MF investors beat equity volatility with hybrid funds

Notwithstanding the sharp fall in equity markets, mutual fund investors are considering hybrid mutual funds to hedge their risk.

As per the latest numbers of the Association of Mutual Funds in India, data investors have pulled out ₹9.87 lakh crore in February against ₹10.30 lakh crore in January. The fresh fund mobilisation also dipped to ₹10.27 lakh crore last month, down from ₹12.17 lakh crore in January.

Similarly, redemption from hybrid category was also down at ₹21,657 crore last month against ₹26,202 crore in January this year. Fresh mobilisation in hybrid schemes was down at ₹28,461 crore against ₹34,970 crore in January.

‘Safe bet for investors’

Hybrid funds are considered the safe bet for investors sailing in choppy market conditions. Since these funds offer a diversified portfolio of equity, debt and commodities, the risk is mitigated and investors can get potentially decent returns, despite a fall in the markets.

Funds such as the Nippon India Multi Asset Fund follows a definite allocation across equity, debt and commodities to eliminate fund managers prejudice. The fund had touched a new high due to its exposure to gold.

Other hybrid funds from Samco, Edelweiss, Invesco and ICICI Prudential have also delivered positive returns in a falling market. On a YTD basis, hybrid funds return lead the pack with near double digit returns.

DD Sharma, Managing Director of leading distributor MF King, said in the current phase of financial uncertainties, right asset allocation put investors to a significant advantage and hybrid mutual funds are a versatile investment choice.

Since these funds combine multiple asset classes like equity, debt, and commodities, they allow investors to achieve the dual goal of a hedged and a diversified portfolio, he added.