Indian fund industry is getting innovative when it comes to product design. In the latest example, Indiabulls Mutual Fund has launched its hybrid aggressive fund called Indiabulls Equity Hybrid Fund that will look at current account deficit (CAD) level as one of the criteria to select sectoral allocation in its equity portion and duration call in its debt portion.
The fund manager will take a call if he has to increase exposure to defensive sector or cyclical sector depending on the country’s CAD movement and other macro factors. Typically, defensive stocks outperform markets when CAD is high and vice versa, said the fund house.
However, advisors should keep in mind that the fund is not a sectoral or thematic fund.
The fund will also select stocks based on fundamental and quantitative analysis such as growth prospects, earnings growth, valuations and governance among other parameters. The fund will follow multicap strategy with a large cap bias for its equity portion.
For debt component, the fund would take exposure to papers having credit rating of at least AA+.
Sharing the rationale for launching this fund, Raghav Iyengar CEO, Indiabulls Mutual Fund said, “India is at the cusp of macro-economic recovery driven by strong GDP, all consumption data showing stability. However, markets have turned volatile on rising global interest rates and oil price rise. In such a scenario, we think hybrid funds offer an opportunity for investors to ride out this volatility given debt component which brings stability to performance and also allowing exposure to equity with benefits of appreciation.”
Giving a strong case to invest in this fund during its NFO, the company said, “Equity markets have recently been in a phase of correction as the market valuations have cooled off from Price-to-Earnings of 28.40 as of August 31, 2018 to 25 by the end of October 2018. Similarly, the 10-year benchmark yields have increased steadily to 7.85% as on October 31, 2018 from 6.94% in November last year. As such, the current valuations and yield levels provide an attractive investment opportunity to the investors.”
Indiabulls Equity Hybrid Fund is an open-ended hybrid scheme investing predominantly in equity & equity related instruments. The fund offers dual benefits of wealth generation through investment in equities and lower volatility through investment in debt. The fund is suitable for investors having moderately high-risk appetite.
In addition, investors who are looking for a regular cash flow Investors can consider doing SWP in this fund, said the fund house. The fund house will not levy exit load on 10% of the investment corpus for one year. There will be no exit load after a year on the entire corpus.
Sumit Bhatnagar( equity fund manager) and Veekesh Gandhi will co-manage the equity portion while Malay Shah will manage debt portion of the fund.