Hybrid funds built for volatility

As the markets have turned volatile, investing in hybrid funds can deliver better risk-adjusted returns through diversification. Investors with a moderate-to-high risk appetite should opt for aggressive hybrid funds. And those with low risk appetite, should look at balanced advantage funds.

Aggressive hybrid funds invest 65-80% in equities and the rest in debt. On the other hand, balanced advantage funds dynamically adjust equity and debt allocations based on market conditions. These funds increase equity exposure during bullish markets and reduce it during bearish phases, optimising returns while managing risk.

Also ReadCorrections in EPFO portal, account transfers simplified Diversified approach

The benchmark Sensex has lost over 9,000 points since the peak in September last year. Given the expected market volatility in the year, Nirav Karkera, head, Research, Fisdom, recommends investors to prioritise exposure to balanced advantage funds as they offer fund managers the flexibility to allocate across equity, debt, and arbitrage strategies to capitalise on market movements. “Rather than selecting aggressive hybrid funds, allocating investments in two balanced advantage funds with distinct fund management approaches may add more value and enhance portfolio resilience,” says Karkera.

However, Soumya Sarkar, co-founder, Wealth Redefine, AMFI registered mutual fund distributor, says in the current market scenario, a combination of aggressive hybrid funds and balanced advantage funds may be prudent. “Aggressive hybrid funds, with a higher equity allocation, can offer growth potential, while balanced advantage funds can provide flexibility and risk management,” he says.

Benefit in case of rate cuts

If the Reserve Bank of India cuts interest rates, the bond component of hybrid funds stands to benefit significantly. When interest rates fall, bond prices typically rise because the yields on existing bonds, which may offer higher interest payments than newly issued ones, become more attractive to investors. “Lower rates drive bond prices higher, leading to capital appreciation for the debt portfolio,” says Sonam Srivastava, founder, Wright Research.

Investors can benefit by investing in hybrid funds with significant debt exposure, as these funds not only capture gains from falling interest rates but also provide diversification and risk mitigation. Entering hybrid funds early in the rate-cutting cycle allows investors to maximise the dual advantage of potential bond price appreciation and equity market gains, especially if lower rates stimulate economic growth and corporate earnings.

 » Read More

Related Articles

Markets to track inflation data, global trends, FIIs trading activity this week: Analysts

Investors would track a host of macroeconomic data announcements scheduled this week, including inflation numbers, and also monitor global market trends, and trading activity of foreign institutional investors, analysts said. The ongoing quarterly earnings announcements and the rupee-dollar trend would also influence the markets. “This week is set to be dynamic for global and Indian

The Evolution of Gurgaon’s Real Estate: How Dwarka Expressway is leading the way

With rising demand and consistent price appreciation, Gurgaon’s real estate market is on a strong growth trajectory. Its prime location, excellent connectivity, and world-class infrastructure make it a preferred choice for homebuyers and investors alike. The Evolution of Gurgaon Real Estate Infrastructure Gurgaon has long been a pioneer in shaping India’s luxury real estate market

Fixed Deposit: Make the most of current FD rates before they start falling

Fixed deposit (FD) rates are currently looking pretty attractive. If you’ve been thinking about parking your savings in guaranteed return investment schemes and earn decent returns, this might be the best time to do so. Banks are currently offering interest rates as high as 8% on FDs, with smaller banks pushing the envelope even further.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Markets to track inflation data, global trends, FIIs trading activity this week: Analysts

Investors would track a host of macroeconomic data announcements scheduled this week, including inflation numbers, and also monitor global market trends, and trading activity of foreign institutional investors, analysts said. The ongoing quarterly earnings announcements and the rupee-dollar trend would also influence the markets. “This week is set to be dynamic for global and Indian

The Evolution of Gurgaon’s Real Estate: How Dwarka Expressway is leading the way

With rising demand and consistent price appreciation, Gurgaon’s real estate market is on a strong growth trajectory. Its prime location, excellent connectivity, and world-class infrastructure make it a preferred choice for homebuyers and investors alike. The Evolution of Gurgaon Real Estate Infrastructure Gurgaon has long been a pioneer in shaping India’s luxury real estate market

Fixed Deposit: Make the most of current FD rates before they start falling

Fixed deposit (FD) rates are currently looking pretty attractive. If you’ve been thinking about parking your savings in guaranteed return investment schemes and earn decent returns, this might be the best time to do so. Banks are currently offering interest rates as high as 8% on FDs, with smaller banks pushing the envelope even further.

FPIs’ incessant selling continues; withdraw Rs 7,300 crore from equities in a week

The exodus of FPIs from the Indian equity markets continued unabated, as they withdrew over Rs 7,300 crore (about 840 million) in the first week of this month due to global trade tensions, with the US imposing tariffs on countries such as Canada, Mexico, and China. This came following an outflow of Rs 78,027 crore

Co-working spaces boom in small towns

In December last year, Andhra Pradesh chief minister N Chandrababu Naidu, in a bid to boost employment opportunities for women, ordered state officials to facilitate development of co-working spaces and “neighbourhood working spaces”. By the end of 2025, Andhra Pradesh aims to set up 1,50,000 seats in co-working space centres in government and private buildings.