HDFC Hybrid Mutual Funds', offer 7 different types of mutual fund schemes under the hybrid mutual fund category. The total AUM belonging to these hybrid funds as on June 2023 is Rs 465,145 crores. The HDFC hybrid schemes include balanced funds, multi-asset allocation funds, balanced advantage funds, equity savings funds, and arbitrage funds.
HDFC Hybrid Funds are balanced funds that invest in stocks of companies for exposure to equities. Simultaneously, HDFC Hybrid Mutual Funds invests in fixed income instruments or debt instruments to balance the risk of the portfolio.
HDFC Hybrid Fund schemes have historically delivered higher returns in comparison to debt mutual funds.
Investors who seek diversification in their overall portfolio must invest in HDFC Hybrid MF schemes.
Owing to the exposure to debt instruments, HDFC Hybrid Mutual Funds are suitable for conservative investors who wish to balance risk and returns.
HDFC Hybrid Funds are suitable for investors with a medium- to long-term investment horizon.
Things To Consider Before Investing in HDFC Hybrid Mutual Funds
Investment Objective: The investment objective of HDFC Hybrid Mutual Funds is to deliver long-term capital appreciation as well as liquidity to its investors. Owing to its investment objective, the schemes invest in a diversified portfolio comprising equity and equity-related securities along with debt instruments. Also, HDFC Hybrid Mutual Funds are open-ended schemes that aim toward a balance of risk and diversification of investment portfolio.
Investment Strategy: The investment strategy of HDFC MF Hybrid schemes is to generate long-term wealth creation from a mixed portfolio comprising majorly equity and equity-related instruments. The asset allocation strategy between equity and debt is per SEBI/AMFI guidelines based on the type of scheme under the hybrid category, such as arbitrage, asset allocation, equity savings fund and so on. Therefore, investors must know the investment objective to help them identify which HDFC Hybrid Scheme is suitable.
Associated Risk: Owing to the minimum exposure of 65% to equity and equity-related instruments, HDFC Hybrid Mutual Funds carries an associated risk to the equity market and other risks. To mitigate such risks, the HDFC Hybrid Mutual Funds fund managers construct a portfolio according to the guidelines. However, due to the combination of equity and debt, HDFC Hybrid Mutual Funds carry relatively lower risk than equity-oriented funds. Moreover, this combination of equity and debt provides investors with a balance of risk and reward.
Tax on HDFC Hybrid Mutual Funds
The tax on HDFC MF Hybrid funds depends on the percentage of exposure of the scheme towards equity and debt. If the scheme is exposed to equities of more than 65%, then the tax treatment is similar to that of an equity fund. Otherwise, the tax treatment will be similar to that of debt funds. Therefore, the following table shows the taxation of HDFC Hybrid Mutual Funds –
Funds
Short Term Capital Gains (STCG)
Long Term Capital Gains (LTCG)
Equity oriented fund
Holding Period: less than 12 monthsTax: at 15% flat in investor’s hands irrespective of the income tax slab rate.
Holding period: 12 months or moreTax: Capital gains up to Rs. 1 lakh are exempted. Above Rs. 1 lakh is taxable at 10%
Debt-oriented Fund
Holding Period: less than 36 monthsTax: The capital gains are added to the overall income and taxed as per the individual income tax slab rate.
Holding Period: 36 months or moreTax: Capital gains are taxable at 20% with indexation.
