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In your early 50s and nearing retirement? These 2 MC30 schemes can take you there

If you are about five to seven years away from retirement, moving a portion of the investment from risky assets to aggressive hybrid funds can not only help generate returns but also guard against erosion of accumulated corpus

April 25, 2023 / 09:45 AM IST
MC30 helps you to build your retirement corpus

MC30 helps you to build your retirement corpus

MC30, a curated basket of 30 investment-worthy mutual funds (MFs), selects its schemes across asset classes. MC30 provides a complete solution for the investment community.

The schemes in the MC30 basket cater to all types of investors -- with varying risk profiles, time horizons and financial goals. For instance, an investor with a high-risk profile can select equity schemes from the list to meet his/her long-term goals. Similarly, a conservative investor can select debt schemes from the basket to ensure stability while generating FD-beating returns.

MC30 offers an end-to-end solution to achieve your retirement goals, too. The schemes within the MC30 basket are suitable to invest not only during the accumulation phase but for the retirement period as well.

See here: The complete MC30 basket of mutual fund schemes

Safeguard the nest egg

Above all, it is equally important to safeguard the accumulated nest egg when you approach your non-working years. During the accumulation phase, allocating a major portion in risky assets, such as direct equity and equity MFs, which can help generate better returns over the long run, makes sense. But while nearing your retirement age, it is better to look for less-risky alternatives that cushion your portfolio while generating returns.

If you are about 5-7 years away from retirement, you can shift a portion of the corpus to hybrid MF schemes. Hybrid schemes invest in a combination of equity and debt. While the equity portion helps to generate returns, the debt portion cushions the downfalls.

MC30 offers you two schemes from the aggressive hybrid category.  Aggressive hybrid funds are mandated to invest 65-80 percent in equity and the rest in debt assets. Note that MC30 recommends only aggressive hybrid funds among the hybrid categories that can provide ample asset class diversification between equity and debt. Investors wanting to de-risk further can consider the debt funds listed in MC30.

Also see: How to use MC30?

Here are our picks:

Canara Robeco Equity Hybrid Fund

Canara Robeco Equity Hybrid Fund (CREHF) invests 65-80 percent of its assets in equity, while the rest is deployed in debt instruments. CREHF has been one of the least volatile in this category. The scheme’s low volatility has led to superior risk-adjusted returns when compared to its peers over the long term. That is what this category aims to achieve due to its debt holdings.

It has consistently beat average returns by large-cap funds over the long run.

On the equity side, CREHF follows a multi-cap approach, with a bias for large-caps. The fund manager mainly chooses quality businesses with superior management execution strategies. These filters keep the risks low.

On the debt side, the fund follows a blend of accrual and duration strategies. The debt portion is designed to cushion the overall portfolio when the equity portion undergoes turbulence. It is one of the few schemes in the category that invest exclusively in the highest-rated debt instruments.

Also Read: Why MC30 has only 2 tax-saving funds in its basket?

DSP Equity & Bond Fund

DSP Equity & Bond Fund (DEBF) has been a long-term performer. Atul Bhole manages the equity portfolio and Vikram Chopra looks after the debt portion. Its corpus size was Rs 7,187 crore, as of March 2023.

For a hybrid fund, the scheme is quite diversified, with its equity portion spread over 60-65 stocks. To keep the risks in check, nearly two-thirds of the equity assets are invested in largecaps and the rest in mid- and small-cap stocks. Bhole is following a growth style of investing and betting mainly on the consumer side of the economy.

DEBF delivered below-average returns over the last 2-3 years as value style of investing overtook the growth investment style. Many commodity and PSU stocks where the fund managers had an underweight positions rallied. Bhole believes that growth stocks will likely find favour over next one to three years soon after global macro headwinds fade away.

On the equity side, Bhole considers only good businesses with management competency and growth prospects, rather than valuations, first. Bhole prefers to be conservative, given the scheme’s nature and target segment. On the debt side, too, Chopra keeps the risks to a bare minimum. He sticks to highly-rated debt instruments with shorter maturity profiles.

Dhuraivel Gunasekaran
Dhuraivel Gunasekaran