The Covid-19 pandemic has changed how investors approach their financial goals. The pandemic has led many investors to seek investments that can offer a mix of both growth and lesser volatility.
Aggressive hybrid funds fit well for investors who seek capital appreciation with less volatility as these funds give you best of both the worlds - equity and debt. Like it is said, when one is not enough, get the might of two. Overall, the mixed portfolio of equity and debt makes these funds relatively less volatile than pure equity funds. The debt part of the portfolio aims to offer lower volatility while the equity part helps earn good growth over the long term.
In this context, Union Hybrid Equity Fund, an open-ended hybrid scheme investing predominantly in equity and equity related instruments, launched by Union Mutual Fund deserves a serious look – it offers a power packed portfolio of equity and debt.
The Scheme aims to generate capital appreciation and aims to maximize the returns by actively investing in equity instruments and utilizing debt and money market instruments to cushion the impact of volatility.
Since Union Mutual Fund believes that stock prices track intrinsic value over time, the Scheme will focus on understanding the fair value of the asset, estimate the growth in fair value, and identify margin of safety in purchase price. This philosophy is practiced using an internal fair value approach by Union Asset Management Company Private Limited (the Investment Manager to Union Mutual Fund).
For the equity portion the fund will deploy money across large, mid & small caps. Mr Hardick Bora, one of the Co-Fund Managers of the Scheme, believes that currently, all three cap sizes - large cap, mid cap and small cap are providing similar risk reward potential. Hence, the fund will explore attractive opportunities across market capitalisation.
Talking about the Scheme’s portfolio construction, Mr Bora said, any investor having time horizon of at least 3 years can invest in this Scheme.”
Further, Mr Bora added that hybrid funds as a category deserve higher allocation in clients’ investment portfolio as it offers growth with lesser volatility.
On the debt portion of the Scheme, Mr Parijat Agrawal, Head - Fixed Income, Union Mutual Fund said that the fund house is well aware about the current weak credit cycle in the economy. “Since investment in debt instruments in this Scheme is not to generate extra return but ensure lesser volatility, we have decided to invest in high quality debt instruments,” said Mr Parijat.
G Pradeepkumar, CEO, Union Mutual Fund said, “The objective of Union Hybrid Equity Fund is to achieve long term capital growth with lesser volatility. Our robust investment process that focuses on identifying the fair value of the stocks before investing, separates our funds from other products in the market.” he said.
Union Hybrid Equity Fund will benchmark itself against CRISIL Hybrid 35+65 Aggressive Index^. Mr Vinay Paharia, Chief Investment Officer, Mr Parijat Agrawal, Head - Fixed Income and Mr Hardick Bora, Equity Fund Manager of Union Mutual Fund will manage the Scheme.
This Scheme is recommended for investors seeking returns out of an investment portfolio built with a judicious mix of equity and debt components.
