Hybrid schemes are a mutual fund category that are known for their unique investment strategy. While equity schemes invest predominantly in stocks and other equity related instruments and debt schemes invest in fixed income securities for income generation, hybrid mutual funds invest both in equity and debt related instruments. Such unique diversification is rarely carried for a mutual fund portfolio.
The equity element of the scheme gives an opportunity for capital appreciation in the long term and the debt aspect of it provides cushion when the equity markets are underperforming.
Whether a hybrid scheme will allocate its assets more towards equity or debt securities may entirely depend on the nature of the scheme and the objective that it wishes to achieve through an investment strategy. For example, a conservative hybrid scheme is more debt oriented in nature.
This type of hybrid scheme invests 75 to 90 per cent of its total assets in debt instruments and the remaining in equity.
Investors with an aggressive portfolio wanting to invest more in equity can invest in an aggressive hybrid funds like Equity Hybrid Fund.
Investment objective
The investment objective of Hybrid Fund is to generate long term capital appreciation along with current income by investing in a mix of Equity and Equity related Instruments, debt Instruments and money market instruments. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns.
Features of Equity Hybrid Funds
Here some of the salient features of Axis Equity Hybrid Fund:
Equity Hybrid Fund invests 65 to 80 per cent in equity and rest in debt.
Equity Hybrid Fund will follow the Axis philosophy of bottom up investing in high quality stocks
Equity Hybrid Fund may offer a potential capital appreciation of equity and stability of debt
Who should consider investing in Equity Hybrid Fund?
Investors are always expected to have a word with their financial advisor before investing in any type of mutual fund scheme.
If you are looking forward to invest in Equity Hybrid Fund, here are some of the things that you should take into consideration:
Investment objective
What is your investment objective? Is it aligning with that of the scheme?
#These are some of the most important questions one must be asking before investing in Equity Hybrid Fund.
#It shouldn’t be like you are looking for a tax saver fund and end up investing in this one.
Thus, investors should always make sure that their investment objective is in sync with that of the scheme.
Someone with a long term investment horizon
Now, remember that Axis Equity Hybrid Fund is more equity oriented. Equity related schemes generally require some time for them to show their true potential. If you wish to see this fund grow, you need to remain investment of at least 5 to 7 years. Investments that are held for the long run also have a chance of multiplying thanks to the power of compounding.
One can also start a SIP in Equity Hybrid Fund and give their investments a disciplinary approach. A Systematic Investment Plan allows investors to invest small fixed amounts at regular intervals (usually every month).
All you have to do is complete a onetime mandate with your bank and you can start investing in Equity Hybrid Fund from the comfort of your home or your laptop or even smartphone.
Once to choose to invest in mutual funds via SIP, every month on a predetermined date, a fixed amount is debited from your savings account and electronically transferred to the fund.
Do you carry a moderately high risk appetite?
If you are a conservative investor who carries zero risk appetite then you should reconsider investing in Equity Hybrid Fund. That’s because this scheme predominantly invests in equity and equity related instruments.
During volatile markets, your mutual fund portfolio can even incur losses. This will not be an issue if you keep a long term investment horizon. Because long term equity investments tend to remain unaffected by the daily market upheavals.
On the other hand, long term investments are also known for being able to beat inflation.
These were some of the things that one should consider before investing their hard earned money in Equity Hybrid Fund.
If you feel that the information provided here isn’t enough to make an investment decision, you can seek the help of a financial advisor.
If you have long term goals like buying a weekend home, or planning a destination wedding for your son or want to send your daughter overseas for foreign education, then you can consider investing in Equity Hybrid Fund for long term capital appreciation.