The growth in the combined AUM of hybrid mutual funds is in negative for quite a while. In June 2019, hybrid portfolio witnessed net outflows of more than Rs 2,300 crore. Not only in June but the downtrends in the AUM of hybrid schemes has been going down since a couple of months. The debt crisis in many of the trusted NBFCs might be a major reason for that but the experts at MySIPonline suggest there might be more reasons for investors to step out of the mixed portfolio.
The outflows in hybrid schemes have been overpowering the inflows for a long time now. The downtrends in AUM of hybrid schemes started to ignite after the introduction of Dividend Distribution Tax in March 2018. However, in the last few months, more investors have been going away from hybrid schemes and are switching towards pure equity scheme. Clearly the defaulting of fixed income securities issued by various prominent non-banking financial institutions have feared the investors of debt as well as hybrid mutual funds. The net outflows in the liquid fund for the last month were over Rs 1.5 trillion but the equity mutual funds witnessed tremendous inflows. Hence, it can be clearly observed that the investors have been avoiding the fixed income securities and are shifting focus towards pure equities. The debt crisis is the most influential factor due to which the investors have been losing interest in the hybrid funds.
Those who invested in hybrid mutual funds for regular dividends have deserted as the fund managers have stopped paying regular dividend after the introduction of dividend distribution tax.
The equity market is not doing well in the last few years and its effect can be seen on the performance of hybrid schemes as well. Due to continuous under-performance, many investors have stopped investing further.
Absolutely not. Hybrid mutual funds are chosen for risk-adjusted returns from a mix of debt and equity instruments. The factors that are responsible for outflows in hybrid schemes are temporary and must have no effect on the mentality of long term investors. These funds are chosen by a large number of investors. Market trends are lesser effective on the performance of hybrid schemes. Suitable investors should keep investing regardless of inflows or outflows in the category.
Many hybrid schemes have been doing a great job in the recent market and the investors can choose best in different sub-categories of the hybrid mutual fund.
Those investors who are planning to move away from hybrid schemes need to re-check their investment objective. Some hybrid schemes are still performing better than many of the pure equity schemes and if the investment objective is not looking within reach, then re-structuring of the portfolio can be done under a financial expert. These funds aim to provide risk-adjusted returns from a mixed portfolio of different asset class and the investors can enjoy capital gains from multiple assets. This feature is not available in pure equity or debt scheme. Following are the best performing hybrid funds which can be chosen to make a better investment plan in mutual funds. To get the best recommendations regarding mutual fund investment, connect with the experts at MySIPonline.
NBFC Crisis Is a Major Reason
The outflows in hybrid schemes have been overpowering the inflows for a long time now. The downtrends in AUM of hybrid schemes started to ignite after the introduction of Dividend Distribution Tax in March 2018. However, in the last few months, more investors have been going away from hybrid schemes and are switching towards pure equity scheme. Clearly the defaulting of fixed income securities issued by various prominent non-banking financial institutions have feared the investors of debt as well as hybrid mutual funds. The net outflows in the liquid fund for the last month were over Rs 1.5 trillion but the equity mutual funds witnessed tremendous inflows. Hence, it can be clearly observed that the investors have been avoiding the fixed income securities and are shifting focus towards pure equities. The debt crisis is the most influential factor due to which the investors have been losing interest in the hybrid funds.
Other Supporting Reasons
Those who invested in hybrid mutual funds for regular dividends have deserted as the fund managers have stopped paying regular dividend after the introduction of dividend distribution tax.
The equity market is not doing well in the last few years and its effect can be seen on the performance of hybrid schemes as well. Due to continuous under-performance, many investors have stopped investing further.
Should you Stop Investing in Hybrid Funds?
Absolutely not. Hybrid mutual funds are chosen for risk-adjusted returns from a mix of debt and equity instruments. The factors that are responsible for outflows in hybrid schemes are temporary and must have no effect on the mentality of long term investors. These funds are chosen by a large number of investors. Market trends are lesser effective on the performance of hybrid schemes. Suitable investors should keep investing regardless of inflows or outflows in the category.
What are the Top Performing Hybrid Schemes?
Many hybrid schemes have been doing a great job in the recent market and the investors can choose best in different sub-categories of the hybrid mutual fund.
- Aggressive Hybrid: ICICI Prudential Equity & Debt Fund, Mirae Asset Hybrid Equity Fund, Reliance Equity Hybrid Fund
- Conservative Hybrid: ICICI Prudential Retirement Fund, Aditya Birla Sun Life Regular Savings Fund, UTI Regular Savings Fund
- Equity Savings: HDFC Equity Savings Fund, Kotak Equity Savings Fund, Axis Equity Saver Fund
Those investors who are planning to move away from hybrid schemes need to re-check their investment objective. Some hybrid schemes are still performing better than many of the pure equity schemes and if the investment objective is not looking within reach, then re-structuring of the portfolio can be done under a financial expert. These funds aim to provide risk-adjusted returns from a mixed portfolio of different asset class and the investors can enjoy capital gains from multiple assets. This feature is not available in pure equity or debt scheme. Following are the best performing hybrid funds which can be chosen to make a better investment plan in mutual funds. To get the best recommendations regarding mutual fund investment, connect with the experts at MySIPonline.
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