Are You 50+ and Retiring Soon? This Mutual Fund Category Could Be Ideal For You

A look at selected aggressive hybrid funds for 50+ investors

_Aggressive Hybrid Funds

New investors may confuse mutual funds as a single type of investment. But, given the wide variety of mutual funds available in the market, they cover almost all investment categories in the world. There are mutual fund schemes that are suitable for equity investors, debt and bond investors, precious metal investors, commodities investors, and so on. In other words, mutual funds can serve almost all our investment goals, be it children's education, short-term wealth building or retirement planning. 

Also Read: Don't miss out on these names - the new top performers in the Indian Mutual fund industry

Retirement Planning

How you invest for your retirement would depend on how old you are, amongst other things. Young investors tend to invest more aggressively. It suits the exuberance of youth, and their investments have a longer time to overcome market uncertainties. However, as you grow old, you must protect your accumulated corpus by managing the risk adequately. If you are 50+ and have a substantial investment in equity and other market-linked products, it is high time you protect your investment from negative market movements. Assuming you retire at 60, you have 5-10 more years of active investing. If your investment is exposed to a spell of market volatility, it will not have sufficient time to recover before you retire.

Also Read: Want to invest in the best large and mid-cap funds? Here’s how pros do it.

Tailormade Mutual Funds

As someone looking to reshuffle a portion of equity investments into safer funds, you might be tempted to take the safer route of debt mutual funds. However, with still a few years to go till your retirement, here are a few aggressive hybrid funds where you can park a portion of your pure-equity investments.

  • Canara Robeco Equity Hybrid Fund (CREHF) - Presently, CREHF has nearly 72% of its assets in equity, with HDFC Bank, ICICI Bank, Infosys, Reliance Industries, Axis Bank and SBI being the major allocations. Over 12% of its fund is invested in government-backed debt instruments, and nearly 7% in other low-risk investments. It has a fund size of over Rs 8,200 crores and has an expense ratio of 0.66%. It is one of the least volatile schemes in its category.
     
  • DSP Equity and Bond Fund (DEBF) - DEBF has a fund size of Rs 7,189 crores and its expense ratio is 0.79%. Its 74% equity investment has HDFC Bank, Bajaj Finance, ICICI Bank, Axis Bank and Avenue Supermarts as the major stocks. A quarter of its assets are in debt instruments, divided evenly between government-backed instruments and other low-risk instruments. DEBF fund manager for equity investments, Atul Bhole follows growth investing with a focus on management competency and growth prospects.
     
  • HDFC Hybrid Equity Fund (HHEF) - More debt-heavy than CREHF and DEBF, HHEF has 46% investment in large-cap stocks out of a total of 66% equity investment. Nearly 19% of its assets lie in government securities, while 11% are in other low-risk securities. ICICI Bank, HDFC Bank, HDFC, Reliance and ITC are its major stocks. It has a higher standard deviation and beta, but better risk-adjusted returns, compared to the category average.
     
  • Edelweiss Aggressive Hybrid Fund (EAHF) - EAHF has 71.5% investment in equities, 16.7% in debt instruments and nearly 10% in TREPS. It has a beta of 1.11, which is higher than the category average of 0.94. At 0.36%, it has one of the lowest expense ratios in the category. It has garnered a 13.75% return in 10 years and boasts of a five-star CRISIL rating.

Also Read: Mutual fund investors beware. Your savings may be at risk. Here’s what you need to know:

It can be observed in these schemes that aggressive hybrid funds have lower exposure to equities than pure equity funds. The debt allotment ensures stability to the funds and keeps the regular income flow open. For a soon-to-be-retiring investor, this category offers the option of playing it safe with age, while not missing out on equity growth altogether.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

Source:

https://www.moneycontrol.com

New investors may confuse mutual funds as a single type of investment. But, given the wide variety of mutual funds available in the market, they cover almost all investment categories in the world. There are mutual fund schemes that are suitable for equity investors, debt and bond investors, precious metal investors, commodities investors, and so on. In other words, mutual funds can serve almost all our investment goals, be it children's education, short-term wealth building or retirement planning. 

Also Read: Don't miss out on these names - the new top performers in the Indian Mutual fund industry

Retirement Planning

How you invest for your retirement would depend on how old you are, amongst other things. Young investors tend to invest more aggressively. It suits the exuberance of youth, and their investments have a longer time to overcome market uncertainties. However, as you grow old, you must protect your accumulated corpus by managing the risk adequately. If you are 50+ and have a substantial investment in equity and other market-linked products, it is high time you protect your investment from negative market movements. Assuming you retire at 60, you have 5-10 more years of active investing. If your investment is exposed to a spell of market volatility, it will not have sufficient time to recover before you retire.

Also Read: Want to invest in the best large and mid-cap funds? Here’s how pros do it.

Tailormade Mutual Funds

As someone looking to reshuffle a portion of equity investments into safer funds, you might be tempted to take the safer route of debt mutual funds. However, with still a few years to go till your retirement, here are a few aggressive hybrid funds where you can park a portion of your pure-equity investments.

  • Canara Robeco Equity Hybrid Fund (CREHF) - Presently, CREHF has nearly 72% of its assets in equity, with HDFC Bank, ICICI Bank, Infosys, Reliance Industries, Axis Bank and SBI being the major allocations. Over 12% of its fund is invested in government-backed debt instruments, and nearly 7% in other low-risk investments. It has a fund size of over Rs 8,200 crores and has an expense ratio of 0.66%. It is one of the least volatile schemes in its category.
     
  • DSP Equity and Bond Fund (DEBF) - DEBF has a fund size of Rs 7,189 crores and its expense ratio is 0.79%. Its 74% equity investment has HDFC Bank, Bajaj Finance, ICICI Bank, Axis Bank and Avenue Supermarts as the major stocks. A quarter of its assets are in debt instruments, divided evenly between government-backed instruments and other low-risk instruments. DEBF fund manager for equity investments, Atul Bhole follows growth investing with a focus on management competency and growth prospects.
     
  • HDFC Hybrid Equity Fund (HHEF) - More debt-heavy than CREHF and DEBF, HHEF has 46% investment in large-cap stocks out of a total of 66% equity investment. Nearly 19% of its assets lie in government securities, while 11% are in other low-risk securities. ICICI Bank, HDFC Bank, HDFC, Reliance and ITC are its major stocks. It has a higher standard deviation and beta, but better risk-adjusted returns, compared to the category average.
     
  • Edelweiss Aggressive Hybrid Fund (EAHF) - EAHF has 71.5% investment in equities, 16.7% in debt instruments and nearly 10% in TREPS. It has a beta of 1.11, which is higher than the category average of 0.94. At 0.36%, it has one of the lowest expense ratios in the category. It has garnered a 13.75% return in 10 years and boasts of a five-star CRISIL rating.

Also Read: Mutual fund investors beware. Your savings may be at risk. Here’s what you need to know:

It can be observed in these schemes that aggressive hybrid funds have lower exposure to equities than pure equity funds. The debt allotment ensures stability to the funds and keeps the regular income flow open. For a soon-to-be-retiring investor, this category offers the option of playing it safe with age, while not missing out on equity growth altogether.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

Source:

https://www.moneycontrol.com

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