Worried about the markets? Switch to Hybrid Mutual Funds

With global markets showing signs of turbulence, mutual fund investors are looking for safer avenues to invest in. Reason why they are making a beeline for hybrid funds, given the asset diversification and stability these funds offer. The assets under management (AUMs) in hybrid funds hit a record high of Rs. 8.61 lakh crore in August this year, making hybrid funds the biggest gainer across mutual fund categories.

The phenomenal growth in hybrid mutual funds is fuelled by the nature of these funds. Hybrid funds invest in two or more asset classes, typically including commodities like Gold and Silver, in addition to Equity and Debt as primary assets. These funds offer diversification and asset allocation to balance risk and return.

Hybrid mutual funds essentially try to offer the best of multiple asset classes in a single product. When the markets are on a high, the equity component in the fund generates returns, while the debt portion provides stability. These funds seek to achieve long-term capital growth through equity and short-term stability & regular income through debt.

Hybrid funds offer a host of advantages. These include capital appreciation since the equity component grows wealth. Investors also benefit from low volatility, thanks to the debt portion of the fund. Besides, hybrid funds give diversification, which is a crucial benefit as these funds diversify not only across different asset classes but also across sub-classes, such as large cap, mid cap and small cap stocks. Hybrid funds also offer active rebalancing, allowing fund managers to adjust the portfolio in response to evolving market conditions to optimise returns for investors.

Every fund house offers a mix of hybrid funds. Leading the pack is Nippon India Mutual Fund which offers a slew of hybrid funds like their Nippon India Multi Asset Allocation Fund, Nippon India Asset Allocation FOFs, Nippon India Equity Savings Fund, Nippon India Balanced Advantage Fund and Nippon India Equity Hybrid Fund. Each of these funds are leaders in their genre. Some of these funds have given attractive returns in last one year. For ex, 35.82% in Nippon India MAF, 25.75% in Nippon India BAF and so on. Fund houses like ICICI Prudential, SBI, Kotak Mutual Fund and Aditya Birla also offer a host of hybrid funds.

Hybrid mutual funds provide a unique advantage by allowing investors to access multiple asset categories through a single fund, eliminating the need for multiple separate investments.