Mutual Fund

Hybrid Funds: To bring more diversification and better returns

This blog is after long time, apologies for that. In last few weeks I am hearing a lot of people are concerned about their money invested in mutual funds. As the Indian economy is not in great shape as well as the near term future is bleak, the same is also reflected on the Stock market. We started the year when Nifty was around 6,300 and now it is trading at almost 8% losses near 5,350 mark. Most of the people are asking about what to do with their investments.

Let us revise which we are advising since start:

  • Do not put all your money only in mutual funds or Stocks
  • Buy a good mix (based on your investment budget and risk profile) of various investments comprising Gold, Stocks, Corporate debts and FDs.
  • Don’t panic on short term losses and always plan to stay invested for longer time frame in all market linked investments (3 or more years)

These days when the stock market is performing great, most of the investments flow to other assets like Commodities, Gold, Real estate etc. Investments in any of these alternative assets requires a lot of money. There are some funds in market which helps retail investors to own a small piece of these assets. The most important part in these funds is that you should be aware of various business cycles of Steel, Iron, Gold, Coal etc. This will help you understanding the appropriate time to invest and sell these funds.

These funds are called as Hybrid funds and they invest in listed/non listed company’s or alternative assets. Most of the hybrid funds have higher risk because of various business cycles. In India, if we see the performance of these funds most of them earned more than 10% in last one year, when Nifty returns are less than 2%.

All these funds are having same rules as any other open ended scheme. Some of the specifications worth mentioning are as follows:

Minimum investment required:                INR 5,000 (then in multiples of INR 1,000)

Scheme type:                                              Open Ended

Entry/Exit load:                                          No charge while buying, Exit load of 1% if sold in less than a year else 0

Tax on Income:                                          No tax if sold after 1 year otherwise short term capital gain tax of 10.3%

In case of any other questions, do write to us.

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