In this episode, we tell you about the new six classifications of the hybrid fund.
Moneycontrol PF Team
SEBI has recently proposed a change in the name of balanced funds into six categories - Equity savings fund, Aggressive Hybrid Fund, Balanced Hybrid Fund, Conservative Hybrid Fund, Multi-asset allocation funds and Dynamic asset allocation fund. In this episode of Managing Money with Moneycontrol, we tell you about the six new classifications of hybrid mutual funds categories and the best scheme suited for you. In the accompanying video, Manoj Nagpal, Consulting Editor and Founder, Outlook Asia Capital, shares actionable insights on various categories of hybrid mutual funds present in the market.
Here are the six new classifications of the hybrid fund mentioned below:
The Equity Savings Fund: This is an existing category. It usually invests in equities and its related instrument for around 33 percent of the overall assets and the rest is invested in debt and arbitrage fund of total assets. The fund which one can opt under this category is Kotak Equity Savings Funds.
The Aggressive Hybrid Fund: This is the erstwhile category commonly known as a balanced fund. Now, all funds will migrate from this category to the new category. It will invest in equities between 65 percent and 80 percent of total assets, which will give you a pure equity taxation benefit. The remaining amount will get invested in debt funds between 20 percent and 35 percent of total assets. The fund which one can opt under this category is HDFC Balanced Fund.
The Balanced Hybrid Fund: This is a completely new category which has been formed under the guidance of SEBI. It will invest in equities between 40 percent and 60 percent of total assets and debt funds between 40 percent and 60 percent of total assets. However, no arbitrage would be permitted in the scheme.
The Conservative Hybrid Fund: These are the erstwhile monthly income plans (MIPs). It will invest in equities between 10 percent and 25 percent of the overall assets and debt fund between 75 percent and 90 percent of total assets. The fund which one can opt under this category is Aditya Birla Regular Savings fund (earlier known as Aditya Birla MIP).
Multi-asset allocation funds. This is again a completely new category that has been formed under the SEBI guidelines. This classification of the fund will invest in all the three asset classes that are equities, debt, and gold. SEBI has mandatorily said that at any point in time there has to be minimum exposure of 10 percent in all of the three asset classes.
Dynamic asset allocation fund: The fund is also known as Balanced Advantage Fund which has grown substantially in the last three years. Fund managers can easily move the allocation of equities from 0 percent to 100 percent based on the market dynamics, benchmarks, etc. The funds which one can opt under this category are SBI Dynamic asset allocation fund, ICICI Balanced Advantage fund.(You can send in your queries to email@example.com)