Selecting ‘true’ hybrid funds involves balancing debt and equity exposure for a robust portfolio. These funds combine both asset classes, with categories like Aggressive Hybrid, Conservative Hybrid, Balanced Advantage, Multi-Asset, and Equity Savings Funds, each adhering to SEBI mandates.

Hybrid funds are beneficial if you’re not actively managing asset allocation. Recent interest has been driven by tax advantages, but historical inflows can be attributed to market conditions and new fund launches.

Not all hybrid funds offer the desired balance. Categories like Balanced Advantage and Multi-Asset Funds provide flexibility, but many don’t utilize it effectively. Investors should assess historical asset allocation and effectiveness.

In today’s market, elevated valuations make hybrid funds valuable for risk-adjusted returns. Analysing factors, past performance, and portfolio holdings is crucial when evaluating mutual fund investments.

In the September edition of “The Scanner,” Amogh Korde, Project Lead – Behavioural and Fund Analytics at Multi-Act, discusses the appeal of Balanced Hybrid Funds and how to select the right investments for your mutual fund portfolio.