Investment advisors often assert that investors should make investment based on their risk appetite and investment horizon. This means those with a low-risk appetite should invest more in the debt schemes and less in the equity. On the contrary, those with a high-risk appetite should do the opposite i.e., a higher proportion in equity and lower in debt.
There are hybrid mutual funds that cater to investors across the spectrum of risk appetite. In other words, investors with moderate risk appetite can opt for balanced hybrid funds, whereas those with a low-risk appetite can opt for conservative hybrid funds. Let us now understand more on conservative hybrid mutual funds.
What are conservative hybrid funds?
Conservative hybrid mutual funds refer to the schemes that invest anywhere between 10 to 25 percent in equity & equity related instruments, and 75 to 90 percent in debt instruments, as per the Sebi’s categorisation of mutual fund schemes.
There are 20 schemes that fall in this category with net assets under management (AUM) of ₹25,401 crore, which is 13.8 percent higher than the corresponding figure one year ago, as the table below indicates.
No of conservative hybrid schemes | Net AUMs ( ₹crore) | As on |
20 | 25,401 | Sep 30, 2023 |
21 | 22,324 | Sep 30, 2022 |
(Source: AMFI)
Additionally, this category of mutual funds received an inflow to the tune of ₹130 crore in Sep this year, which is less than the half of the August figure that stands at ₹267 crore.
Some of the popular funds in this category include SBI Conservative Hybrid Fund, ICICI Prudential Regular Savings Fund and HDFC Hybrid Debt Fund, as the table below shows.
Scheme name | AUMs ( ₹crore) |
SBI Conservative Hybrid Fund | 8,946 |
ICICI Prudential Regular Savings Fund | 3,289 |
HDFC Hybrid Debt Fund | 2,880 |
Kotak Debt Hybrid Fund | 1,980 |
(Source: AMFI)
So, if you are planning to invest in conservative hybrid mutual funds, make sure these schemes align with your financial goals, investment horizon and risk appetite.
Key reasons for investing in conservative hybrid funds:
1. Exposure to equity: Investors who want an exposure to equity can explore these schemes as a viable investing opportunity. Since the exposure to equity is anywhere between 10 to 25 percent of the portfolio value, investors can explore them as a good bet.
2. Managing risk: Since these schemes invest majority of their assets in debt instruments, they are quite effective in managing the risk and therefore should be explored when you want the risk management mechanism to be embedded within the portfolio.
3 For conservative investors: As the name suggests, these schemes are go-to schemes for conservative investors who want to play a safer risk and return trade-off.
Overall, conservative hybrid mutual funds are a good option for investors who have a low-risk appetite and are looking for a balance of capital preservation and growth potential.
“Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!
Updated: 18 Oct 2023, 09:04 AM IST