There are different options available in the market, and the best combination of risk and stability is chosen by most investors.
Huge risks are involved when it comes to mutual fund investment. Investors require research and proper mentorship to choose the right mutual fund with higher returns. Recently, the mutual fund sector has seen a boom in its investments and returns. There are different options available in the market, and the best combination of risk and stability is chosen by most investors.
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If you are also looking for a desirable return and are ready to face the risk, then you can invest in hybrid mutual funds. These types of funds let you invest in more than one asset at once. These are a combination of equity and debt assets, sometimes they might include gold or real estate as well. As an investor, you can avoid the risk of concentration in the portfolio and achieve a higher return along with some level of capital protection. Let’s take a look at the top five categories of hybrid mutual funds.
Traditional Investment (conservative): These funds can invest from 75% to 90% in debt and 10% to 25% in equity exposure. They can provide slightly higher returns, up to 25% than debt funds and can be allotted to equity. According to reports, these funds have given returns of 9.74% in one year, 8.72% in three years, and 7.16% in five years.
Aggressive Investment: These funds take on higher equity exposure and can invest a minimum of 65% in equity and can go up to 85%. Investment in total assets can be between 20% to 35%. Due to the higher allocation of equity, they have a higher chance of generating higher alpha (returns). The risk in these returns is higher and the returns recorded from this investment have been 4.8% in the year 2022. ICICI Prudential gave a return of 11.7% last year.
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Balanced Hybrid: These funds range from 40% to 60%. These create higher returns but are more risky than the others. During Covid 19 pandemic, Ipro (investment firm) Balanced Advantage increased equity exposure to 73.7%; on the other hand, the market had reached a level of over 60,000. This category has given returns of 15% in a year and 13.7% in three years.
Multiple Returns: These gave 16.8 % returns in 2022 and the benchmark gave 5.8% returns. In a year, it gave 17.7%, 17.9% in three years, and 10.22% in five years.
Equity Saving Fund: Equity savings category funds can invest up to 65% in equity and up to 10% in debt. If you are looking for a lower return on equity over debt, then you can opt for this. Funds from this category have given a return of 11.32% in one year, 11.06% in three years, and 7.51% in five years.
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Hybrid funds are the best option for investors to create long-term wealth. According to experts, the growth rate in India is higher than in other countries. Earnings and corporate sectors are doing well. No other country provides this kind of growth rate.
