Best Nippon India Hybrid Mutual Funds

Nippon India Mutual Fund is one of the top AMCs of India, with a portfolio of Rs.99.82 lakh and an aggregated asset management valuation of about Rs.228586.38 crore till March 2021. Nippon started its journey in 1996 in collaboration with Reliance Mutual Funds. In 2019, Nippon bought the entire stake of this joint venture and renamed it the Nippon India Mutual Fund.

The company offers 65+ mutual funds schemes, including the best Nippon hybrid mutual funds.

Hybrid funds, or popularly known as balanced funds, invest in more than one category of funds. These MF schemes invest in two or more assets like equity and gold, equity and debt, or equity, debt, and gold. However, the most popular among them is equity and debt.

The best Nippon hybrid mutual funds aim to generate stable income quickly and significant wealth appreciation in the long run via a balanced portfolio. To that end, a fund manager allocates resources to debt and equity instruments based on the specified investment objective.

Hybrid MFs are classified depending on their asset allocation. Equity-oriented funds invest about 65% or more in stocks and the rest in fixed-income instruments. Contrarily, debt-based funds invest predominantly in fixed-income securities and the rest in stocks.

Besides this, monthly income plans primarily operate in the debt market, with a 15-20% investment in stocks as well. This ensures higher returns than pure debt MFs, and investors also receive regular income as dividends. Lastly, arbitrage funds are where a manager tries to maximise returns by purchasing stocks at lower prices in one market and selling them at higher prices in other markets. However, these funds or investment opportunities are not always available quickly.

The upside of a hybrid mutual fund is its balanced yet high return. Equity components offer higher returns, whereas the debt components provide a necessary cushion against market fluctuations.

A point to remember here is that the exact positives and negatives can vary as per the choice of the best Nippon hybrid mutual fund scheme.

Taxability

The best Nippon hybrid mutual funds 2023 include more than 5 schemes in its portfolio. Before investors select any specific scheme in this category, they must know the taxability involved with hybrid funds. 

Long-term Capital Gains Tax: Long-term capital gains above Rs.1 lakh attracts a 10% tax if it’s an equity-oriented scheme. On the other hand, LTCG earned by selling debt-based fund units is taxed at a flat 20% after indexation benefits and 10% without indexation benefits. Note that, for equity-based funds, LTCGT applies if units are sold after 1 year. This period is 3 years for debt-based funds. 

Short-term Capital Gains Tax: STCGT @ 15% applies if equity-based fund units are sold prior to 1 year of investment. You need to add the gains to your income and pay per the eligible income tax slab in the case of debt-oriented funds. For instance, if you belong to the 15% income tax slab, you are liable to pay 15% + 4% cess as STCGT.

Factors to Consider Before Investing

Understanding the taxability of hybrid mutual funds is vital to making the right call in terms of investments and liquidating them. Alongside, consider the following factors before investing to make better decisions.

Investment objective: You may want to identify an investment objective beforehand. It can help choose the best Nippon hybrid mutual funds to meet specific financial goals and within the desired timeframe.

Risk appetite: Mutual fund investments are risky, and it’s imperative to consider your risk-taking appetite before investing. Even though hybrid funds are more balanced, the equity portion is still subject to market volatility. At the same time, the debt portion of it is prone to inflation risks. Therefore, consider every possible aspect prior to finding a suitable scheme from the top Nippon hybrid mutual funds.

Experience of the fund manager: Whether you are investing with Nippon or any other AMC, it is imperative to check the expertise of a fund manager. It will let you gauge whether a manager is sufficiently qualified to navigate through different market conditions and if they can meet scheme objectives.

Holding analysis: It’s necessary to review the percentage of funds invested in equity and debt and any other asset class prior to investing in a hybrid scheme. Also, note the asset allocation across sectors and companies to gauge its profitability presently and in the long run. 

Past performance of the fund: Reviewing the past performance of a fund is vital before investing. Even though previous returns are not an indication of future performance, you can estimate the effects of different market trends by analysing them.

Expense ratio: Every fund scheme incurs management and operating expenses, represented in terms of expense ratio. Hence, checking this ratio in advance will let you understand the final return.

Exit load: Exit load is the amount charged by AMCs if you liquidate your investments before a particular period. However, the fee details vary from one scheme to another, and some may not require an exit load.

Investing in the best Nippon hybrid mutual funds can be difficult for investors just starting their journey. Nonetheless, having an elementary knowledge of mutual funds and keeping the aforementioned pointers in mind can help them find a suitable plan.