Hybrid funds inflow touch ₹1 lakh crore as markets turn volatile

With steady inflows and series of new fund offer, the inflows into hybrid schemes in the nine months of this fiscal has jumped 17 per cent to ₹1 lakh crore against ₹85,618 crore.

The asset under management of hybrid has jumped 16 per cent to ₹8.77 lakh crore in last month against ₹7.58 lakh crore as investors flocked to hybrid schemes due to extreme volatility and concern of high valuation in the equity markets.

Hybrid funds offer a diversified portfolio of equity and debt, and mitigate risks for investors besides earning potentially decent returns. Investors opened over 14 lakh new folios in the hybrid funds category in last nine months. The industry has raised ₹3,079 crore through six hybrid NFOs this fiscal.

While most fund houses are offering a debt and equity option in their hybrid offerings, the Nippon India Multi Asset Fund follows a definite allocation across equity, debt and commodities and leads the hybrid category giving a return of 26 per cent return in the last one year as of November-end. The fund also has exposure to international equity.

In the hybrid fund category ICICI Pru Multi-Asset, HDFC Multi Asset and Kotak Multi Asset Allocation returned 22 per cent, 19 per cent and 23 per cent CAGR respectively in the last one year while while Nippon Balanced Advantage Fund clocked in return of 19 per cent.

Volatile market

In volatile market times, hybrid funds offer capital protection and growth, the two critical needs of an investor. Since these funds adjust to market changes, they help investors avoid the anxiety of timing the markets.

Manish Bhandari, CEO and portfolio manager, Vallum Capital Advisors, said hybrid funds usually gain prominence when high risk funds such as thematic, mid and small funds become volatile and among them some of the thematic funds have disappointed investors in the last one year.

“Investors in search of alpha/absolute return will move in different directions next few years. International FOFs will become attractive options for them,” he added.

Increasingly popular

Aakanksha Shukla, AVP-Wealth Management, Master Capital Services, said hybrid funds are increasingly popular as they offer a mixed investment approach, combining equity for growth and debt for stability and it is suited for investors seeking diversification and consistent returns, especially in current market conditions.

Their ability to adjust allocations between asset classes makes them an attractive choice, helping mitigate risks while maintaining the potential for steady performance, she said.