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Five Best Performing Equity Savings Hybrid Funds to Invest in

Highlights

  • Equity savings hybrid funds have largely underperformed, barring a few
  • So which are those top performers? Read this post to know the same

Equity Savings hybrid funds are a type of hybrid funds that invest in a combination of equity, arbitrage and debt. As per SEBI regulations, they have to invest a minimum of 65% in equities and a minimum of 10% in debt. The allocation to arbitrage is included in the 65% minimum allocation to equity. These funds are suitable for investors with a conservative to moderate risk profile and who are looking for an allocation in equity as well. Arbitrage funds are classified as equity funds for taxation but work like debt funds in terms of returns. The cushion of buying arbitrage in equity savings hybrid funds enables the fund manager to increase allocation to arbitrage when equity markets are not looking promising. Technically, the fund manager can rebalance the portfolio with maximum (65%) allocation to arbitrage, thereby protecting the downside. Thus, these funds offer flexibility to fund managers and protect returns. One should not expect very high returns from these funds, they are more for protecting the downside.

Top Mutual Funds to Invest in Now

Best Performing Equity Savings Hybrid Funds

Axis Equity Saver Fund

This fund is offered by Axis Mutual Fund, which is a subsidiary of Axis Bank. These are the key points to know about these funds:

  • This fund was launched on 14th August 2015 and is rated four stars by Value Research.
  • The fund has an AUM of INR 679 crores.
  • It is benchmarked against the Nifty equity savings fund.
  • The portfolio comprises 45 stocks and 32 bonds with 35% in AAA-rated bonds.
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ICICI Prudential Equity Savings Fund

This fund is offered by ICICI Prudential Mutual Fund. These are the key points to know about these funds:

  • This fund was launched on 5th Dec 2014 and is rated four stars by Value Research.
  • The fund has an AUM of INR 1,157 crores.
  • It is benchmarked against the Nifty equity savings fund.
  • The portfolio comprises 60 stocks and 12 bonds with 30% in AAA-rated bonds.

Kotak Equity Savings Fund

This fund is offered by Kotak Mutual Fund, which is a subsidiary of Kotak Mahindra Bank. These are the key points to know about these funds:

  • This fund was launched on 13th October 2014 and is rated four stars by Value Research.
  • The fund has an AUM of INR 1,409 crores.
  • It is benchmarked against the Nifty 50 & Nifty 50 Arbitrage
  • The portfolio comprises 49 stocks and 24 bonds with 40% in AAA-rated bonds.

HDFC Equity Savings Fund

This fund is offered by HDFC Mutual Fund. These are the key points to know about these funds:

  • This fund was launched on 17th Dec 2004 and is rated three stars by Value Research.
  • The fund has an AUM of 3,182 crores.
  • It is benchmarked against the Nifty 50 arbitrage, Nifty 50 and Crisil Short Term Bond Index.
  • The portfolio comprises 85 stocks and 14 bonds with 40% in AAA-rated bonds.

SBI Equity Savings Fund

This fund is offered by SBI Mutual Fund, which is the largest mutual fund in the country. These are the key points to know about these funds:

  • This fund was launched on 27th May 2015 and is rated three stars by Value Research.
  • The fund has an AUM of INR 1,324 crores.
  • It is benchmarked against the Nifty equity savings index.
  • The portfolio comprises 62 stocks and 21 bonds with 30% in AAA-rated bonds.
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Should You Invest in Equity Savings Hybrid Funds?

The returns from these funds have been disappointing in different time frames. The average returns in this category have been -2.27% and 2.10% in the last year and three years, respectively. The performance has picked up in the last 3 months with 7.17% returns, however, these funds remain relative underperformers to other types of hybrid funds. Therefore, we recommend avoiding this category. If you have a conservative risk profile, it is better to stick to pure debt funds.

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