Equity savings schemes: Low-risk hybrid fund that's consistent on net inflows
The total AAUM of equity savings schemes has surged by 71.67 per cent in a year, reaching Rs 43,696.02 crore.
Equity savings schemes from the hybrid mutual fund category are a lesser-known scheme but investors are getting attention as it is a low-risk alternative. In September, equity savings schemes witnessed a net inflow of Rs 2,269 crore, which is the record high of the calendar month. Net account additions, or folios, rose to 11,232, significantly higher than the six-month average of 6,300 in September.
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Overall Hybrid Funds category saw a net inflow of Rs 4,369.78 crore in which Conservative Hybrid Funds and Arbitrage Funds witnessed outflow and the rest of the scheme categories fetched inflows in December 2024.
Source: AMFI
Source: AMFI
Equity savings schemes provide lower-risk hybrid investment options while offering tax benefits compared to other mutual funds with similar risk profiles. These funds invest in a combination of arbitrage opportunities, pure equity investments, and debt instruments to achieve predictable returns with low volatility while being taxed as equity.
The portfolio maintains a net equity exposure of 30-40 per cent, despite having gross exposure over 65 per cent to qualify for equity taxation. This hybrid category gained appeal after Debt Fund taxation was revised in April 2023.
From the hybrid funds family, balanced advantage funds have similar underlying assets but differ in terms of risk exposure. In contrast, equity savings schemes consistently maintain lower net equity exposure due to their conservative approach. Over the past year, these schemes have provided an average return of 13.75 per cent, with a three-year annualised return nearing 12.75 per cent. Among the hybrid funds category, aggressive hybrid funds which invest in both equity (65 per cent - 80 per cent) & debt (20 per cent - 35 per cent) have consistently beaten the Nifty 50.
The total AAUM of equity savings schemes has surged by 71.67 per cent in a year, reaching Rs 43,696.02 crore.
Disclaimer: The article is for informational purposes only and not investment advice.