Mumbai: There is a lot of turmoil in the stock market since last one month. According to a report by our colleague ET, a month ago the BSE Sensex was at 82,948. It climbed to 85,836 on September 26. But after a few days, on October 7, it fell to 81,050. On the last trading day of this week i.e. 18th October, it recovered a bit and closed at 81,220 points. In such a volatile environment, retail investors lose heart. In such a situation, the question arises that where should people invest their money?
People are looking for safe market
At present there is a lot of turmoil in the global markets. This impacts the Indian markets. In such a situation, mutual fund investors are looking for safe ways to invest. Market experts say that considering asset allocation and stability, they are turning to hybrid funds. That is why the asset undermanagement (AUM) of hybrid funds is increasing a lot. Last August, it increased to a record level of Rs 8.61 lakh crore.
Why is it increasing so much
In fact, the unprecedented growth in hybrid mutual funds is driven by the nature of these funds. Hybrid funds invest in two or more asset classes. These usually mainly include equities and debt as well as commodities like gold and silver. These funds offer diversification and asset allocation to balance risk and returns. Hybrid mutual funds essentially attempt to offer the best of multiple asset classes in a single product.
Which gives better returns in different market conditions?
When stock markets are high, the equity portion in the fund gives good returns. On the contrary, the debt portion of the fund provides it stability. These funds help in achieving short-term stability and regular income through equity and better returns in the long run through debt. Hence hybrid funds offer multiple benefits simultaneously. These also include capital appreciation as equity increases wealth. Investors also benefit from lower volatility due to the debt portion of the fund. Additionally, hybrid funds offer the benefit of diversification. Because these funds diversify not only across different asset classes but also sub classes like large cap, mid cap and small cap stocks.
Who are the leading fund houses
Nippon India Mutual Fund is the leader in this group. It offers several hybrid funds such as Nippon India Multi Asset Allocation Fund, Nippon India Asset Allocation FOF, Nippon India Equity Savings Fund, Nippon India Balanced Advantage Fund and Nippon India Equity Hybrid Fund. Some of these funds have given attractive returns in the last one year. For example, Nippon India has returned 35.82%, Nippon India BAF has returned 25.75%. Apart from this, fund houses like ICICI Prudential, SBI, Kotak Mutual Fund and Aditya Birla also offer many hybrid funds.
(Disclaimer: The recommendations given in this analysis are of individual analysts, AMCs or broking companies and not of NBT. We advise investors to consult certified experts before taking any investment decision. Because of the stock market conditions Can change rapidly.)