Hybrid Mutual Funds Advantages

Hybrid Funds are those which diversify the investments in both Equity and Debt instruments which are designed to give risk aversive returns.

     These MF schemes are mainly known for Dividend Yield Schemes which recently named as IDCW (Income Distribution cum Capital Withdrawal) of which Balanced Advantage Funds are most preferred by Investors for Monthly Income.

 SEBI categorized 8 types of Hybrid MF Schemes based on Portfolio: 

1) Aggressive Hybrid Fund:

       These funds invest 65-80% in Equity Stocks and remaining in Bonds.

Examples:

           BOI AXA Mid & Small Cap Equity & Debt Fund

              Sundaram Equity Hybrid Fund

2)  Conservative Hybrid Fund:

            These funds invest around 60-75% in Bonds and remaining in Equity Stocks.

            Examples:

                      Parag Parikh Conservative Hybrid Fund

                           HDFC Hybrid Debt Fund

3)  Arbitrage Fund:

                   These funds invest 65%-100% of its funds into equity and 0-35% in debt which buy stocks at a lower price in one market and sell it at a higher price in another. 

 The Fund Manager buys assets in the cash market or spot market, called so because the transactions are settled on the spot, while simultaneously, leverages the volatility of the markets and sells the futures market's holdings to profit from the difference in the prices of the stocks and futures contracts.

    Examples:

          Kotak Equity Arbitrage Fund

            L&T Arbitrage Opportunities Fund

4)  Equity Savings:

                 These funds have portfolio of 65% exposure to Equity & Derivatives while remaining in Debt instruments.                     Examples:

                    ICICI Prudential Equity Savings Fund

                        Axis Equity Saver Fund   

5) Dynamic Asset Allocation or Balanced Advantage:    

                  These funds allocate in both Bonds & Stocks as per Market Conditions.

                      Examples:

                         Invesco India Dynamic Equity Fund

                        Edelweiss Balanced Advantage Fund

6)  Multi Asset Allocation: 

    These mutual funds invest at-least 10% in 3 asset classes (Large, Mid & Small) Caps.

        Examples:

             Axis Triple Advantage Fund

               UTI Multi Asset Fund

7)  Capital Protection Funds:

           Fund has 16.12% investment in indian stocks of which 14.02% is in large cap stocks.Fund has 77.19% investment in Debt of which 20.79% in Government securities, 56.41% in funds invested in very low risk securities.

          Examples:

              Canara Capital Protection Oriented Fund - Series 10 - 1128D

              ICICI Prudential Capital Protection Oriented Fund XIV - Plan A - 1275 Days

8)  Fixed Maturity Plans:

            These are close ended funds which invest in both equity and debt.

 Examples:

        Aditya Birla Sun Life Dual Advantage Fund - Series II

          Axis Equity Advantage Fund - Series 1