Should You Consider Hybrid Mutual Funds in 2022?

You might know that hybrid funds are those mutual fund schemes that invest in various asset classes including equity and debt. These funds include debt instruments like commercial papers, government bonds, corporate securities, debentures as well as equity instruments like stocks in their portfolio. Some investors prefer hybrid funds as they get to invest in different asset classes through a single investment. It fulfills their need to invest in different types of mutual funds for exposure to different assets.

Who considers investments in Hybrid Funds?

Investors who are willing to take some risk with the hope of earning some capital appreciation in the medium-to-long term by investing in a portfolio of debt and equity related instruments may consider hybrid funds. Investors who want to diversify their mutual fund portfolio without investing in multiple schemes may also consider hybrid funds. Some investors are afraid of investing their entire investible corpus in equity funds and hence might prefer hybrid funds. That’s because a portfolio of hybrid funds is also invested in debt securities. A mix of debt and equity might offer some investors a sense of security as whenever the equity markets turn volatile, the debt portfolio may offer the necessary cushion and act as a hedge against the economic downturn. Investors who are willing to take more risks with their portfolio might prefer equity oriented hybrid funds whereas those who wish to take minimum exposure to the equity markets may consider debt oriented hybrid funds.

Features of Hybrid Funds

• Since hybrid funds invest in a portfolio that is a mix of equity and debt related instruments, investors get the benefit of diversification across asset classes through a single investment. Some debt funds like multi asset allocation funds may offer further diversification as these funds invest in three asset classes (equity, gold, and debt).
• The fund managers here have an added advantage as they may try to allow the fund to make the most out of their investments in two different asset classes based on the prevailing market conditions.
• The hybrid fund may be able to minimize the overall investment risk as it invests in multiple asset class securities and is not confined to a single asset, unlike other mutual fund schemes.
• Investors who are willing to invest their money in equity funds but do not want to have maximum exposure at the initial stages of their investment journey can consider hybrid funds. They may seek a controlled exposure to equity by investing in equity oriented hybrid funds.

Axis Aggressive Hybrid Fund Regular Growth
(An open ended hybrid scheme investing predominantly in equity and equity-related instruments)
Investment objective
To generate long term capital appreciation along with current income by investing in a mix of Equity and Equity related Instruments, debt Instruments and money market instruments. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns.

Benefits

• Hybrid fund investing 65-80% in equity and rest in debt
• The fund will follow the Axis philosophy of bottom up investing in high quality stocks.
• Potential capital appreciation of equity and stability of debt all while being tax efficient
• Tax efficient withdrawal facility for regular income

Axis Aggressive Hybrid Fund Regular Growth
(An open-ended hybrid scheme investing predominantly in equity and equity related instruments)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.