Hybrid Funds

At times the Equity markets go bullish leaving ordinary investors in a fix: whether to enter or not now?
Exit, of course people manage depending on their need matetialisation or long bullish trends generally propels repurchases from mutual funds. The animal spirits of the market got into frenzy from 24, 121.74 on 16 May 2014 to 28, 717.91 by 06 February 2015.

 Secular trends in markets generally make people leave to think it will last for more days into the future. However, entering the market is important for an individual to get long term benefits from the market movements.

These are times when hybrid funds come handy. These funds have equity and debt as major parts in the portfolio. Hybrid funds may be those having focussed on debt or equity with 25-35% with equity or debt as the case may be.
Irrespective of prominence for equity or debt, the income distribution is tax frre in the hands of the investor.
However, the debt oriented fund qualify for long term capital gains only when holding period exceeds 36 months; The long term capital gains tax may be with or without inflation index. This when compared to equity funds, is nil and holding period condition is 12 months only.

Hybrid funds taht are debt focussed, when offer income distribution option, it becomes MIPs. Though  there is no guarantee of income distribution, they help in enhancing little more compared to fixed income counterparts.

Happy investing