Aggressive hybrid funds for your core portfolio

Here we tell you about a type of fund that can constitute the core of your portfolio. The core serves as the anchor to the entire portfolio, and the prerequisites for a fund that is part of it are that it should require minimum maintenance and should be able to adjust to market conditions. We believe aggressive hybrid funds, earlier known as balanced or equity-oriented hybrid funds, are ideal candidates for this role. In an aggressive hybrid fund, the fund manager balances the fund's equity-debt allocation according to market conditions. However, by law, the equity exposure has to remain between 65-80 per cent. This will leave you free to concentrate on the active portion of your portfolio that requires greater attention. The only disadvantage of having an aggressive hybrid fund in the core portfolio is that you cannot specify your equity-debt mix. A more conservative investor may, for instance, desire a lower allocation to equity, but by owning mainly aggressive hybrid funds, he will not be able to achieve this. What is a hybrid fund? Hybrid funds combine a stock component, a debt component and sometimes a money market component in a single portfolio. These funds are geared towards investors looking for a mixture of safety, income and modest capital appreciation. The amount that such a mutual fund invests in each asset class rema

This article was originally published on June 03, 2020.