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Are Equity Funds Only for Aggressive Investors?

Highlights

  • Can you invest in equity despite not being in the aggressive class of investors?
  • You can but through hybrid funds that invest in both equity and debt instruments

The mutual fund market is flush with different types of investors with different investment goals, risk-appetite and time horizon. Those wanting to make huge surplus out of their investments are widely advised to opt for equity mutual funds, which invest predominantly in the high-return proposition of stocks. However, you must have a high risk-appetite to be enjoying a run in equity funds. So, you need to be an aggressive investor who does not bother about the short and mid-term fluctuations that can very well be the case with these funds. Your goal is predominantly to compound your invested capital over time. But does that mean equity funds are only for aggressive investors? Well, for that, we need to dig deeper by focusing on several aspects concerning a mutual fund investment.

Should Investors Other Than Aggressive Ones Go for Equity Funds?

There’s no doubt that equity funds serve the purpose of aggressive investors the best way. However, when it comes to investors who are not willing to take big risks, debt funds are the ones they should go with. These funds invest mainly in fixed income instruments to generate a regular flow of income. The returns may not be that high as can be the case with equity funds.

Amidst all, there could be investors somewhere between aggressive and conservative investment behaviour. These investors would like to taste the slice of both equity and debt instruments. For them, hybrid funds that invest in both equity and debt instruments would be the way to go. Now, these funds can be either equity or debt-oriented. The equity-oriented funds invest the money more in equity than debt instruments. On the other hand, the debt-oriented funds would keep a major chunk in debt and exposure a minor portion in equities.

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Now, it’s up to choose from equity or debt-oriented hybrid fund. We are sharing with you the returns from both equity and debt-oriented funds generated over the years. It will help you choose the fund that you think is the best to serve your purpose.

Top Equity-oriented Hybrid Funds to Look for

Here’s a list of top-performing hybrid funds (equity-oriented) that you can look to invest in.

Hybrid Funds (Equity-oriented)Rating1-year Return3-year Return5-year Return10-year Return
SBI Equity Hybrid Fund4 Star3.30%8.77%11.39%12.05%
ICICI Prudential Equity & Debt Fund4 Star1.13%8.63%10.63%13.78%
Franklin India Equity Hybrid Fund3 Star-1.18%5.17%9.89%11.04%
DSP Equity & Bond Fund4 Star-0.86%6.99%11.09%11.30%
Principal Hybrid Equity Fund5 Star-5.34%9.55%10.13%10.72%

Note – The data is sourced from Value Research as on August 2, 2019. In addition, the data pertains to the regular plan of the schemes shown above.

Top-debt Oriented Hybrid Funds to Invest in

The exclusive list of debt-oriented hybrid funds is shown in the table below.

Hybrid Funds (Debt-oriented)Rating1-year Return3-year Return5-year Return10-year Return
ICICI Prudential Regular Savings Fund5 Star6.70%8.08%9.91%9.54%
HDFC Hybrid Debt Fund3 Star5.88%5.94%7.88%8.99%
Reliance Hybrid Bond Fund3 Star3.04%5.54%7.82%8.80%
Franklin India Life Stage Fund of Funds 50s Plus - Floating Rate4 Star4.75%6.62%7.78%8.21%
SBI Debt Hybrid Fund3 Star3.61%4.96%8.20%8.05%

Note – The data is sourced from Value Research as on August 2, 2019. In addition, the data pertains to the regular plan of the schemes shown above.

Conclusion

From the information above, it can be safely said that equity funds are a den for aggressive investors willing to take high risks for high returns over time. But given the inflationary scenario around, it won’t be bad for those between conservative and aggressive investors to expose a portion of their investments into the potentially high-return engine of equities through a hybrid mutual fund.

Disclaimer – “Mutual fund investments are subject to market risks. Please read the scheme document carefully before investing”.