This hybrid MF clocked 29% annual return, bet more on a ‘FANG’ stock

With the stock market trading near its one-year lows and neither bulls nor bears able to take control of the direction of the market and key indices, investors could be puzzled on what to bet and if to bet at all.

One way to hedge their investment decisions is to look at mutual funds instead of directly picking stocks to diversify or spread the holding.

One can try and hedge further by picking a hybrid fund, which invests in both debt and equity thereby giving some comfort factor of relative safety of the principal investment amount and yet a chance to generate wealth with the equity portion of the portfolio.

In this set, there are various sub-groups including hybrid funds that are aggressive, conservative or balanced as also others like those playing the arbitrage game.

While the benchmark indices have been almost flat over the last twelve months, one hybrid fund stood out as an outlier generating nearly 29% growth in net asset value. This was not just ahead of the mutual funds pack at large but also comprehensively beat its peer group of aggressive hybrid funds that returned under 2% in the last one year.

The fund—SBI Magnum Children's Benefit Fund - Direct Plan—is among the group that invests over two-thirds of the corpus in equity shares with the remaining money in bonds.

Currently, around 85.8% of its assets are invested in equity. But the fund is not so high on bonds either. Debt comprises just 1.9% of its assets, with the rest being held in the form of cash.

The fund is overweight on consumer staples, chemicals, textiles, capital goods, services, consumer discretionary, metals and mining and communications, relative to the peer group.

It has been underweight on financials, materials, construction, healthcare and technology, compared to the category average.

That said, it did go bottom fishing last quarter in the new-age tech pack. It upped its holding of Netflix, an OTT platform that has seen its share price crumble by two-thirds in the last seven months. The fund also added stocks like ecommerce-linked logistics company Delhivery, Nvidia and Aether Industries. It also upped its stake in gold financer Muthoot.

At the same time, it maintained its position in some of its key holdings: Dodla Dairy, Gokaldas Exports, HDFC Bank and Medplus Health Services.