Frequently asked questions
Why should you invest in Hybrid Fund?
Hybrid Funds create a diversified portfolio spread across different asset classes, wherein the proportion of asset classes depend upon the investment objective of the fund. Hybrid Funds equips the investors with the stability of debt, coupled with the potential of wealth creation through equity. The investors also get benefited by managing their asset allocation and balancing the risk profile with a single investment product.
Who should invest in Hybrid Funds?
Hybrid Funds balance the investment strategy between equity and debt. As such, the investors seeking a diversified investment portfolio with different asset classes may invest in hybrid funds. The investors also have the luxury to invest across different sub-categories of hybrid funds, best suiting their risk profile, investment horizon, and financial goals.
What are the different types of hybrid funds?
The different types of hybrid funds are:
Conservative Hybrid Funds
Balanced Hybrid Funds
Aggressive Hybrid Funds
Balanced Advantage Fund
Multi Asset Allocation Fund
Dynamic Asset Allocation or Balanced Advantage Fund
How are Hybrid Funds taxed?
Since the allocation of the portfolio between debt and equity may keep changing in a hybrid fund, the tax treatment of capital gains from such schemes may also differ accordingly. For taxation, mutual funds are classified into two categories – equity-oriented schemes and other schemes depending upon the percentage of the portfolio invested in listed equity shares of domestic companies.
In respect of dividend income received by the investors in the dividend option of the mutual fund, it is taxable at the regular tax rates as applicable to the investor. Further, the mutual funds are also required to deduct TDS @ 10% if an investor receives a dividend of more than Rs. 5,000 in a year from the mutual fund.
What is the return on Hybrid Funds?
The return on hybrid funds may depend upon the performance of the underlying portfolio. However, since such funds invest across equity and debt, such funds may be expected to be relatively less volatile than pure equity mutual fund schemes. However, the returns may also be relatively lower as against a diversified equity fund due to the same reason.
* Disclaimer - Past performance is not a guarantee of future returns and may or may not be sustained in the future.
The information set out above is included for general information purposes only and is not exhaustive and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, each investor is advised to consult his or her or their own tax consultant with respect to specific tax implications arising out of their participation in the Scheme. Income Tax benefits to the mutual fund & to the unit holder is in accordance with the prevailing tax laws/finance bill 2020. Any action taken by you on the basis of the information contained herein is not intended as on offer or solicitation for the purchase and sales of any schemes of UTI mutual Fund. Please read the full details provided in SID and SIA carefully before taking any decision.