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Hybrid Funds
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List of Hybrid Mutual Funds in 2024
Top 10 Hybrid Mutual Funds to invest in 2024
Below are the hybrid mutual funds in india:
1. ICICI Prudential Multi Asset Fund Direct (G)
ICICI Prudential Multi Asset Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 19.3%, a 3 Years return of 21.1% and a 5 Years return of 21.1%. The fund has an expense ratio of 0.7% and an AUM of ₹50988 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 49.80% to equities, 15.28% to debt and 21.91% to other assets.
2. HDFC Hybrid Debt Fund Direct (G)
HDFC Hybrid Debt Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 11.7%, a 3 Years return of 10.9% and a 5 Years return of 11.3%. The fund has an expense ratio of 1.2% and an AUM of ₹3322 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 23.10% to equities, 73.74% to debt and 2.49% to other assets.
3. SBI Equity Savings Fund Direct (G)
SBI Equity Savings Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 13.4%, a 3 Years return of 11.4% and a 5 Years return of 11.8%. The fund has an expense ratio of 0.7% and an AUM of ₹5982 crores as of 2024-12-22. It was Launched on 2015-05-27. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 30.64% to equities, 26.11% to debt and 38.24% to other assets.
4. Edelweiss Balanced Advantage Fund Direct (G)
Edelweiss Balanced Advantage Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 17.0%, a 3 Years return of 13.3% and a 5 Years return of 16.3%. The fund has an expense ratio of 0.5% and an AUM of ₹12381 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 66.49% to equities, 27.09% to debt and 6.20% to other assets.
5. HDFC Hybrid Equity Fund Direct (G)
HDFC Hybrid Equity Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 15.6%, a 3 Years return of 14.9% and a 5 Years return of 16.3%. The fund has an expense ratio of 1.0% and an AUM of ₹24185 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 69.54% to equities, 28.47% to debt and 1.03% to other assets.
6. ICICI Prudential Regular Savings Fund Direct (G)
ICICI Prudential Regular Savings Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 12.9%, a 3 Years return of 10.4% and a 5 Years return of 10.6%. The fund has an expense ratio of 0.9% and an AUM of ₹3201 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 21.69% to equities, 73.73% to debt and 3.06% to other assets.
7. ICICI Prudential Equity & Debt Fund Direct (G)
ICICI Prudential Equity & Debt Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 20.4%, a 3 Years return of 20.9% and a 5 Years return of 21.7%. The fund has an expense ratio of 1.0% and an AUM of ₹40089 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 66.21% to equities, 21.25% to debt and 10.57% to other assets.
8. HDFC Balanced Advantage Fund Direct (G)
HDFC Balanced Advantage Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 20.2%, a 3 Years return of 23.8% and a 5 Years return of 20.6%. The fund has an expense ratio of 0.7% and an AUM of ₹95570 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 49.76% to equities, 29.39% to debt and 19.38% to other assets.
9. HDFC Equity Savings Fund Direct (G)
HDFC Equity Savings Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 12.6%, a 3 Years return of 11.5% and a 5 Years return of 12.0%. The fund has an expense ratio of 0.9% and an AUM of ₹5516 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 31.17% to equities, 24.36% to debt and 42.26% to other assets.
10. UTI Aggressive Hybrid Fund Direct (G)
UTI Aggressive Hybrid Fund Direct (G) is a Hybrid fund that has delivered a 1 Year return of 23.4%, a 3 Years return of 18.5% and a 5 Years return of 19.4%. The fund has an expense ratio of 1.3% and an AUM of ₹6107 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 70.45% to equities, 27.16% to debt and 2.40% to other assets.
What are hybrid funds?
Hybrid funds invest in both equity as well as debt instruments. This mix is for diversification of funds, risk, and return. Equity mutual funds invest in shares and stocks of other companies. It has the potential of higher return but also carries a high risk in comparison of debt mutual funds. Debt mutual funds invest in debt securities, treasury bills, corporate bonds. It provides a regular income to the investor and carries a low risk.
Both the mutual funds have their own pros and cons. Hybrid funds mix both the funds and aims to generate higher returns in exchange for lower risk depending on the investment goals of the investors. Investors who are seeking good returns at moderate risk can invest in hybrid mutual funds
These funds are suitable for investors seeking good returns at moderate risk.
What are the Types of Hybrid Funds?
Below are the types of hybrid funds depending on the asset allocation towards equity securities and debt instruments.
- Aggressive Hybrid Funds: Equity– oriented hybrid funds allocate more than 65% of the total fund in equity and rest in debt instruments and money market securities. This way the funds gain higher returns and less risk at the same time. These funds are also known as Equity-Oriented Hybrid Funds funds.
- Conservative Hybrid funds: Debt oriented- hybrid funds allocate more than 65% of the total fund in fixed income debt instruments. Such as money market instruments like corporate bonds, government securities, treasury bonds, etc. The rest of the funds in equity i.e. shares and stocks of companies. Some portion is also invested in cash and cash equivalents to maintain liquidity. These funds are also known as Debt-Oriented Hybrid Mutual Funds.
