Kotak Debt Hybrid Fund

The fund is suitable for investors with a moderate risk appetite looking for consistent returns in the long term. The fund balances the risk involved in the equities market with its calculated allocation of assets.

Kotak Debt Hybrid Fund has two variants that are available for retail investors. The variants of the fund are given below.

• Kotak Debt Hybrid Fund-Regular Growth
• Kotak Debt Hybrid Fund-Direct Growth

The fund contains carefully chosen government securities and bonds, corporate bonds with high credit ratings, and higher liquidity. The fund's equity holdings consist of great businesses involving banking, automobile, manufacturing, FMCG sectors, etc ., with a good track record of growth and dividends. The investors can also opt for an income distribution cum withdrawal plan to receive regular dividends from the mutual fund. The fund is called a hybrid because of its strategy to generate stabilized returns by investing in debt markets and allowing capital appreciation through their investments in the equities market.

Table: Investment Facts

Investment Objective

The fund has rewarded its unitholders with double-digit returns since the launch of the hybrid fund. The investors reaped an annualized return of 10.8% over the past decade, resulting in their capital invested. For example, an investor with a lump sum of Rs.5000 invested in Kotak Debt Hybrid Fund would have witnessed his invested sum grow to Rs.8490 with an annualized return of 11.2% for five years. The investor must understand the risk involved in buying mutual fund units as the previous years' returns do not guarantee future returns, and one must remain patient and grounded to reap the rewards. The fund considers various risk factors such as credit risks, sovereign risk, price risk, etc., before buying bonds and debts available in the market.

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Fund Summary

1. Kotak Debt Hybrid Fund Direct Plan-Growth

   •         Risk-level- Moderately High
   •         NAV-43.99 as of June 18 2021
   •         Expense Ratio-1.1% and 1% for units redeemed, exceeding 8% of their investment under one year.
   •         Fund Started- December 02, 2003

2. Kotak Debt Hybrid Fund Regular Plan-Growth

   •         Risk-level- Moderately High
   •         NAV-40.19 as of June 18 2021
   •         Expense Ratio-2.24% and 1% for units redeemed, exceeding 8% of their investment under one year.
   •         Fund Started- December 02, 2003

Fund Returns Summary

1. Kotak Debt Hybrid Fund Direct Plan Growth-Returns Summary

   Time Period	Annualized returns per year
   6 months	7.75%
   1 year	22.69%
   3 years	12.30%
   5 years	11.17%
   10 years	10.98%

2. Kotak Debt Hybrid Fund Regular Plan Growth-Returns Summary

   Time Period	Annualized returns per year
   6 months	7.11%
   1 year	21.24%
   3 years	11.00%
   5 years	9.82%
   10 years	8.25%

Pros and Cons

Benefits of Kotak Debt Hybrid Fund

The key benefits of Kotak Debt Hybrid Fund are as follows:

1. Risk-Adjusted Returns

    The fund managers in charge of the Kotak Debit Hybrid fund ensure that the unit holders' investments are shielded from downside risk and capital losses during market turmoil. The investments are less prone to deterioration as the exposure to the stock market is minimal therefore hedging market volatility. 

2. Better Returns Compared to Benchmark Index

   The Kotak debt hybrid fund, known for its high exposure to debt instruments, has beaten the benchmark indices such as Crisil Hybrid 85+15-conservative index consistently. Moreover, it offers its benchmark indices unit holders higher than expected annualized returns. Another benefit of the debt hybrid fund is its ability to perform well during inflation in the global economy.

3. Asset Allocation

   As mentioned earlier, the hybrid fund invests more than three-fourth of its cash in government securities, debts, and corporate bonds, while the remaining cash is held in shares of Indian companies with tremendous growth potential. The portfolio consists of over seventy holdings with companies across sectors, including software services, power generation, automobile manufacturing, refineries, etc., ensuring adequate capital appreciation and dividends from equity holdings.

4. Fund House Details

   Kotak Debt Hybrid Fund is managed by Kotak Asset Management Company Ltd, entirely owned by the Kotak Mahindra Bank, an Indian private bank. The bank got its license to operate in 2003 after approval from the Reserve Bank Of India. The Kotak Group laid its foundation stone in 1985 and has cemented its place as one of the country's first Non-Banking Financial Companies. 

   The Company has over three thousand branches nationwide offering financial services to its customers along with its international branches located in the Middle East, UK, USA, and Singapore. The group has over 70% of its AUM in domestic mutual funds, 9% in international funds, more than 10% in insurance, 5% in other assets, and 1% in portfolio management services and other financial services. 

   The Kotak group is also a constituent of the Nifty 50 index in the National Stock Exchange of India with a massive net worth of Rs.821.16 billion and owns a market share worth Rs.3473 billion. The Company also employs around 50,000 people nationwide to its designated office branches in the country.

Who Should Invest in Kotak Debt Hybrid Fund?

Kotak Debt Hybrid Fund is ideally suited for investors with a conservative investment approach. The hybrid fund reduces the risk of capital loss and compounds the invested capital in a conserved manner. The investors who are saving for future requirements such as emergency funds, meeting the educational expenses of their child, marriage expenses, and sudden medical expenses can opt for debt hybrid funds as the volatility of the fund is more stable in comparison with the aggressive mutual funds heavily exposed to the equities market. The track record of the hybrid fund for over a decade has produced impressive returns with more than 10% of annualized returns. The debt hybrid fund is recommended for long-term investors with a time horizon of more than 3 years. The investors must analyze the risks involved, understand one's needs, and set reasonable financial goals before buying units of any mutual fund.

Conclusion

Kotak Debt Hybrid Fund is one the top-ranked funds in the category producing generous returns and beating the benchmark indices by a few basis points on a consistent basis. The seasoned fund managers with more than a decade of experience in the investment and banking sectors ensure a win-win scenario for the unitholders even during testing times such as global financial markets meltdown or war-like situations. The first-time investor can opt for SIP, where the units are purchased monthly, quarterly, and half-yearly. The investor can understand the fund's performance through SIP(Systematic Investment Plan) before making a significant investment in the plan. The investor can remain peaceful during a market crash as the hybrid fund is less exposed to the capital markets and therefore reduces the downside risk and sails through the storm efficiently.

FAQ's

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“The investment risk in investment portfolio is borne by the policyholder.”

 “Tax benefit is subject to changes in tax laws. Standard T&C apply.”

Disclaimer: Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.