Hybrid funds clock Rs 27,220-cr inflow in Jun qtr

Hybrid funds are getting traction from investors with such instruments witnessing net inflow of Rs 27,220 crore in three months ended June, more than double from the preceding quarter.

Hybrid funds are mutual fund schemes that typically invest in a combination of equity and debt securities and sometimes to other asset categories such as gold. Nikhil Kamath, Co-founder and CIO, True Beacon and Zerodha, said equity market valuations seem to be frothy currently, and this is compelling market participants to consider more generalized products as compared to equity-focussed ones. "Major central banks across the globe are taking interest rate hikes and that is going to spill over to India. This, in turn, makes debt a favourable asset class once again after the low interest-rate environment," he added.

Harshad Chetanwala Co-founder- MyWealthGrowth.com said investors are evaluating hybrid funds as markets have been near all-time high and some investors would like to reduce the risk and at the same time participate in equity markets. According to data by Association of Mutual Funds in India (Amfi), hybrid funds witnessed net inflow to the tune of Rs 27,220 crore in quarter ended June 2021, much higher than Rs 13,055 crore in three months ended March.

However, such funds had seen a net withdrawal of Rs 12,862 crore in three months ended December 2020. To investors, hybrid funds help capitalise from the investment opportunities in the equity markets, provide stability of the debt markets and strategic diversification of gold, which could sustain the portfolio when other two asset classes struggle, Himanshu Srivastava, Associate Director Manager Research, Morningstar India, said. "The importance of asset allocation cannot be overstated, and over the years, investors have increasingly started to comprehend that. Hybrid fund just offers the same in a ready format.