Best Invesco Hybrid Mutual Funds

Catering to an individual’s investment needs, Invesco Mutual Fund is one of the top AMCs in India, serving clients across 120 countries. Since its establishment, the fund house has successfully managed assets worth Rs.36,791.04 crore as of the quarter-end of March 2021.  

The AMC offers more than 30 mutual fund schemes, including regular and direct plans. It serves investors by offering equity funds, fixed-income funds, fund of funds, exchange-traded funds, and the best Invesco hybrid mutual funds. 

Hybrid funds are for those investors looking for an instrument that generates moderate returns and pose lesser risks than equity funds. These funds invest in a blend of stocks and bonds. They comprise an equity and debt component that enables regular income generation with a scope of capital appreciation in the long term. 

Other than this, hybrid MFs features diversification due to investments in several assets or asset classes. This, in turn, leads to stable, risk-adjusted returns higher than pure debt mutual funds. Further, these funds come with lesser risk than equity funds due to a balanced portfolio. 

The best Invesco hybrid mutual fund works based on three philosophies. They are asset allocation, correlation, and diversification. The distribution of assets across multiple classes refers to allocation. Correlation is generally the co-movement of asset returns, whereas diversification is essentially the blend of more than one asset in a portfolio. 

In addition to this, one can invest in the best Invesco hybrid mutual funds in 2023 based on its types – multi-asset allocation, balanced, aggressive, balanced advantage, and conservative. However, the benefits of each type vary from others depending on investment objective and duration. 

Approximately 4 hybrid mutual fund schemes are there under Invesco’s portfolio. 

Factors to Consider Before Investing

Apart from their taxability, it is essential to remember certain factors before investing in the best Invesco hybrid mutual funds. 

Investment objective: Investors may want to set an investment purpose that syncs with their financial goals. Evaluating the objective before choosing the best Invesco hybrid mutual fund can make the shortlisting process more streamlined. 

Risk assessment: Hybrid mutual funds are associated with some amount of risk due to their equity component. One can reduce this risk by balancing the portfolio regularly. However, calculating the risk appetite before investing is desirable to stay on the safer side during market fluctuations.

Holding analysis: This is an assessment of an investor’s resources and where they are allocated. Analysing this aspect can benefit in the above two cases as well. By reviewing the underlying stocks and bonds, you can determine the risk and return potential of a scheme.

Fund performance: A fund’s past performance indicates its trends in a changing market over a prolonged period. Therefore, it may be prudent to study a hybrid mutual fund’s performance before investing in it. However, it is not an estimation of the returns it can generate currently.  

Expense ratio: Mutual funds charge a certain amount for administration, management, promotion, and distribution. As they deduct this amount from an investor’s annual return, it is vital to consider the expense ratio when comparing the best Invesco hybrid mutual funds.

Fund manager’s experience: A fund manager with expertise in mutual fund and market analysis can distribute investments to accrue higher returns or mitigate risk more efficiently, per the scheme’s objectives. Therefore, an experienced fund manager is desirable while opting for a hybrid mutual fund scheme. 

Exit load: Some mutual funds deduct a specific fee from an investor’s returns if they redeem units before the lock-in period. Therefore, investors should consider this factor prior to settling for a particular scheme. But, not all Invesco hybrid mutual funds will involve a fee of this sort. 

Returns: Hybrid mutual funds are vulnerable to market movements. Therefore, one can expect varying returns on investing in these funds. Depending on the type of scheme, they can outperform a specific benchmark or try to mimic its returns.

Therefore, it is evident that choosing the best Invesco hybrid mutual funds can be a daunting task. However, considering the aforementioned points and understanding the basics of mutual funds can be a good start for beginners as well as experienced personnel.

Taxability

Investors need to understand their taxability before choosing an appropriate scheme. For tax purposes, the top Invesco hybrid mutual funds can be broadly classified into debt and equity-oriented schemes. Funds with a 65% or higher allocation to equity and equity-related instruments are considered equity-oriented schemes and taxed accordingly. Conversely, debt-based funds invest predominantly in debt instruments and attract tax likewise. 

Long-term Capital Gains Tax: Investors will need to pay an LTCGT if they redeem units of an equity-based scheme after a year or more of investment. If their capital gain is above Rs.1 lakh, they will be taxed at the rate of 10% without indexation benefit. Any amount below Rs.1 lakh will be tax-exempted. Similarly, for gains on debt-oriented funds realised after 3 years, an individual is liable to pay an LTCGT of 20% with indexation benefit and 10% without it. 

Short-term Capital Gains Tax: Selling units of equity-based schemes before 1 year will incur an STCGT at the rate of 15% on the gains. Proceeds on debt-oriented funds sold before 36 months will be added to a person’s taxable income.

TDS: Dividends above Rs.5000 from hybrid funds will be liable for 10% TDS.