JM Aggressive Hybrid Fund – Growth is a part of the hybrid fund category offered by JM Financial Asset Management Private Limited. Established on April 1, 1995, this fund has been a popular choice among investors looking for a balance between steady income and long-term capital growth. With an Assets Under Management (AUM) of ₹578.07 crore as of August 2024, the fund has demonstrated significant growth over the years.
This detailed article will explore the key aspects of the JM Aggressive Hybrid Fund – Growth, covering its objectives, performance, risk factors, investment strategies, and more.
Overview of JM Aggressive Hybrid Fund – Growth
Fund Details
- Fund Name: JM Aggressive Hybrid Fund – Growth
- Asset Management Company (AMC): JM Financial Asset Management Private Limited
- Inception Date: April 1, 1995
- AUM as of August 2024: ₹578.07 crore
- Type: Open-ended scheme
- Category: Aggressive Hybrid Fund
- Option: Growth
The JM Aggressive Hybrid Fund falls into the Aggressive Hybrid Fund category, meaning it primarily invests in both equity and debt securities. As a hybrid fund, it seeks to strike a balance between risk and return by diversifying investments across asset classes, making it suitable for investors with a moderate to high-risk appetite.
Investment Objective
The primary objective of the JM Aggressive Hybrid Fund – Growth is to provide steady current income and long-term capital appreciation. The fund achieves this by investing in a diversified portfolio consisting of equity and equity-related instruments along with debt and money market instruments.
The scheme aims to generate returns from both growth in the equity markets and interest income from debt instruments, providing a blend of income and capital growth.
Minimum Investment Requirements
- Lumpsum Investment: ₹1,000
- Systematic Investment Plan (SIP): ₹100
This low minimum investment amount makes the JM Aggressive Hybrid Fund – Growth accessible to a wide range of investors, from first-time investors to seasoned professionals.
Expense Ratio
The expense ratio for the JM Aggressive Hybrid Fund – Growth as of August 31, 2024, is 2.31%. This ratio represents the annual fees charged by the fund for managing your investments, and it’s crucial for evaluating the net returns you can expect. A 2.31% expense ratio is on the higher side compared to other funds, which may slightly impact overall returns for investors.
Exit Load
An exit load of 1% applies if units are redeemed within a year of investment. This load is charged to discourage early withdrawals, helping to align the interests of long-term investors with the fund’s strategy.
Risk Rating
The risk rating for the JM Aggressive Hybrid Fund – Growth is categorized as Very High. Given its substantial allocation to equities, the fund is subject to market fluctuations, making it suitable for investors who are willing to take higher risks in exchange for potentially higher returns.
Benchmark
The fund uses the CRISIL Hybrid 35+65 – Aggressive Index as its benchmark. This index measures the performance of hybrid funds that have an aggressive equity allocation, providing a standard for comparison to gauge how the JM Aggressive Hybrid Fund performs relative to its peers.
Portfolio Metrics
- Market Capitalization: ₹18,157.94 crore
- Price-to-Earnings (PE) Ratio: 53.82
- Price-to-Book (PB) Ratio: 8.01
- Dividend Yield: 0.95%
- Portfolio Turnover Ratio: 1.21 times
These key metrics reflect the fund’s equity-heavy allocation and active management approach, aiming to strike a balance between growth and income.
Custodian and Registrar
- Custodian: HDFC Bank Limited
- Registrar: KFin Technologies Limited
Both HDFC Bank and KFin Technologies provide operational support to ensure secure transactions, unit allocation, and efficient record-keeping for the investors.
Performance Review
The performance of JM Aggressive Hybrid Fund – Growth has been impressive over different time horizons, with a steady increase in returns, particularly in the short to medium term. Below is a breakdown of the fund’s performance across various periods:
Short-Term Performance
- 1 Day: ▲ 0.4%
- 1 Week: ▲ 0.7%
- 1 Month: ▲ 1.3%
- 3 Months: ▲ 6.7%
Medium-Term Performance
- 6 Months: ▲ 24.2%
- 1 Year: ▲ 50.8%
Long-Term Performance
- 2 Years: ▲ 37.6% (annualized)
- 3 Years: ▲ 22.7% (annualized)
- 5 Years: ▲ 26.7% (annualized)
The one-year return of 50.8% stands out as particularly impressive, indicating strong performance in both the equity and debt markets. The fund’s three-year and five-year performance has also shown considerable growth, reflecting its ability to generate consistent returns over the long term.
