 "finance, fund manager, mutual fund, MF, INVESTMENT")
WhiteOak Capital Mutual Fund on Thursday launched a new open-ended hybrid fund that will invest in both equity and debt. The new fund offer ( NFO) will be open from 5 October 2023 to 19 October 2023.
Hybrid mutual funds are investment funds that combine different asset classes, such as stocks and bonds, within a single portfolio. They are considered suitable for both new investors entering into the mutual fund market and those with medium-term investment horizons. While such funds provide better returns than debt funds, the risk and returns of hybrid funds are contingent upon the level of equity exposure.The main advantage of hybrid funds is that they provide diversification benefits to investors
The investment objective of the scheme is to provide long-term capital appreciation and generate income by investing in a balanced portfolio of equity & equity-related instruments and debt & money market securities. The scheme is benchmarked against CRISIL Hybrid 50+50 Moderate Index.
The fund will invest 40-60 per cent in equity and equity-related instruments (including foreign securities) and a similar proportion in debt securities (including securitised debt) and money market instruments, cash, and cash equivalents and /or units of domestic liquid mutual fund schemes across various sectors.
Investing platform Scripbox believes balanced funds have the potential to provide safety, income, and medium capital appreciation for investors. Those with a low-risk appetite can invest in these hybrid funds to balance out the benefits of high-risk investment markets. They follow strict guidelines that ensure a limited 65% allocation across all asset classes during bull market periods while still generating higher returns than their equity counterparts even during recessionary times.
Under normal circumstances, the asset allocation philosophy of the scheme shall rebalance back to strategic asset allocation of 50 per cent, whenever external asset allocation limits (i.e. 40 per cent or 60 per cent) are breached due to market movement. However, final portfolio can have higher or lower allocation depending on prevailing market scenario, it added.
“The scheme aims to achieve not only reasonable returns over time, but also reduce the intermittent volatility associated with pure equity allocation. The fund provides hassle-free and tax-efficient way of investing in debt and equity through a single mutual fund scheme, and is also eligible for long-term capital gains (LTCG) tax with indexation benefit, if held for more than three years,” WhiteOak Capital Mutual Fund said in a statement.
The minimum application amount is Rs. 500 and in multiples of Re. 1. For systematic investment plan, the minimum application amount is Rs 100 in weekly, fortnightly or monthly mode with a minimum of six instalments. For quarterly SIPs, the minimum application amount is Rs. 500 and a minimum of four instalments.
"“Investors often make mistakes when they are exposed to extremes of market conditions or asset classes. They end up generating sub-optimal returns from investments because of huge intermittent volatility. One of the simple but effective strategies to follow is the ‘balanced approach’ of having growth asset (equity) and stability (debt) in the portfolio," said Prateek Pant, chief business officer, WhiteOak Capital Asset Management.
A Balanced Hybrid Fund is a simple yet effective way to participate in both Equity and Debt asset classes, wherein equity provides higher wealth creation opportunities in the long term and debt provides stability to the portfolio. The scheme aims to achieve not only reasonable returns over time, but to reduce the intermittent volatility associated with pure equity allocation.
The fund will be managed by Ramesh Mantri (Equity), Trupti Agrawal (Assistant Fund Manager), Mr. Piyush Baranwal (Debt), and Shariq Merchant (Overseas Investments).
Hybrid funds are ideal for investors who are looking for a balance between returns and risk. They are suitable for investors who are looking to generate regular income or grow their wealth. These are also suitable for investors who have a low to moderate risk tolerance and are looking for a diversified investment option.
"Investors who are new to investing or those who do not have the time or expertise to manage their investments can also consider investing in these funds as they are managed by professional fund managers who have the expertise to make informed investment decisions," said Shreya Gupta of Smallcase.
"I find this category ( balanced funds) extremely promising because of their ability to rebalance and handle volatility. Also, in retirement, one easily gets uncomfortable with a big slide in the value of their investment. These funds help you there," said Dhirendra Kumar of Value Research in a note.
