Best Mirae Asset Hybrid Mutual Funds

A diversified manager of assets, Mirae Asset Global Investments, is an asset management arm of Mirae Asset Financial Group. As of December 31, 2020, this AMC has 15 offices on a global scale and an AUM of 554 billion US dollars. 

This AMC currently offers more than 30 mutual fund schemes distributed over equity, debt and hybrid fund categories. This includes the best Mirae Asset hybrid mutual funds.

Hybrid mutual funds are a particular category of mutual funds, which makes investments in multiple classes of assets. Though these asset classes most often include a combination of debt and equity assets, they can also sometimes include Gold and the real estate sector.

These top Mirae Asset hybrid mutual funds make investments in equity and debt instruments for diversification and avoiding concentration risk. An appropriate combination of these two instruments provides high returns than a standard debt mutual fund while also lowering risks associated with an equity mutual fund.

The selection of a hybrid mutual fund depends on the investment objective and risk preferences of an investor.  A fund manager would allocate an investor’s money in debt and equity categories depending on a fund’s investment objective in different proportions. Considering market movements, a fund manager might even sell or buy securities to take advantage of the movements.

The debt component in the best Mirae Asset hybrid mutual funds in 2022 offers protection against tremendous market fluctuations. At the same time, the equity part provides a potential for earning high returns.

The present mutual fund scheme offerings of this AMC include approximately 3 hybrid mutual funds.

While knowing these facts about the best Mirae Asset hybrid mutual funds is important, one must also be aware of the taxability involved in these options.

Taxability

The equity and debt components of hybrid mutual funds are taxed separately. This implies that a debt component faces taxation just like a debt fund, while similarly, an equity component is taxed like an equity fund.

Long-term Capital Gains Tax: The rate applicable on the long-term capital gains for an equity-oriented hybrid mutual fund is 10%. On the other hand, the LTCG arising from a debt-oriented hybrid mutual fund held for more than 3 years is applicable for taxation at a 20% rate with indexation. 

Short-term Capital Gains Tax: The short-term capital gains on an equity-oriented hybrid mutual fund, which is held for less than a year, is taxed at a 15% rate. If debt-oriented hybrid funds are held for less than 3 years, the STCG is added to the income tax and charged according to the appropriate tax slab. 

TDS: Capital gains arising out of these funds are not applicable for TDS. But, dividends exceeding Rs.5000 attract 10% TDS. 

Factors to Consider Before Investing

Besides knowing the taxability involved in the best Mirae Asset hybrid mutual funds, an investor must also consider some more parameters:

Return: Hybrid mutual funds do not commit guaranteed returns. The NAV or Net Asset Value of these funds is affected by the performance of underlying securities. Therefore, it might fluctuate because of the movement in the market. Furthermore, dividends might not be declared by these funds during market downturns.

Risk factor: The investments made by investors in a hybrid mutual fund are not devoid of risk. The risk factor in these funds mainly arises from the equity component. Having mentioned this, the risk factor involved may be lower than that involved in pure equity funds. Still, an investor must be cautious and exercise portfolio rebalancing on a regular basis. The proportion of equity in a portfolio determines the risk involved. The greater the equity component, the higher is the risk involved. The risk of an equity portion is defined by the equity market segment where a fund invests. Along with this, the strategy used would also come into consideration. 

Past performance of the fund: Though past performance of a particular fund is not indicative of probable future returns, it can provide valuable insights into market conditions. A fund’s past performance enables investors to understand the bullish and bearish trends in market conditions over time.

Expense ratio: The fee that mutual fund houses and fund managers charge from an investor to manage their money is the expense ratio. An investor may want to ensure that the best Mirae Asset hybrid fund they are investing in bears a low expense ratio, implying higher take-home returns.

Experience of the fund manager: A fund manager’s expertise comes into account for determining the prospects of profitability for an investor. Therefore, this forms the basis for a majority of the investors to put significant emphasis on a fund manager who is judged based on various parameters. These include experience level, ability to identify scripts as compared to their peers, etc.

Investment horizon: A medium-term investment horizon of around 3 to 5 years might prove to be suitable for hybrid mutual funds. The prospects of high and stable returns improve with an increase in the length of this investment horizon.

Budding investors might find it daunting to choose a suitable fund out of the best Mirae Asset hybrid mutual funds. However, consulting this article as a guide and acquiring basic knowledge about hybrid mutual funds would ease the task.