Home >Mutual Funds >News >Parag Parikh Conservative Hybrid Fund NFO to open on 7 May

PPFAS Mutual Fund has said its first-ever offering in the hybrid space -- the Parag Parikh Conservative Hybrid Fund -- will open on 7 May and close 21 May. Being an open ended fund, it will also be available for subscription thereafter.

Conservative hybrid funds can invest 10-25% of their assets in equity with the rest in debt. In a conversation with Mint in February, Neil Parikh, CEO, PPFAS Mutual Fund said that he viewed the scheme as virtually a debt product. Conservative Hybrid Funds are taxed as debt funds. Gains in them are taxed at slab rate for holding periods of up to 3 years and at 20% with indexation thereafter.

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"We want to replicate the idea behind Parag Parikh Flexicap on the debt side. This stems from conversations we've had with investors. This will be a go anywhere debt fund with a sliver of equity exposure from 10-25%. It will not be boxed into any particular type of debt like short term, government bond or high yield," Neil Parikh, CEO, PPFAS Mutual Fund told Mint in February. The fund will have an expense ratio of 0.6% on the regular plan and 0.3% on the direct plan. Direct plans do not entail pay outs of commissions to distributors. It will have an exit load of 1% if an investor redeems his or her units within 1 year of investing.

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According to the presentation released by the fund house, the scheme will invest predominantly in central and state government bonds and high quality PSU debt as well as AAA rated papers. There will be limited ‘corporate credit risk’ exposure. On the equity side, there will be a preference for stocks with a high dividend yield and a large ‘margin of safety.’

Margin of safety is the difference between a stock’s estimated fundamental value and the price paid for it - a buffer amount for the investor even if some assumptions on fundamentals prove wrong. The fund will also invest up to 10% of its corpus in units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs). It will be jointly managed by Rajeev Thakkar and Rounak Onkar on the equity side and Raj Mehta for the debt portion.

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