Should we switch to hybrid funds from debt funds to avoid tax? What are the risks involved in hybrid funds? Let us discuss this topic in this post.
After the recent shocking taxation rules of debt fund taxation, many are eagerly looking for avenues for their debt products which are in some way tax efficient also. Few are looking for various categories of hybrid funds like balanced advantage funds or equity savings funds as an alternative to debt funds. However, is it worth considering these categories?
Should we switch to hybrid funds from debt funds to avoid tax?
If you look at the SEBI’s categorization and rationalization of Mutual Fund Schemes notification, you will find that there are seven funds listed in the hybrid category. They are as below.
a) Conservative Hybrid Fund – Investment in equity and equity-related instruments – between 10% to 25% of total assets. Investment in debt instruments – 75% to 90% of the total assets.
b) Balanced Hybrid…