We have been cautioning investors about this for a while now. Hybrid funds— which have a mix of equity and debt securities, and are often mis-sold by some distributors and fund houses in the garb of regular monthly income-giving instruments—are now under pressure due to volatile markets. The BSE Sensex has barely seen any gains since the start of this year. It has returned 0.07% from January 2018 till date. For the same period, the balanced funds category has shown as average return of -2%.
In recent months, the average 1-year return for hybrid funds with 20-25% allocation to equity has gone down to around 8.5% (February 2018) as compared to around 15% a year ago. For balanced funds with around 65-70% allocation in equity, the average 1-year returns are now in the range of 13-14% as compared to 23-25% a year ago.
