A conservative hybrid fund is a kind of hybrid mutual fund that invests 75%-90% of its overall assets in debt securities and the remaining 10%-25% in equity. That means this scheme invests a majority of its fund corpus in fixed income instruments like treasury bills, debentures, bonds, etc., and a limited portion in stocks.
Want to invest in such funds? Check this list of 10 best-performing conservative hybrid funds in India. Read on!
This mutual fund scheme has both debt and equity as its underlying asset class. So, a fund manager rebalances its portfolio daily to maintain the ratio of equity and debt as per SEBI regulations. Following is a list of the top-performing conservative hybrid funds in India:
|S No.||Scheme Name||Last 5 Years’ Returns|
|1.||Kotak Debt Hybrid-Direct Plan-Growth||10.04%|
|2.||ICICI Prudential Regular Savings Fund-Direct Plan-Growth||9.66%|
|3.||Canara Robeco Conservative Hybrid Fund-Direct Plan-Growth||9.48%|
|4.||BNP Paribas Conservative Hybrid Fund-Direct Plan-Growth||8.60%|
|5.||SBI Conservative Hybrid Fund-Direct Plan-Growth||8.59%|
|6.||Baroda Conservative Hybrid Fund-Plan B (Direct)-Growth||8.46%|
|7.||Aditya Birla Sun Life Regular Savings Fund-Direct Plan-Growth||8.42%|
|8.||Axis Regular Saver Fund-Direct Plan-Growth||8.39%|
|9.||HDFC Hybrid Debt Fund-Direct Plan-Growth||8.19%|
|10.||Navi Regular Savings Fund-Direct Plan-Growth||6.77%|
Note: Returns and NAV (Net Asset Value) data as of March 7 2022
Conservative hybrid funds such as Navi Regular Savings Fund invest at least 75% in fixed deposit-like instruments and 25% in stocks. These schemes can offer higher returns than fixed deposits and are suitable for risk-averse individuals. Visit Navi Mutual Fund and start investing with Rs. 500 only.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Go through the various advantages of conservative hybrid funds:
These schemes facilitate portfolio growth and diversification through investments in both debt and equity. Prominent exposure in debt securities safeguards the portfolio, offering stable returns.
The portfolio of these funds has been designed to carry a lower risk relative to other kinds of hybrid funds. The objective is to protect the principal amount and yield stable returns. Hence, to keep the risk and volatility low, debt instruments get higher weightage.
This fund has a track record of delivering higher returns than fixed deposits. The better returns are a result of the addition of equity in its portfolio. However, for earning higher yields, you will have to bear certain market risks that go hand-in-hand with investment in stocks.
If you are close to your retirement, you can afford to be a little bit conservative so that the profit doesn’t disappear with market fluctuations. These schemes can be a favourable option to deviate from regular equity funds prior to retirement.
Returns from fixed deposits are reasonable, but they cannot beat the inflation rate by a high margin. After taking inflation into consideration, the yields from FDs will barely stick to 1-2%. Contrarily, returns from conservative hybrid funds have the potential to beat inflation owing to the equity exposure.
An investor who doesn’t want to bear the risk of a pure equity portfolio but wants to get some equity exposure can choose these schemes. It is suitable for individuals who do not wish to risk their principal sum for the sake of achieving higher returns.
Consider the following parameters before conservative hybrid funds:
You will have to pay certain expenses while investing in mutual funds. Such costs can be an expense ratio and an exit load. A higher expense ratio can reduce your returns. So, you must pick a scheme with a lower expense ratio.
Fund managers play a crucial role in asset allocation and fund selection. Hence, an efficient management team having years of experience and expertise can design a scheme that has the potential to fulfil the objective that the fund was set up to achieve.
Prior to opting for conservative hybrid funds, examining a fund’s past returns is vital. Although historical returns don’t guarantee future gains, it is imperative to research about the scheme’s past performance.
Investment objectives of all individuals are not identical. Hence, you must ensure that the scheme’s investment goals align with your financial and personal goals.
You can make a lump sum investment or opt for a Systematic Investment Plan (SIP) to invest in conservative hybrid funds. The lump sum mode facilitates a one-time investment in this type of scheme, while a SIP mode allows you to invest periodically, such as yearly, half-yearly, quarterly and monthly.
A conservative hybrid fund is a debt-focused hybrid fund; its returns are impacted by market fluctuations owing to the equity exposure. So, when the stock market is high, it can generate significant gains. If you’re a risk-averse investor, you can consider investing in this type of hybrid scheme.
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