ICICI PRUDENTIAL Hybrid Mutual Funds', offer 10 different types of mutual fund schemes under the hybrid mutual fund category. The total AUM belonging to these hybrid funds as on April 2024 is Rs 716,232 crores. The ICICI PRUDENTIAL hybrid schemes include balanced funds, multi-asset allocation funds, balanced advantage funds, equity savings funds, and arbitrage funds.
ICICI Hybrid Funds are balanced funds that invest in stocks of companies for exposure to equities. Simultaneously, ICICI Hybrid Mutual Funds invests in fixed income instruments or debt instruments to balance the risk of the portfolio.
ICICI 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 ICICI Hybrid MF schemes.
Owing to the exposure to debt instruments, ICICI Hybrid Mutual Funds are suitable for conservative investors who wish to balance risk and returns.
ICICI Hybrid Funds are suitable for investors with a medium- to long-term investment horizon.
Things To Consider Before Investing in ICICI Hybrid Mutual Funds
Investment Objective: The investment objective of ICICI Hybrid Mutual Funds is to deliver long-term capital appreciation as well as liquidity to its investors. The investment objective of the scheme is to invest in a diversified portfolio comprising equity and equity-related securities along with debt instruments. Also, ICICI 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 ICICI 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 and also depends 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 ICICI Hybrid Scheme is suitable.
Associated Risk: Owing to the minimum exposure of 65% to equity and equity-related instruments, ICICI Hybrid Mutual Funds carries an associated risk to the equity market and other risks. To mitigate such risks, the ICICI Hybrid Mutual Funds fund managers construct a portfolio according to the guidelines. However, due to the combination of equity and debt, ICICI 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-return trade-off. .
Tax on ICICI Hybrid Mutual Funds
The tax on ICICI MF Hybrid funds depends on the percentage of exposure of the scheme towards equity and debt. If the scheme is exposed to equity securities of more than 65%, then the tax treatment is similar to that of an equity fund. Otherwise, the taxation will be similar to that of debt funds. Therefore, the following table shows the taxation of ICICI Hybrid Mutual Funds –
Funds
Short Term Capital Gains (STCG)
Long Term Capital Gains (LTCG)
Equity oriented fund
Holding Period: less than 12 months Tax: at 15% flat in investor’s hands irrespective of the income tax slab rate.
Holding period: 12 months or more Tax: 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 months Tax: The capital gains are added to the overall income and taxed as per the individual income tax slab rate.
Holding Period: 36 months or more Tax: Capital gains are taxable at 20% with indexation.
*Note: As per the Finance Bill 2023, debt mutual funds will no longer have the LTCG benefit from April 1st 2023. Thus, capitals gains arising from debt funds from the said date will be taxable as per the investor’s income tax slab rate.
