October 2, 2023


Digitally first class

Creating a customized hybrid fund portfolio: building wealth gradually for 5 crores

How super rich can invest Rs 5 crore in 2023? Sundaram Alternate's Vikaas M  Sachdeva explains - BusinessToday

Hybrid funds invest in a mix of equity and debt instruments, balancing risk and return. For investors targeting corpuses of Rs 5 crores or more, hybrid funds can create wealth steadily without full equity exposure. Conservative investors can gain equity linked returns with lower volatility through strategic hybrid fund investing.

Optimal asset allocation is key

The biggest advantage of hybrid mutual funds is asset allocation flexibility. Investors can choose funds with higher equity or debt portions to suit their risk appetite and goals. Typically, funds with higher equity have potentially higher returns but also higher volatility. Hybrid funds allow creating customized portfolios with optimized asset allocation for ideal risk-return profile.

Manage volatility, mitigate risks

Direct equity investing requires strong stomach for volatility stemming from market swings. Hybrid funds significantly mitigate risks over pure equity funds through stable debt portions. Equity exposure generates inflation beating returns while debt provides stability and income to manage volatility. Conservative investors focusing on wealth protection can manage risks effectively with hybrid funds.

Take advantage of market upswings

Hybrid funds provide a simple way to participate in equity market rallies through the fund’s stock portion. Upside potential is lower than pure equity funds but healthy upside is possible with the right hybrid funds. The key is choosing funds tactical allocation to take advantage of market upturns. Investors targeting large corpuses can get optimal equity participation with hybrid funds.

Building an ideal Rs. 5 crore portfolio

Here is one approach to building a customized hybrid mutual fund portfolio for a Rs 5 crore target corpus over 12-15 years:

– Equity hybrid funds: Allocate 50% to equity hybrid funds with 25-50% equity exposure. These drive portfolio growth with manageable risks.

– Conservative hybrid funds: Allocate 30% to conservative hybrid funds with 10-25% equity exposure. These provide stability and lower volatility.

– Aggressive hybrid funds: Allocate 10% to aggressive hybrid funds with 51-75% equity exposure. These give higher equity participation for added growth.

– Debt hybrid funds: Allocate 10% to debt hybrid funds with negligible equity exposure. These give capital preservation and income.

Rebalance periodically to maintain target allocations to different fund types as per initial strategy.

Advantages of this approach

This portfolio allows participating in equity upside through 70% allocation to equity and aggressive hybrid funds. 30% in conservative and debt funds balances this with stability and lower volatility.

Gradual wealth building is possible through healthy equity exposure while managing overall volatility. Starting early and giving the portfolio time to grow over 12-15 years can potentially achieve the Rs 5 crore target.

The customized approach reduces dependence on pure equity funds. Equity participation comes from hybrids which carry lower volatility. This prevents wide portfolio fluctuations during market corrections.


Hybrid funds offer excellent flexibility to conservative investors for customized portfolios aligned to specific goals. Strategic allocation across various fund types can achieve gradual wealth creation of even Rs 5 crores and above over the long term. Investors must align hybrid fund selection to their risk appetite, return expectations and investment horizon to maximize benefits. A mutual fund calculator can help determine the ideal SIP amounts and expected corpus value to achieve the Rs 5 crore target over a planned investment tenure. Using online mutual fund calculators to estimate corpus build-up ensures portfolios stay on track to reach the wealth creation goals.