Sundaram Hybrid Mutual Funds

Investment Objective

Sundaram Hybrid Mutual Funds are mutual funds that invest in a mix of equity and debt instruments. They aim to provide a balance of growth and income to investors with moderate risk appetite. The investment objective of Sundaram Hybrid Mutual Funds varies depending on the scheme’s asset allocation and investment strategy. 

The investment objective of Sundaram Hybrid Fund is to generate capital appreciation and current income from a balanced portfolio of equities and fixed-income securities, debt and money market instruments, and a dynamic mix of equity, debt, and arbitrage opportunities.

Risks Involved in Sundaram Hybrid Mutual Funds

Like any other investment, Sundaram Hybrid Mutual Funds also involve some risks, such as:

• Market risk: This is the risk of losing money due to fluctuations in the prices of the securities held by the fund.
• Credit risk: This is the risk of default or delays in payment by the issuers of the debt instruments held by the fund.
• Interest rate risk: This is the risk of losing money due to changes in the interest rates in the economy.
• Liquidity risk: This is the risk of not being able to sell or buy the securities held by the fund at a fair price and in a timely manner.
• Concentration risk: This is the risk of losing money due to overexposure to a particular sector, security, or market.

Return Potential of Sundaram Hybrid Mutual Funds

The return potential of Sundaram Hybrid Mutual Funds depends on the performance of the equity and debt markets, the asset allocation and investment strategy of the scheme, and the fund manager’s skill and experience. Based on the past returns of some of the Sundaram Hybrid Mutual Funds, here are some observations:

• Sundaram Aggressive Hybrid Fund: As of May 2, 2023, this fund has given an annualised return of 18.11% in the last 3 years, 14.75% in the last 5 years, and 11.97% since its inception in July 2000.
• Sundaram Debt-Oriented Hybrid Fund: As of May 4, 2023, this fund has given an annualised return of 7.32% in the last 1 year, 8.86% in the last 3 years, and 7.19% since its inception in February 2008.
• Sundaram Balanced Advantage Fund: As of May 2, 2023, this fund has given an annualised return of 16.02% in the last 3 years, 13.01% in the last 5 years, and 10.23% since its inception in February 2010.

Therefore, Sundaram Hybrid Mutual Funds have the potential to offer decent returns over a medium to long-term period, depending on the scheme’s risk-return profile and market conditions.

Who Should Invest in Sundaram Hybrid Mutual Funds?

Sundaram Hybrid Mutual Funds are suitable for investors who:

• Have moderate risk appetite: Sundaram Hybrid Mutual Funds invest in a mix of equity and debt instruments, exposing them to market and credit risks. However, they also provide a balance of growth and income, which reduces the volatility of returns. Therefore, they are ideal for investors who can tolerate moderate risk and seek moderate returns.
• Have medium to long-term investment horizon: Sundaram Hybrid Mutual Funds are not meant for short-term trading or speculation.
• Have financial goals: Sundaram Hybrid Mutual Funds can help investors achieve their long-term financial goals, such as retirement planning, children’s education planning, wealth creation, etc. 

Things To Consider Before Investing in Sundaram Hybrid Mutual Funds

Before investing in Sundaram Hybrid Mutual Funds, you should consider the following things:

• Your financial goals and risk tolerance: You should invest in Sundaram Hybrid Mutual Funds only if they match your financial goals and risk tolerance.
• The asset allocation and investment strategy of the scheme: You should understand the asset allocation and investment strategy of the scheme before investing in it. You should check the proportion of equity and debt components, the sectors and securities that the scheme invests in, the fund manager’s track record and style, the performance of the scheme compared to its benchmark and peers, etc.
• The taxation of the scheme: You should know the taxation of the scheme before investing in it. 
• The diversification of your portfolio: You should invest in Sundaram Hybrid Mutual Funds as part of your overall portfolio diversification. 

Tax on Sundaram Hybrid Mutual Funds

The tax on Sundaram Hybrid Mutual Funds depends on the proportion of equity and debt components in the scheme. According to the Income Tax Act of 1961, hybrid funds are classified into two categories for taxation purposes:

• Equity-oriented hybrid funds: Long-term capital gains (LTCG) of more than Rs. 1 lakh are taxed at 10% without indexation. Short-term capital gains (STCG) are taxed at 15%. Dividends are added to the taxable income of the investors and taxed at their respective income tax slab rates.

Debt-oriented hybrid funds: These are hybrid funds that invest less than 65% of their assets in equity and equity-related instruments. They are taxed like debt funds. LTCG is taxed at 20% with indexation. STCG is added to the taxable income of the investors and taxed at their respective income tax slab rates. Dividends are also added to the taxable income of the investors and taxed at their respective income tax slab rates.