Conservative hybrid funds: What are these and why should you invest in them?

livemint.com:

risk appetite and investment horizon. This means those with a low-risk appetite should invest more in the debt schemes and less in the equity. On the contrary, those with a high-risk appetite should do the opposite i.e., a higher proportion in equity and lower in debt.

There are hybrid mutual funds that cater to investors across the spectrum of risk appetite. In other words, investors with moderate risk appetite can opt for balanced hybrid funds, whereas those with a low-risk appetite can opt for conservative hybrid funds. Let us now understand more on conservative hybrid mutual funds.

Conservative hybrid mutual funds refer to the schemes that invest anywhere between 10 to 25 percent in equity & equity related instruments, and 75 to 90 percent in debt instruments, as per the Sebi’s categorisation of mutual fund schemes. There are 20 schemes that fall in this category with net assets under management (AUM) of ₹25,401 crore, which is 13.8 percent higher than the corresponding figure one year ago, as the table below indicates. (Source: AMFI) Additionally, this category of mutual funds received an inflow to the tune of ₹130 crore in Sep this year, which is less than the half of the August figure that stands at ₹267 crore.

Some of the popular funds in this category include SBI Conservative Hybrid Fund, ICICI Prudential Regular Savings Fund and HDFC Hybrid Debt Fund, as the table below shows. (Source: AMFI) So, if you are planning to invest in conservative hybrid mutual funds, make sure these schemes align with your financial goals, investment horizon and risk appetite. 1.