More and more hybrid schemes are coming out to lure investors. However, these schemes could do more harm than good to the investors
Moneylife Digital Team
SBI Mutual Fund plans to launch an open ended hybrid fund-SBI EDGE Fund-according to an offer document filed with the Securities and Exchange Board of India (SEBI). The fund will invest in equity, debt and gold ETFs (exchange traded funds)-perhaps the same reason why the fund house has named it EDGE. The fund would invest 10%-60% of its assets in equity and equity-related instruments, a similar allocation would be made towards gold ETFs and 10%-80% in debt and money market instruments. The investmentobjective of the scheme is to generate growth and regular income, however, with a major portion kept to be invested in gold makes the fund a highly risky investment. The performance of the scheme would be benchmarked against equal weightage of the BSE 100 index, Crisil Composite Bond Fund Index and the price of gold.
With no attraction towards equity, and known the affinity of Indians towards gold, fund houses have started using gold as an asset to attract investors. They are launching gold ETFs and hybrid funds that invest in gold along with debt and equity or a gold savings fund which is a mutual fund which invests in gold ETFs. Axis MF, Kotak MF and Religare MF have all three products and now SBI is following suit.
SBI would be investing as much as 60% in gold, which is too high an allocation to a highly speculative product such as gold. Rajeev Radhakrishnan would be the fund manager. He has a number of funds under his belt-Magnum Insta Cash Fund, SBI Premier Liquid Fund, Magnum Children Benefit Plan, Magnum Income Plus Fund-Saving Plan, SBI Capital Protection Oriented Fund-Series I, Series II & Series III, SBI Short Horizon Debt Fund and the existing Debt Fund Series.
Apart from the risk in gold, investors would be left to the dilemma as to how much to invest in such a fund. With huge variance in asset allocation, how much should an investor invest if he is planning for a particular goal? How much returns is the scheme expected to generate? Fund houses need to come out with schemes that would benefit investors by fitting into a financial plan and not leaving them more confused. Min Investment: Rs5,000 Additional Investment: Rs1,000 SIP: Minimum amount Rs6,000
Exit Load -
For exit within one year from the date of allotment -1%
For exit after one year from the date of allotment - Nil
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