Hybrid Mutual Funds Attracting More and More Inflows After Changes In Tax Laws

OM Prakash
3 Min Read

Investment in hybrid mutual funds is gradually gaining momentum. Statistics show that during January, these funds received more than Rs 20 thousand crore from investors. This is an increase of 37 per cent compared to a month ago.

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This Much Inflow Happened In The Current Financial Year

According to a report by news agency PTI, the total investment in hybrid mutual funds in January stood at Rs 20,634 crore. In this way, the total investment of hybrid mutual funds increased to Rs 1.21 lakh crore during the current financial year. During the last financial year, outflows from hybrid funds were seen in the first 10 months.

What Is Hybrid Mutual Fund?

Hybrid funds are those mutual funds that invest in equity and debt simultaneously. Besides equity and debt, many hybrid funds also allocate funds to asset classes like gold. For this reason, investors benefit from better diversification in hybrid funds. Hybrid mutual funds have become a better option for investors who prefer to take less risk because, due to the diverse portfolio, the fluctuations in these funds are comparatively less.

Invest More In These 2 Hybrid Funds

The PTI report quoted the Association of Mutual Funds in India as saying hybrid funds had received an inflow of Rs 15,009 crore in December before the inflow of more than Rs 20 thousand crore in January.

Hybrid funds have been receiving continuous inflows for almost a year. Among them, two categories – Arbitrage Fund and Multi-Asset Allocation Fund are getting the maximum investment. Arbitrage funds alone received more than 50 per cent of the total investments in January. Their total inflow was Rs 10,608 crore. At the same time, the Multi Asset Allocation Fund had received an inflow of Rs 7,080 crore.

Responsible For Changes In Tax Rules

Tax benefits are the biggest reason for hybrid mutual funds’ increasing popularity and acceptance. The taxation rules regarding debt funds were changed in April last year. Since then, investment in hybrid mutual funds has increased and monthly inflows have been recorded. Before that, in March 2023, more than Rs 12 thousand crore were withdrawn from hybrid mutual funds.

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