Birla Sun Life Asset Management CEO on how investors gain with hybrid funds
Birla Sun Life Asset Management CEO A Balasubramanian talks about how investors can make the most of their investments in hybrid funds.
Birla Sun Life Asset Management CEO A Balasubramanian
Birla Sun Life Asset Management CEO A Balasubramanian talks about how investors can make the most of their investments in hybrid funds.
What type of investors should buy hybrid funds?
Hybrid funds are for people who want to have an allocation to both equity and debt. Depending on their risk appetite, investors can choose from a variety of funds that give the best of both worlds.
The equity component in a hybrid fund, although volatile, creates wealth in the long term and helps the investor beat inflation. The debt component protects from equity market volatility. Further, hybrid funds can be used to make recurring investments. The idea is to create a lumpsum to meet any expenditure later in life.
Most recurring deposits have tenures of seven to 10 years. The best way to create wealth is to divert this to monthly income plans and balanced funds.
What are the advantages of a hybrid fund?
Hybrid funds allow you to diversify across asset classes through one product/scheme. They offer an automatic rebalancing facility. Whether the fund manager likes it or not, he or she has to rebalance the portfolio to maintain the planned asset allocation, which we as individual investors don't tend to do as often.
Equity-oriented hybrid funds get similar tax treatment as equity funds and do not attract long-term capital gains tax. If you were to invest in an equity and debt fund separately, during rebalancing, you would have had to pay tax on gains from your debt portfolio.
What is the ideal investment horizon for investing in hybrid funds?
One should consider an investment horizon of one year for MIPs. For a balanced fund, though a one-year horizon can be considered, three years is preferable.
Stock markets are bound to fluctuate; one cannot expect a secular bull run. Investors should redeem their investments only when needed. Staying invested for the long term creates a lot more wealth.
What type of investors should buy hybrid funds?
Hybrid funds are for people who want to have an allocation to both equity and debt. Depending on their risk appetite, investors can choose from a variety of funds that give the best of both worlds.
The equity component in a hybrid fund, although volatile, creates wealth in the long term and helps the investor beat inflation. The debt component protects from equity market volatility. Further, hybrid funds can be used to make recurring investments. The idea is to create a lumpsum to meet any expenditure later in life.
Most recurring deposits have tenures of seven to 10 years. The best way to create wealth is to divert this to monthly income plans and balanced funds.
What are the advantages of a hybrid fund?
Hybrid funds allow you to diversify across asset classes through one product/scheme. They offer an automatic rebalancing facility. Whether the fund manager likes it or not, he or she has to rebalance the portfolio to maintain the planned asset allocation, which we as individual investors don't tend to do as often.
Equity-oriented hybrid funds get similar tax treatment as equity funds and do not attract long-term capital gains tax. If you were to invest in an equity and debt fund separately, during rebalancing, you would have had to pay tax on gains from your debt portfolio.
What is the ideal investment horizon for investing in hybrid funds?
One should consider an investment horizon of one year for MIPs. For a balanced fund, though a one-year horizon can be considered, three years is preferable.
Stock markets are bound to fluctuate; one cannot expect a secular bull run. Investors should redeem their investments only when needed. Staying invested for the long term creates a lot more wealth.