- Balanced Hybrid Funds: Balanced fund is an open-ended scheme that invests in both equity and debt securities. They can invest a maximum of 40%-60% in equity and equity-related instruments and 40%-60% in debt instruments. The balanced fund is ideal for an investment horizon above three years. They are taxable like debt funds.
- Dynamic Asset Allocation or Balanced Advantage Hybrid Funds: It is an open-ended dynamic asset allocation fund. This type of hybrid fund balances its asset allocation between equity and debt based on market situations. This balanced advantage fund books profit when markets rise and invest more during a correction. It is suitable for an investment horizon above three years. The funds are taxable as equity funds.
- Multi-Asset Allocation Hybrid Funds: It is an open-ended scheme investing in multiple asset classes. Multi-asset allocation funds can invest in a minimum of 10% of its assets in 3 asset classes. This hybrid mutual fund scheme is diversified in comparison to other hybrid funds as the investment is spread out to multiple asset classes. It is ideal for investors who want to invest for a three-year horizon.
- Equity Savings Hybrid Funds: It is an open-ended scheme investing in equity, debt, and arbitrage opportunities in the market. Equity savings scheme is permitted to invest a minimum of 65% of its assets in equities and 10% of its assets in debt securities. The ideal investment horizon for this hybrid mutual fund scheme is 2-3 years. For the purpose of taxation, they are considered as equity funds.
- Arbitrage Hybrid Funds: These funds buy and sell the shares and stocks at the same time. Stocks are bought at a lower price from the cash market and sold in the future market at a higher price. The difference becomes profit. Arbitrage funds are relatively safer than equity hybrid funds.
How do Hybrid Funds work?
There are 2 goals of any hybrid fund, capital appreciation in the long term and higher return in the short term. To achieve these 2 goals hybrid funds pick a mix of equity and debt.
Investing in equity provides capital appreciation and stability to the funds invested. Investment in debt instruments provides returns in the form of dividends and interests. Hybrid fund managers do asset allocation, market analysis, diversification of funds to ensure risk, return and capital appreciation are in place.
Asset allocation means allocating funds to different classes of assets available in the market i.e. bonds, bills, gold, etc.
Diversification of funds is a process in which the asset is chosen is such a manner to balance the risk and return matching the investment goals.
Why to Invest in a Hybrid Fund?
Equity mutual fund schemes provide returns with higher risk, ideal for investors who don’t mind taking the risk of capital and expect inflation-beating returns over the long term.
Debt mutual fund schemes offer regular and lower return with lower risk, ideal for investors who don’t want to take high risk and accept lower returns
Hybrid funds combine the risk and return both the funds offer and provide a blend of risk and return. The fund management involves risk management, portfolio diversification, and asset allocation. This is the reason why it is ideal for investors who look for a balance of risk and rewards.
Ways to Invest in Hybrid Mutual Funds
The investment can be made in 2 ways, either through a lump-sum investment or SIP
- Lump-sum investment – The entire investment amount is invested at once and returns start flowing thereon
- SIP – The investor invests a fixed amount of his choice at fixed intervals. Here the benefit is that the investor can anytime change the lower or increase the amount of investment. An investor can also change the investment period from 6 months to say a year or end the investment.
One can calculate their potential mutual fund returns through different mutual fund calculators. For estimating SIP returns, one can use the SIP calculator. And for lumpsum returns, one can use the lumpsum mutual fund calculator.
How are Hybrid Mutual Fund Taxed?
Since Hybrid funds invest in both equities and debt securities, the tax treatment for these funds depends on the asset allocation of the funds. All hybrid funds with an exposure of 65% or more to equities are treated as equity funds. And the rest are treated as debt funds.
For mutual fund schemes, the holding period of investments is very important for tax purposes.
Equity Hybrid Fund
For an equity hybrid fund, if an investment holding period is less than one year, then it is a short term investment. And the gains arising out of it are Short Term Capital Gains (STCG). These are taxable at 15% per annum (plus 4% cess).
For investments with holding period for more than one year, then it is a long term investment. And the gains arising out of it are Long Term Capital Gains (LTCG). These are taxable at 10% per annum (plus 4% cess), only if the gains are above INR 1 lakh.
Debt Mutual Fund
For investments with holding period less than three years, are short term investments. And the Short Term Capital Gains (STCG) are taxable as per the income tax slab rate (plus 4% cess). For investments with holding period more than three years, the Long Term Capital Gains (LTCG) are taxable at 20% with indexation benefit.
As per the Finance Bill 2023, debt mutual funds will no longer have the LTCG benefit. Thus, from April 1st 2023, capital gains from debt fund investments will be taxed as per the investor’s Income Tax slab rate.
Additionally, there is a Dividend Distribution Tax (DDT) on dividend funds. From April 1st, 2020, dividends are taxable in the hands of investors. Dividends earned are subject to tax according to the income tax slab rate. Also, dividends above INR 5,000, attract 10% TDS.
Additionally, equity mutual funds are subject to securities transaction tax is 0.001% if investors sell their holdings.
You may also like to read about Balanced Fund Vs Equity Fund