Mutual fund investors are turning to hybrid mutual funds as a hedge against the sharp fall in equity markets.
According to the latest data from the Association of Mutual Funds in India, investors withdrew Rs 9.87 lakh crore in February compared to Rs 10.30 lakh crore in January. Fresh fund mobilisation also decreased to Rs 10.27 lakh crore last month, down from Rs 12.17 lakh crore in January.
Redemptions from the hybrid category also saw a decline at Rs 21,657 crore last month, compared to Rs 26,202 crore in January. Similarly, fresh mobilisation in hybrid schemes was down at Rs 28,461 crore against Rs 34,970 crore in January.
Hybrid funds are viewed as a safe option for investors during turbulent market conditions. These funds offer a diversified portfolio of equity, debt, and commodities, which helps mitigate risks and potentially generate decent returns even in a market downturn.
For example, the Nippon India Multi Asset Fund maintains a balanced allocation across equity, debt, and commodities to eliminate any bias from fund managers. The fund saw a record high due to its exposure to gold.
Other hybrid funds from firms like Samco, Edelweiss, Invesco, and ICICI Prudential have also delivered positive returns in a declining market. Year-to-date, hybrid funds have outperformed other categories with nearly double-digit returns.
DD Sharma, Managing Director of MF King, emphasized the importance of proper asset allocation in uncertain financial times. He stated that hybrid mutual funds offer a versatile investment choice by combining multiple asset classes like equity, debt, and commodities to provide investors with a hedged and diversified portfolio.
Overall, hybrid funds have emerged as a preferred option for mutual fund investors looking to navigate market volatility and manage risks effectively.
