High valuation and a lack of visibility of near-term earnings’ growth have made equities unattractive, at least in the short term. It is quite clear that earnings growth in equities has become a little longer term story.
As opposed to this, many savvy participants do not perceive grave concerns about debt markets.
Given this situation, investments in hybrid or balanced schemes which offer the best of both worlds — equities and debt— with at least a five-year time horizon must not be ruled out. When equities are volatile, debt markets provide stability to the portfolio’s returns.
Among balanced schemes, SBI Equity Hybrid is one of the most stable performers in the long term. In the past three- and five-year periods, the scheme has given 8.2 per cent and 10.1 per cent returns, respectively, while its peers in the category have given 5.4 per cent and 7.3 per cent returns, respectively, in the same period.
As regards the scheme’s debt investments, fund managers Dinesh Ahuja and R Srinivasan have given special attentions to quality. The scheme is heavily invested in government and AAA-rated securities which, moderately, offer a certain amount of stability to the portfolio.
With respect to its benchmark index, the scheme has higher exposure to debt securities than its benchmark index. This aggressive exposure shows the conviction of the fund managers. Its equity investments are also spread across good dividend-paying, superior asset-possessing multi cap growth stocks.
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