scorecardresearchMutual Fund Investing: This conservative hybrid fund gave up to 20 percent

Mutual Fund Investing: This conservative hybrid fund gave up to 20 percent return in past one year

Updated: 04 Jul 2022, 08:06 AM IST
TL;DR.

Conservative hybrid funds are mutual funds which allocate anywhere between 75 percent to 90 percent of their total assets in debt instruments, and the remaining (i.e., up to 25 percent) in equity and equity related instruments. They are called conservative because a vast majority of its assets are invested in highly safe instruments i.e., debt securities.

Conservative hybrid funds invest a minimum of 75 percent of total assets in debt instruments. 

Conservative hybrid funds invest a minimum of 75 percent of total assets in debt instruments. 

To evaluate the performance of a mutual fund, it is imperative to assess its returns for past few years, among other factors.

Here we take a look at the past few years’ returns of conservative hybrid mutual funds and analyse their performance. We inferred that one of the top performing conservative hybrid funds gave as much as 20 percent in past one year, whereas in the past three years, the top performing funds gave more than 10 percent return.

First of all, let us elaborate what exactly are conservative hybrid mutual funds.

Conservative hybrid funds are mutual funds which allocate anywhere between 75 percent to 90 percent of their total assets in debt instruments, and the remaining (i.e., up to 25 percent) in equity and equity related instruments. They are called conservative because a vast majority of its assets are invested in highly safe instruments i.e., debt securities.

One-year returns

As we can see in the chart below, one-year returns of conservative hybrid fund schemes range widely. There are some schemes which gave nearly one percent return such as L&T Conservative Hybrid Fund delivered1.07 percent return and Franklin India Debt Hybrid Fund returned 0.90 percent to investors. But the top-performing ones gave considerably higher return.

Bank of India Conservative Hybrid Fund gave 20.6 percent, Sundaram Debt Oriented Hybrid Fund gave 7.33 percent and SBI Conservative Hybrid Fund delivered 5.33 percent.

Schemes                                                     1-year-return
Bank of India Conservative Hybrid Fund   20.60
Sundaram Debt Oriented Hybrid Fund     7.33
SBI Conservative Hybrid Fund                     5.33
Parag Parikh Conservative Hybrid Fund      5.22
Nippon India Hybrid Bond Fund                 5.25

(AMFI data as on June 20, 2022)

Three-year return

Three-year returns of conservative hybrid funds range widely as some of the low-performing fund schemes offered as low as 1.06 percent by Nippon India Hybrid Bond Fund and the best-performing ones delivered more than 10 percent return.

As shown in the table below, Bank of India Conservative Hybrid Fund gave 10.86 percent return, Kotak Debt Hybrid Fund delivered 10.74 percent and SBI Conservative Hybrid Fund gave 9.65 percent return.

Fund schemes                                            3-year-return
Bank of India Conservative Hybrid Fund     10.86
Kotak Debt Hybrid Fund                                10.74
SBI Conservative Hybrid Fund                   9.65
Canara Robeco Conservative Hybrid Fund   9.49

(Source: AMFI data as on June 20, 2022)

 

Here we give a snapshot of some of the top-performing schemes:

Bank of India Conservative Hybrid Fund: The fund started in March 2009 and its return since inception is 6.65 percent. In other words, if someone invested one lakh 13 years and three months ago, the sum would have swelled to 2,34,683.

Top five equity holdings in the fund portfolio include SBI, Birla Corporation, Infosys, Bharti Airtel and TCS. However, it is a small fund as its total assets under management amount to 53.34 crore.

Kotak Debt Hybrid Fund: The fund (direct plan) started in December 2013. Its return since inception is 10.34 percent. This means if someone invested one lakh over 9 years and six months ago, it would have now swelled to 2,54,628.

The top portfolio holdings included ITC, RIL, ICICI Bank, Maruti Suzuki, SBI, Persistent Systems, NTPC, Sapphire Foods, HDFC Bank, Bharti Airtel and Aether Industries.

First Published: 04 Jul 2022, 08:06 AM IST