Debt-oriented Hybrid funds invest primarily in debt with a small allocation to equity. The equity allocation can range from 5% to 30%and is stated in the offer document.
The equity component works to boost to the returns, and the debt component works to protect the downside.
Monthly Income Plan : Is a type of debt oriented hybrid fund. It seeks to declare a dividend every month. However, an MIP does not guarantee a monthly income.
Multiple Yield Funds : generate returns over the medium term with exposure to multiple asset classes, such as equity and debt.
Equity-oriented Hybrid funds: invest primarily in equity, with a portion of the portfolio invested in debt to bring stability to the returns.
Balanced Fund : A popular category of Equity Oriented Fund is a Balanced Fund.
It is a combination of equity and debt. The objective of these schemes is to provide growth and stability.
The balanced funds can have fixed or flexible allocation between equity and debt.
Capital Protected Schemes are close-ended schemes, which are structured to ensure that investors get their principal back, irrespective of what happens to the market.
The amount is invested in Zero Coupon Government Securities, maturity of which is aligned with the maturity of these schemes, in such a way that at the maturity the investor will get at least the capital back. Rest of the money is invested to get higher returns.
If investment is done in corporate debt securities also, they will be called Capital Protection Oriented Schemes.
Some of these funds are also launched as Asset Allocation Funds. These schemes are not different from those under the Hybrid category.
SEBI CATEGORIZATION OF OPEN ENDED HYBRID SCHEMES
Conservative Hybrid Fund: Predominantly invests in debt securities. Investment in debt instruments shall be between 75% and 90% of total assets while investment in equity and equity instruments shall be between 10% and 25% of total assets.
Balanced Hybrid Fund*: The investment in equity and equity related instruments shall be between 40% and 60% of total assets while investment in debt shall be between 40% and 60%
Aggressive Hybrid Fund*: Predominantly invests in equity and equity related instruments. The investment in equity and equity related instruments shall be between 65% to 80% of total assets while investment in debt instruments shall be between 20% and 35%
Mutual funds in India are permitted to offer either Aggressive Hybrid Fund or Balanced Fund.
Dynamic Asset Allocation or Balanced Advantage: Investment in equity/debt that is managed dynamically
Multi Asset Allocation: investing in at least three asset classes with a minimum allocation of at least 10% each in all three asset classes. Foreign securities are not treated as a separate asset class in this kind of scheme.
Equity Savings Fund: Invests in a combination of equity, arbitrage and debt. The minimum investment in equity and equity related instruments shall be 65% (including arbitrage) and in debt 10% of total assets.
SSOOLLUUTTIIOONN OORRIIEENNTTEEDD SSCCHHEEMMEESS
Retirement Fund: A solution oriented scheme having a lock-in of 5 years or till retirement age of the investor, whichever earlier.
Children’s Fund: An open ended fund for investment for children having a lock-in for at least 5 years or till the child attains age of majority, whichever earlier.
Real Estate Funds take exposure to real estate. Such funds make it possible for small investors to take exposure to real estate as an asset class. Although permitted by law, real estate mutual funds are yet to hit the market in India.
Real estate funds are quite high in risk, relative to other scheme types. Yet, they are less risky than direct investment in real estate.
Fund of Funds: It is a mutual fund that invests in other mutual funds. It does not hold securities in its portfolio, but other funds that have been chosen to match its investment objective. Feeder Fund in International fund is an example of Fund of Funds.
Fund of Fund can be domestic and international also.
International Funds are funds that invest outside the country.
A mutual fund may offer a scheme to investors in India, with an investment objective to invest abroad.
Domestic AMC – Feeder Fund
Foreign AMC- Host Fund
Setting up own infrastructure to function in another country.
Asset Performance Risk