Asset Allocation
The JM Aggressive Hybrid Fund – Growth maintains a balanced approach between equities and debt instruments. Below is the typical asset allocation:
- Equity: 65% to 80%
- Debt & Money Market Instruments: 20% to 35%
Equity Allocation
The fund primarily focuses on high-growth stocks across various sectors, including financial services, information technology, healthcare, and consumer goods. Its equity portion typically includes large-cap and mid-cap stocks with a focus on growth.
Debt Allocation
The fund’s debt investments are aimed at providing a steady stream of income while ensuring capital protection. These debt instruments include government securities, corporate bonds, and money market instruments, offering a buffer against equity market volatility.
Key Investment Parameters
The following parameters are crucial to understanding how the JM Aggressive Hybrid Fund – Growth positions its portfolio:
1. Market Capitalization
- ₹18,157.94 crore
This metric indicates the fund’s exposure to large, mid, and small-cap stocks, providing a blend of growth opportunities and stability.
2. PE Ratio
- 53.82
The high Price-to-Earnings ratio (PE) indicates that the fund is investing in growth-oriented stocks that trade at higher valuations. A higher PE ratio reflects that investors are willing to pay a premium for expected future growth.
3. PB Ratio
- 8.01
A Price-to-Book ratio (PB) of 8.01 reflects the fund’s investments in companies with significant assets, particularly in sectors like finance, IT, and healthcare. A higher PB ratio typically indicates that the market values the underlying assets more highly than their book value.
4. Dividend Yield
- 0.95%
Although the fund primarily focuses on growth, it still generates a small dividend yield, reflecting income generation from equity investments in dividend-paying stocks.
5. Portfolio Turnover Ratio
- 1.21 times
The portfolio turnover ratio of 1.21 times suggests that the fund manager actively manages the portfolio by buying and selling securities frequently to capture market opportunities. Active management may help capitalize on short-term gains but could lead to higher transaction costs.
Fund Management
The fund is managed by experienced professionals at JM Financial Asset Management Private Limited. Their goal is to strike the right balance between risk and reward, ensuring that investors benefit from the growth potential of equities while mitigating risk through debt instruments.
Key Strategies
The investment strategy involves:
- Active stock selection: The fund managers look for high-growth stocks that can outperform the market.
- Risk diversification: Diversifying across sectors, market capitalizations, and asset classes helps reduce overall portfolio risk.
- Dynamic asset allocation: The fund adjusts its equity and debt exposure based on market conditions to maximize returns.
Risk Factors
Despite its potential for high returns, the JM Aggressive Hybrid Fund – Growth comes with a Very High risk rating. Investors should be aware of the risks involved, including:
- Market Risk: Due to its significant equity exposure, the fund is subject to stock market volatility.
- Interest Rate Risk: Debt securities are vulnerable to fluctuations in interest rates, which could affect bond prices.
- Liquidity Risk: If a large number of investors redeem their units at the same time, the fund may face liquidity issues.
This fund is ideal for investors who have a high risk tolerance and a long-term investment horizon.
Ideal Investors
Given its aggressive nature, this fund is suited for investors who:
- Are looking for both capital appreciation and steady income.
- Have a long-term investment horizon of 3 years or more.
- Can tolerate high levels of volatility.
- Are comfortable with an investment that combines both equity and debt.
Comparison with Related Schemes
JM Aggressive Hybrid Fund – Growth has multiple related schemes under the same umbrella. These include:
- JM Aggressive Hybrid Fund (HB)- Principal Units-Direct Plan
- 24.3% p.a.
- JM Aggressive Hybrid Fund (QB)- Principal Units-Direct Plan
- 24.3% p.a.
- JM Aggressive Hybrid Fund(B)- Principal Units-Direct Plan
- 24.3% p.a.
- JM Aggressive Hybrid Fund(H- IDCW)-Direct Plan
- 24.3% p.a.
- JM Aggressive Hybrid Fund (IDCW)-Direct Plan
- 24.3% p.a.
Each of these related schemes provides options for different payout structures, such as Growth and IDCW (Income Distribution cum Capital Withdrawal).
Conclusion
The JM Aggressive Hybrid Fund – Growth stands out as a solid option for investors seeking a blend of capital appreciation and steady income. With its strong performance over both short and long-term horizons, diversified asset allocation, and focus on active portfolio management, it presents a compelling choice for those with a very high-risk tolerance and a long-term investment horizon.
Its ability to generate 50.8% returns in the past year highlights the fund’s growth potential. However, the very high-risk rating means that it’s suitable for experienced investors comfortable with market volatility. The low minimum investment requirement and the SIP option make it accessible to a broad range of investors.
Before investing, potential investors should carefully consider their financial goals, risk tolerance, and consult with a financial advisor to ensure that this fund aligns with their investment strategy.
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