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Written by Dhirendra Kumar |
April 13, 2003

If mutual funds were cricketers, then hybrid funds would be the all-rounders. With a combination of debt and equity in varying proportion, hybrid (or balanced) funds can both bat and bowl. Like most average all-rounders, you can expect them to deliver consistently, if not brilliantly. And, as most of us have experienced, it is better to be consistent than brilliant in the investment world.,free online slot games no downloads no registration

Equities are the best instruments for long-term growth of capital and a portfolio of diversified stocks reduces the risk of individual equities. In spite of diversification reducing some risks, equity as an asset class is still volatile, especially in the short-term. Debt instruments, on the other hand, are stable. ,bet365 each way odds

Based on these characteristics, it would seem that a blend of both equity and debt could provide a more stable and rewarding mix. A pure equity fund investor who invested three years back would still be reeling under a 17 per cent loss, as on February 25, 2003. In comparison to this, hybrid fund investors have lost 11 per cent of their wealth invested three years ago. While hybrid funds deliver lower returns than equity funds in bullish markets, they do a better job of protecting investors’ money during a bear phase. ,gambling legal

However, not all hybrid funds are alike. While equity-oriented hybrid funds give more weightage to stocks, debt-oriented balanced funds are tilted more towards fixed income instruments. Debt hybrid fund category largely comprises funds with diverse product positioning such as children-oriented funds, asset allocation plans and pension funds. ,pak vs sa

best online poker rooms,A combination of equity and debt in the ratio of 60:40 would normally be called a balanced fund. So, why not do it yourself? The biggest hurdle here is that booking profits in any of these components would subject the portfolio to capital gains tax and this would severely reduce returns, especially over the short run. Portfolio re-alignment would also be extremely difficult. As mutual funds are pass-through instruments and not subject to tax, balanced funds can do the same job in a more tax-friendly manner. Also, the fund manager is there to take the call on re-allocating between equity and debt.

live soccer tv,From a strong equity bias to a debt-tilt in 2001 and a U-turn in 2002 towards equities, hybrid funds have come a long way. To a large extent, in order to remain tax-efficient, this category has held over 50 per cent in stocks. This way, balanced funds were able to escape the 22 per cent dividend distribution tax applicable to funds with less than 50 per cent allocation to equities. The bull run that started in late 1998 benefited the early members-Alliance ’95, Magnum Balanced and Tata Balanced Fund. With a bluechip portfolio of technology, fast-moving consumer goods and pharma stocks, these funds delivered over 100 per cent returns. The new balanced funds from Birla Sun Life, Prudential ICICI and Kotak launched in mid-1999 started off with aggressive positions in technology stocks.

ipl 2021 date list,In 2001, hybrid funds capitalised on the opportunity thrown up by bullish bond markets. The average equity exposure was reduced from 60 per cent in 2000 to 54 per cent in 2001, and the average debt allocation moved up from 28 per cent to 35 per cent.

Circa 2002, hybrid funds took a U-turn and moved from bonds to stocks. Though interest rates continued to move downwards, stock markets had a smooth ride too. Average exposure in gilts was reduced from 17 per cent to 12 per cent, and the average equity allocation went up to 62 per cent. Most balanced funds wrapped up the year on a positive note. ,forecast dividend payments

ipl cricket betting rate,Now, how to pick a balanced fund? It is evident that balanced funds have a lot to offer to investors. The presence of both debt and equity in the portfolio warrants examination of the performance in both asset classes. Ergo, before you go shopping for a hybrid fund make sure that certain things are in place. 1) The fund sticks to its stated equity-debt allocation. At the same time, it should exhibit flexibility in rotating between the two asset classes depending on the market. 2) The fund’s equity investment philosophy gels with your risk-taking aility. It may be taking exposure in aggressive sectors or it could be conservative.

3) Look at the fund’s bond management philosophy. It may be taking aggressive calls on interest rate movements. But if this combines with aggressive equity management, the overall risk associated with the fund will be higher. ,football today match result

Balanced funds can thus serve as an entry vehicle for investors who wish to take a middle path. ,cash register games

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