SBI Equity Hybrid: A consistent performer
As India evolves as a digital-friendly nation with financial innovation, sustainable practices, and clean investing as a new philosophy, it welcomes innovative financial avenues to invest in for new-age investors like you. With the ever-increasing inflation rate, traditional investments like post office schemes, rates of interest offered on savings accounts, fixed deposits, and recurring deposits struggle to fetch an inflation-adjusted rate of return.
Investors like you are more open to taking calculated risks today than before, earning you a higher alpha or a higher return than a benchmark return. Several investors like you often wish to create a corpus of funds to fund your retirement expenses, accumulate wealth for you and fulfill your other financial goals. You may allocate a healthy portion of your savings into mutual funds instead of traditional investments.
Invest in Mutual Funds:
Many fund houses in India have marked their presence recently, but SBI Mutual Fund has been around for the past 30 years. It is one of the oldest and largest mutual fund houses in India in terms of its size. It not only won your confidence but has built its credibility over the years in managing and offering approximately 147 mutual schemes to investors like you.
As of March 2020, SBI Mutual Fund manages an AUM of Rs. 3.74 lakhs crores, and its fund size has increased by 5.92% since 2019. SBI Mutual Fund hosts and manages many active mutual funds depending upon your requirements. If you are looking for a passive income along with capital appreciation, SBI Equity Hybrid Fund can help you meet your financial goals.
Why SBI Equity Hybrid Fund?
The investment strategy of this fund is that, firstly, it provides you with long-term capital appreciation on the money you invested. Secondly, this fund assures you additional liquidity; being an open-ended fund, it invests in a healthy proportion between equities and debt securities. The fund manager maintains a diversified portfolio of high-growth stocks, and the remaining is invested in liquid fixed-income securities.
Fundamental research suggests that holding on to your investments for 5 years and above can beat inflation, earning a higher return than the market. However, as the equity market is prone to volatility and inherent market risk, you should not fear navigating through the highs and lows of the market.
SBI Equity Hybrid Fund aggressively invests nearly 65% to 80% in equity shares of growing companies and the remaining in bonds or fixed-income securities. The portfolio manager regularly conducts a portfolio rebalancing based on the market scenario. As it is a mutual fund, you rest assured that the volatility is comparatively lesser than that of pure equity investments.
What is in it for you in terms of Risk and Return?
SBI Equity Hybrid Fund poses a higher risk than other non-aggressive traditional mutual funds. The fund posted a 3-year CAGR of 10.81% versus a 5-year CAGR of 10.54%. However, the fund generated a return of 15.1% since its launch in 1995 versus 12.30% of its benchmark, S&P BSE Sensex TRI.
The fund held an AUM of Rs. 50291 crores as of 31st May 2022, and the fund manager categorically invests in financial services, automobiles, energy, healthcare, and communication sectors as its investment mandate.
How to invest in SBI Equity Hybrid Fund and what factors to consider?
Suppose SBI Equity Hybrid Fund matches your investment goals and objectives. In that case, you can start with a minimum investment of Rs. 1000 or a minimum SIP of Rs. 500. Subsequently, you should issue 12 cheques of equal amounts in the financial year to maintain your monthly SIP.
The fund house does not impose any lock-in period. However, SBI Equity Hybrid Fund imposes a tax rate of 15% on your returns, and a long-term capital gain tax of 10% is charged on returns above Rs. 1,00,000 in any financial year.
Based on the fund’s performance, you are eligible to earn a dividend, which is an additional income for you. If you receive a dividend income of more than Rs. 5000 in a particular FY, the asset management company levies a 10% TDS as a deduction before crediting the amount to you.
Conclusion
SBI Mutual Fund is known to construct some of the best mutual funds attracting investors like you to park their monies. Reading the terms and conditions and offer documents before investing is healthy. An avid investor like you should not succumb or not fall prey to lucrative investment returns and product offerings. Instead, the product offering must align with your investment goals and horizon.
