2018 was one of the most volatile years in recent time for investors. Despite having faced an unpredictable year, the following Hybrid funds have performed better than its benchmark in 2018.
|Fund||1 Year Return||Alpha (Fund Return - Benchmark Return)|
|SBI Dynamic Asset Allocation Fund||7.96%||0.68%|
|Franklin India Dynamic PE Ratio Fund of Funds||4.21%||2.58%|
|DSP Dynamic Asset Allocation Fund||2.99%||1.36%|
SBI Dynamic Asset Allocation Fund gave 7.96% return in one year while its benchmark gave a return of 7.28%. The funds objective is to provide investors with an opportunity to invest in a portfolio which is a mix of equity and equity-related securities and fixed income instruments. The allocation between fixed income and equity instruments will be managed dynamically so as to provide investors with long term capital appreciation. This approach will help reduce the risk of tracking individual asset classes. The fund allocates higher weight to the asset class that is relatively favorable under the prevailing market and economic conditions. The optimal allocation between Equity, Debt and Cash will be based on three principles: Momentum, Rate of change in momentum and Exhaustion of momentum. This hybrid fund uses derivatives for portfolio rebalancing. The fund’s three-year returns are 1 percentage points higher than its category returns. A SIP of ₹5,000 p.m. in this fund since its launch is worth ₹2.70 lakhs now.
Franklin India Dynamic PE Ratio Fund of Funds gave 4.21% return in one year while its benchmark gave a return of 1.63%. This is a fund of funds scheme which invests in funds from within the Franklin Templeton basket of funds. Through this structure, it provides exposure to both equity and debt asset classes. It has a unique in-built “buy-sell” discipline based on market valuations which gives less room for subjectivity or any error of judgment. The fund has a predefined monthly rebalancing mechanism based on the “PE” level of the Nifty 50 Index. It reduces equity exposure and increases debt exposure when PE levels are high and vice versa. The fund’s five-year returns are 5 and 0.1 percentage points higher than its category and benchmark returns respectively. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹3.82 lakhs now.
DSP Dynamic Asset Allocation Fund gave 2.99% return in one year while its benchmark gave 1.63% return. With this fund, one can “allocate automatically & invest peacefully”. This hybrid fund dynamically manages the asset allocation between equity schemes and debt schemes based on a predefined quant model known as “Yield Gap Model”. The fund uses arbitrage and other derivative strategies. The fund’s three-year annualized return is 7.86% and return since launch i.e. since Feb 2014 is 8.38%. A SIP worth ₹5,000 in this fund since its launch in 2014 is worth ₹3.49 lakhs now.
These funds, despite bad market conditions, have performed well in 2018.