 "mutual funds, MFs")
Whiteoak Capital Mutual Fund on Thursday became the second fund to launch a scheme in the balanced hybrid category, which has a more rigid asset allocation structure compared to balanced advantage.
Balanced hybrid funds must maintain a minimum 40 per cent allocation in both equity and debt, whereas balanced advantage fund managers have the flexibility to maintain an asset mix in any proportion. However, most balanced funds maintain a minimum 65 per cent equity allocation due to tax considerations.
Balanced hybrid funds qualify for the erstwhile debt taxation, where the returns are taxed at 20 per cent with indexation benefits for a holding period of more than three years.
According to the fund house, the fund structure has been proven to deliver reasonable returns with lower intermittent volatility.
"Investors often make mistakes when they are exposed to extremes of market conditions or asset classes. They end up generating sub-optimal returns from investments due to significant intermittent volatility. One of the simple but effective strategies to adopt is the ‘balanced approach’ of having a growth asset (equity) and stability (debt) in the portfolio," said Prateek Pant, CBO, WhiteOak Capital AMC.
Last month, 360 ONE launched the first balanced hybrid fund.
The hybrid space has seen a surge in launches in recent months as fund houses anticipate greater traction for these products following the change in debt taxation.
