Our preference for aggressive hybrid funds isn't new. We find these funds apt for those looking to start their equity journey but want to avoid the wild swings in their portfolios. Since they are mandated to invest up to 80 per cent of their assets in equity and the remaining in fixed-income instruments, aggressive hybrids tick all the boxes for a new investor. That these funds automatically rebalance your portfolio is a strong, albeit underrated, feature. The rebalancing also happens fairly tax-efficiently because the money moves from one asset class to the other, thereby escaping capital gains tax. Moreover, since these funds have to allocate money to fixed-income, it acts as a comforter for first-time investors. That's because the fixed-income portion provides stability during market stress, as seen in the 'Cushioning the downside' graph. You can notice aggressive hybrids outdoing flexi-cap funds when equity markets are down. Having said that, because these funds invest some portion in debt, many people doubt the category's ability to generate returns compared to a pure equity fund. However, our analysis suggests that in spite of their debt allocation, aggressive hybrids are not very far behind. Their long-term returns hold up quite well when compared to flexi-cap funds. Furthermore, aggressive hybrid funds can benefit from debt-oriented funds recently losing their indexation benefits on capital gains. The combination of a debt component, an auto rebalancing setup and friendlier tax rules can be an
Buy, hold, or switch. Get the call.
How's my portfolio doing? What do I need to fix? Where should I invest next? Fund Advisor answers each one. The Advisor Note every Saturday. A live session with Dhirendra Kumar every second Saturday.
No commissions. No conflicts. Since 1991.
See Plans
Already a subscriber ?Log In
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
