Best Mahindra Hybrid Mutual Funds

Incorporated under the Companies Act 1956, Mahindra Manulife Investment Management Private Limited is a collaboration between Mahindra & Mahindra Financial Services Limited and Manulife Investment Management Singapore Pte Ltd. As of March 2021, the average quarterly AUM of this organisation stood at Rs.5271.07 crore. 

The offerings of this Mahindra Manulife comprise more than 15 schemes distributed across debt, equity, and hybrid categories. This includes the best Mahindra Hybrid mutual funds.

Hybrid funds invest in a combination of asset classes to develop a diversified portfolio. A balanced MF’s portfolio can comprise debt, equity, gold, real estate, etc. Primarily based on debt and equity allocation, they can be classified as equity- or debt-based hybrid fund. There are various other classifications, like arbitrage, multi-asset allocation, dynamic, balanced, conservative, and aggressive funds.

Conservative funds invest predominantly in fixed-income securities and aggressive funds in stocks. Arbitrage funds benefit from arbitrage opportunities, whereas dynamic funds can invest the entire amount in stocks or debt securities premised on the market conditions. Balanced funds typically hold 40% bonds and 60% stocks or vice versa. 

Investors enjoy the opportunity to diversify their portfolio via a single investment vehicle through these funds. The best Mahindra hybrid mutual funds are considered suitable for stable returns, average capital appreciation, and low risk. 

The main target of an appropriately managed hybrid fund is to yield long-term capital appreciation and short-term income by distributing the investment corpus across various asset types in a well-planned manner. There are stated objectives associated with these funds, like moderate, aggressive, or conservative growth. This indicates the kind of growth and the risk level that the fund would most likely involve.

To produce capital appreciation in the long term, it invests in stocks. On the other hand, it makes investments in government bonds and other debt instruments to generate stable income in the short run. The equity component in these funds provides a potential for earning greater returns, while the debt component offers protection against market fluctuations. Thus, the best Mahindra hybrid mutual funds 2023 can also present a suitable standalone option. The current mutual fund scheme offerings of this AMC include approximately 3 hybrid funds.

Taxability

Short-term Capital Gains Tax: For equity-oriented hybrid funds held for less than 1 year, STCG is taxed at a 15% rate. On the other hand, for a debt-oriented hybrid MF held for less than 3 years, the STCG is added to a person’s taxable income and taxed accordingly. 

Long-term Capital Gains Tax: The LTCG from an equity-based hybrid fund attracts 10% tax if the amount crosses Rs.1 lakh. At the same time, gains on debt-based fund units held for more than 3 years are liable for 20% tax plus indexation benefits. 

TDS: It does not apply to capital gains. But, dividends of more than Rs.5000 in an FY will be liable for 10% TDS.

Factors to Consider Before Investing

Besides the factors described above, investors may also want to consider a few factors when shortlisting the top Mahindra hybrid mutual funds. 

Equity exposure: Investors must be aware of the equity exposure in the best Mahindra hybrid mutual fund. As discussed above, a scheme’s equity exposure determines its volatility and range of returns. Hence, individuals may want to assess their risk-bearing capacity to evaluate the level of risk they can digest. Note that funds with extensive investments in large-cap stocks are usually not as risky as those with small-cap or micro-cap stocks. 

Return: One must keep in mind that hybrid mutual funds do not commit guaranteed returns. The NAV of the best Mahindra hybrid mutual funds face an impact due to the performance of underlying securities. That is the reason why one might witness fluctuations due to market movements. Furthermore, these funds might not declare dividends during market downturns.

Investment horizon: With an increase in the length of the investment horizon, the prospects of high and stable returns get better. Usually, debt-based funds offer better opportunities in the short to mid-term horizon, whereas an equity-based scheme provides significant returns in the long run. Investors may want to consider the period they wish to remain invested in determining a suitable scheme. 

Fund performance: One can consider the previous performance when shortlisting viable Mahindra Manulife hybrid mutual funds. It doesn’t hint at future returns. However, this assessment can reveal a scheme’s fundamental strength in generating above-average returns under various market conditions. Thus, one can gather an idea about the best Mahindra hybrid mutual funds. 

Investment route: There are two ways to invest in a Mahindra hybrid mutual fund – lump-sum and SIP. The former requires a one-time investment, whereas the latter lets investors deposit a fixed amount periodically. In lump-sum, investors can buy units per a single day’s NAV. One can buy a varying number of units with a fixed sum according to changing NAVs in SIP. 

The aforesaid points and a basic understanding of MFs and market movements can help investors pick the best Mahindra hybrid mutual funds for them.