Top Aggressive Hybrid Mutual Funds to Invest in September 2024
As the financial markets are expected to remain cautious in the upcoming year, hybrid mutual funds are likely to perform well in such uncertain times. These funds, which invest in a mix of equity (stocks) and debt, offer better stability during market volatility. Among them, aggressive hybrid mutual funds are a popular choice for conservative equity investors who are looking to grow wealth without taking on too much risk.
According to SEBI, aggressive hybrid funds are required to invest 65-80% of their assets in equity and 20-35% in debt. A portfolio balanced in this manner would reduce market fluctuations because, during times when the equity markets may tend to get volatile, the debt portion of the portfolio could provide stability for the funds. This fund would thus be a good option for new investors who do not like extreme fluctuation in their investments but still want to stay invested in the markets.
Aggressive hybrid mutual funds are those best suited for the ‘conservative equity investors’, that is, the ones who can afford to take some amount of risk for long-term wealth creation with limited volatility. The investors are very open towards the possibility of higher return from equities and, at the same time, are looking for the safety offered by the debt investments.
This is in contrast to conservative investors who would never take a risk and, instead, would invest in safe investments like fixed deposits or bonds with assured returns. On the other hand, a conservative equity investor does intend to grow his or her wealth but with a balance in regard to risk management.
Benefits of Aggressive Hybrid Funds
1. Mixed Portfolio: An important feature and advantage of aggressive hybrid funds is their assorted portfolio comprising equity and debt. A mixed allotment negates the impact of a stock market crash. In case the equity component grows substantially in a bull run, fund managers will rebalance this by selling the equity to hoard better gains in the long term.
2. Tax Efficiency: Unlike individual investors who have to pay taxes on gains over Rs 1 lakh in a financial year, mutual funds enjoy better taxation advantages. This might perhaps result in higher returns for the investor in the long run.
3. Profit Booking: The regular profit booking by the fund manager maintains the asset allocation of the portfolio. Over a period of time, this may lead to better returns since the profits are booked at the best of times as per the market conditions.
4. Volatility Management: These funds provide some sort of cushion in times of turbulence in the market that ultimately lets investors stay committed to their long-term financial goals without being worried by possible short-term volatility.
While aggressive hybrid funds have many advantages, the fact remains that they are not entirely risk-free. Any investment which has at least 65% allocation in stocks is bound to have some risks, and volatility might be witnessed in the short run. So, investors will have to expect some volatility in the markets in the immediate future.
Best Aggressive Hybrid Funds to Invest in September 2024
Following is the list of some of the best performing aggressive hybrid mutual funds for September 2024:
- SBI Equity Hybrid Fund
- Canara Robeco Equity Hybrid Fund
- Mirae Asset Hybrid Equity Fund
- ICICI Prudential Equity and Debt Fund
- Quant Absolute Fund
How We Chose These Funds?
Our methodology of selecting these funds is based on several key parameters:
1. Mean Rolling Returns: We have considered the daily rolling returns of the last three years to gauge which funds had been the most consistent performers.
2. Consistency: The Consistency in a fund’s NAV series was measured by the Hurst Exponent (H). A higher value of H for a fund implies that there is lesser volatility in that particular fund.
3. Downside Risk: We calculated the downside risk for each fund by essentially looking at the negative returns generated by each fund, and basically, the funds that protected the losses better were ranked higher.
4. Outperformance: For the equity portion, we have considered the three-year risk-adjusted return through Jensen’s Alpha. For the debt portion, we have compared the fund’s return to its benchmark.
5. Asset Size: We have selected funds with an asset size of more than Rs 50 crore for this article.
Aggressive hybrid funds offer balanced investment exposure to the conservative equity investor for wealth creation in the long run. Still, it is good to know your appetite for any other investment class and align investments to your goals.
