LIC Hybrid Mutual Fund

Investment Objective of LIC Hybrid Mutual Fund

Over the medium to long term, LIC Hybrid Mutual Fund schemes seek to provide investors with consistent capital appreciation and income. These funds, also known as balanced funds, invest in stocks and fixed-income securities to deliver growth while maintaining a relatively stable portfolio. The hybrid fund’s type would determine the asset allocation proportion.

An aggressive hybrid fund's equity allocation would be 65%-80%, whereas a conservative hybrid fund's equity allocation could be as low as 10%-25%. On the other hand, a multi-asset allocation fund may invest in multiple asset classes such as equity, debt, and gold. Considering your financial goals before investing in the best LIC hybrid mutual fund is best.

Risks Involved in LIC Hybrid Mutual Fund

LIC hybrid mutual fund risk ranges from moderately low to moderately high compared to equity and debt funds. The fund's value may fluctuate as the price of the underlying stocks and debt securities fluctuate. The level of risk is determined by exposure to equity as an asset class and portfolio diversification.

A LIC hybrid mutual fund heavily invested in equities and long-term bonds is significantly riskier than a fund more focused on debt as an asset class. Before investing in a scheme, investors should consider their own risk tolerance.

Return Potential of LIC Hybrid Mutual Fund

LIC hybrid mutual fund returns are incidental to the risk that an investor takes. Balanced funds fall between equity and debt funds on the risk-return spectrum. The combination of stocks and bonds gives an edge to the LIC hybrid mutual fund performance, allowing them to deliver higher risk-adjusted returns with lower volatility. Historically, these funds have delivered average returns of 10%-12% over a 5-year or longer period. Recently, the returns from some equity-oriented balanced funds have been comparable to those from large-cap equity funds. This was due to greater exposure to mid-cap stocks. However, LIC hybrid mutual fund returns are not guaranteed, and fund performance may vary over time.

Who Should Invest in LIC Hybrid Mutual Fund?

LIC hybrid mutual fund schemes are appropriate for investors with a low tolerance for volatility. This may assist them in keeping track of the losses caused by dynamic asset allocation. However, if you are a more aggressive investor, you must invest in equity hybrid funds. You will be able to realise the full potential of equity in this manner. Furthermore, an investor with a moderate risk tolerance and long-term goals such as child education or retirement planning will find LIC hybrid mutual fund to be the best. The fund manager rebalances the LIC hybrid mutual funds portfolio to exploit market movements. Investors who want to avoid the stress of portfolio management may consider investing in these funds.

Things To Consider Before Investing in LIC Hybrid Mutual Fund

You must consider the following before investing in LIC hybrid mutual fund schemes.

• Returns
• Risk
• Time Horizon
• Cost
• Investment Strategy

Tax on LIC Hybrid Mutual Fund

If investors redeem equity-based scheme units after a year or more of investment, they must pay Long-Term Capital Gain Taxes (LTCGT). They will be taxed at 10% on capital gains exceeding INR 1 lakh without the benefit of indexation. Taxes are not levied on amounts less than INR 1 lakh. For debt-oriented fund gains realised after three years, an individual must pay LTCGT of 20% with indexation benefit.