Aggressive hybrid funds are equity-oriented hybrid schemes. The primary objective of these schemes is to accumulate wealth and regular income in the long run.
Aggressive hybrid funds fall in the category of hybrid schemes. These funds have exposure to both debt and equity instruments in proportions specified in the scheme’s investment objective. As compared to plain vanilla balanced funds, these funds have differences when it comes to asset allocation. In the case of balanced hybrid funds, the fund manager is not allowed to take advantage of arbitrage opportunities. In arbitrage, the fund manager buys securities at a low price in one stock exchange and sells them at a higher price in the other. Gains accrue as a result of the price differential of the same security in a different market.
The autonomy and choice of investment options available to aggressive hybrid funds are much higher than balanced hybrid funds. Aggressive hybrid funds enjoy the flexibility to take advantage of arbitrage opportunities available in the market. These funds have to allocate at least 20% of the fund assets towards debt instruments. The investment in equity and equity-linked instruments varies between 40% to 60% of the fund’s assets. The manner of stock selection varies from growth to value. Similarly, the selection of debt securities differs from being highly sensitive to low-interest-rate sensitive.
These funds aim at generating current income along with wealth accumulation over the long-term via a hybrid portfolio composition. These funds may are capable of yielding higher returns at a relatively higher risk than standalone balanced hybrid funds. The fund manager attempts to provide consistent returns by investing primarily in equity and a small portion of debt and money market instruments. Such funds are best suited to investors who have a moderate risk appetite and medium-term investment horizon of at least five years to seven years.
The budding investors who are new to market volatility may give these funds a try. Even within the same category, the level of risk among funds may vary depending on the presence of mid-cap and small-cap stocks. However, while picking funds for investing, quantitative and qualitative aspects of the fund must be analysed.
Investing in aggressive hybrid funds is made paperless and hassle-free at ClearTax.
Using the following steps, you can start your investment journey:
Step 1: Log on to cleartax.in
Step 2: Enter all requested details
Step 3: Get your e-KYC done, it can be completed within 5 minutes
Step 4: Invest in the most suitable aggressive hybrid fund from amongst the hand-picked mutual funds
The table below shows the top-performing sector funds based on the past 3-year and 5-year returns:
|Fund||3-Year Performance||5-Year Performance||Link|
Quant Absolute Fund Direct Plan Reinvestment of Income Distribution cum capital withdrawal option
Quant Absolute Fund Direct Plan Payout of Income Distribution cum capital withdrawal option
Quant Absolute Fund Reinvestment of Income Distribution cum capital withdrawal option
Quant Absolute Fund Payout of Income Distribution cum capital withdrawal option
Sundaram Equity Hybrid Fund Direct Plan Reinvestment Inc Dist cum Cap Wdrl option Option
Sundaram Equity Hybrid Fund Direct Plan Payout Inc Dist cum Cap Wdrl option Option
The following are some of the advantages of investing in hybrid funds: