Investment in mutual funds has always been a popular choice for those looking to grow their wealth in a structured and relatively safer environment.
Hybrid funds, a favored types of mutual fund, provide a mix of both equity and debt, allowing investors to reap the benefits of both asset classes. As 2024 unfolds, investors might be keen to know which hybrid funds could potentially offer the best returns over the next five years. Below are the top 5 mutual funds to consider for achieving superior returns by 2029.
1. SBI Equity Hybrid Fund
Fund Overview: The SBI Equity Hybrid Fund combines equity and debt to balance risk and reward. Historically, it has delivered an impressive balance of returns due to its diversified portfolio.
Performance: Over the past five years (as of 2023), SBI Equity Hybrid Fund has shown an annualized return of approximately 12.5%.
Investment Strategy: The fund typically invests around 65-85% in equities and the remainder in debt and money market instruments. This strategy helps mitigate risk while leveraging market growth.
2.HDFC Hybrid Equity Fund
Fund Overview: Known for its robust performance, the HDFC Hybrid Equity Fund is another prominent name in hybrid funds. It aims to offer long-term capital appreciation with periodic income.
**Performance**: From 2018 to 2023, this fund has provided an average annual return of around 11.8%.
Investment Strategy: The investment strategy is predominantly equity-focused, with 70-80% allocation in stocks and the rest in debt. The fund managers dynamically adjust the asset allocation based on market conditions.
3. ICICI Prudential Balanced Advantage Fund
Fund Overview: ICICI Prudential Balanced Advantage Fund is designed to generate long-term capital appreciation and also provide income by investing in a dynamic mix of equity and debt.
Performance: Over the past five years, the fund has delivered average annual returns of about 13%.
Investment Strategy: This fund is unique due to its ‘dynamic asset allocation’ model, which shifts between equity and debt based on market valuations. This helps in minimizing the risk while capturing potential upside.
4. Aditya Birla Sun Life Equity Hybrid 95 Fund
Fund Overview: This fund has been a consistent performer in the hybrid mutual fund segment. Its focus on equity for growth and debt for income offers a balanced risk-reward proposition.
Performance: The last five years have seen this fund generating an annualized return of approximately 12%.
Investment Strategy: Generally, 70-75% of the portfolio is allocated to equities, with the remaining 25-30% invested in debt and other money market instruments.
5. **Franklin India Equity Hybrid Fund**
Fund Overview: Franklin India Equity Hybrid Fund aims to achieve long-term capital appreciation by investing predominantly in equity along with some exposure to debt.
Performance: This fund has shown annualized returns of around 11.5% over the last five years.
Investment Strategy: Typically, about 65-80% of the corpus is invested in equity and equity-related instruments, while the balance is deployed in fixed-income securities.
Summary
As investors look ahead to 2024 and beyond, selecting the right mutual funds can be crucial for long-term wealth creation. The hybrid funds mentioned above—SBI Equity Hybrid Funds, HDFC Hybrid Equity Fund, ICICI Prudential Balanced Advantage Fund, Aditya Birla Sun Life Equity Hybrid 95 Fund, and Franklin India Equity Hybrid Fund—are well-regarded for their past performances and portfolio strategies. With historical returns ranging from 11.5% to 13% annually over the last five years, these funds offer a balanced mix of growth and stability.
Hybrid funds, by design, spread investments across equity and debt, catering to different risk appetites. Notably, the dynamic allocation models used by some funds, like ICICI Prudential Balanced Advantage Fund, provide an added layer of risk management. This flexible approach means that fund managers can shift investments between equities and fixed-income securities based on market conditions, thereby optimizing returns.
When selecting any fund, it is essential to understand the associated risks and potential returns. Analyzing factors such as historical performance, portfolio composition, and management strategy can provide valuable insights.
Disclaimer
Investors must gauge all the pros and cons before trading in the Indian financial market. Past performance is not an indicator of future results, and potential investors should consult with a financial advisor to ensure that the chosen funds align with their financial goals and risk tolerance. Mutual funds are subject to market risks, and it is crucial to read all scheme-related documents carefully before making any investment decisions.
