIL 4-star rated. The fund carries a low expense ratio in comparison to the category average of 1.33 percent.

Risk-o-meter specifies the mutual fund to carry a high risk. Of the total corpus, over 69% is into equities and rest is in debt including G-securities and other low risk debt securities.

Benchmark of the fund is Nifty 50. Top holdings of the fund include SBI, NTPC, Coal India, ICICI, Larsen and Toubro among others. While from the debt category top holdings include 8.6% Canara Bank Additional Tier I Bond, 8.75% Additional Tier I Bond. Etc.

Notably, SIP investment in the fund can be started for Rs. 500 while for lump sum investment one needs to put Rs. 5000. Rs. 10000 SIP started 3 years ago is now valued at Rs. 4.85 lakh.

Note this is a pretty old fund launched in 2013.

Hybrid fund Rating 1 year Annualised return in % 3 year annualized return in % 5 year annualized return in %
HDFC Balanced Advantage Fund – Direct Plan – Growth (Adjusted NAV)
CRISIL 4 -Star rated
Value Research 3-Star Rated 49.15% 13.60% 13.57%

2. SBI Equity Hybrid Fund- Regular Plan- Growth:

This is a CRISIL 4-Star rated fund from the house of SBI Mutual Fund and this fund also commands an overwhelming fund size of Rs. 41,264 crore. The fund’s expense ratio is at 1.62 percent lower than the category average of over 2 percent. The fund against the benchmark Nifty 50 has yielded return of 36.87% over a 1-year period.

Hybrid fund Rating 1 year Annualised return in % 3 year Annualised return in % 5 year Annualised return in %
SBI Equity Hybrid Fund- Regular Plan- Growth:
CRISIL 4 -Star rated
Value Research 4-Star Rated 36.87% 13.72% 12.89%

Over 70% of the fund’s corpus is invested into equity while the rest is in debt including low risk securities and G-securities.

SIP in the fund can be started for just Rs. 500 and in 3 years time the SIP of Rs.10000 in a term of 36months is worth Rs. 4.78 lakh.

Top holdings of the fund from the equity category include HDFC Bank, Infosys, Divis, Bajaj Finance and Bharti Airtel while from the debt space the portfolio comprises NCD and bonds, GOI securities.

3. ICICI Prudential Multi Asset Fund – Direct Plan

This is a multi asset allocation fund from the hybrid fund category i.e. mandated to invest a minimum of 10% in at least 3 of the asset classes. Because of multiple asset categories, there is less of risk attached with this mutual fund category. But this also means that in rising market conditions less of equity holdings will possibly lower your returns.

For good gains investors need to be atleast invested for 3 years. This multi asset allocation fund from ICICI Prudential has an asset size of over Rs. 11000 crore Here the expense ratio is over 1% at 1.17%. The fund’s over 74% investments are into equities, while the rest is in debt instruments.

SIP in the fund can be started for just Rs. 100 and the SIP of Rs. 10000 started 3 years back is now worth Rs. 4.90 lakh

Top equity stocks include NTPC, ONGC, ICICI Bank, Infosys, Bharti Airtel, Sun Pharma etc. The rest is into InvITs, Embassy Office Parks Reit, MF units and TREPS and debt instrument.

Hybrid fund Rating 1 year Annualised return in % 3 year Annualised return in % 5 year Annualised return in %
ICICI Prudential Multi Asset Fund – Direct Plan
CRISIL 4 -Star rated
42.55% 14.35% 14.13%

Taxation of hybrid mutual funds:

Herein the equity part is taxed like equity funds. Long-term capital gains over Rs.1 lakh on equity component are taxed at the rate of 10%. Short-term capital gains (STCG) on equity component are taxed at the rate of 15%.

The debt part of hybrid funds is taxable like other debt fund. Investor needs to add up the gains to his or her income and this is then taxed as per investor’s income slab. LTCG from debt component is taxable at 20% after indexation and 10% without the benefit of indexation.

Disclaimer:

This site’s content is for educational purposes only and does not constitute investing or financial advice. Before making any financial decisions, please conduct your own research and at best take consultant from financial advisors.

GoodReturns.in

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