Debt vs Equity vs Hybrid Funds: How Investors’ Age Affects Fund Selection
Several factors are transforming investment habits in India, whether it be increasing financial literacy, rapid digitalisation, or the proactive role of distributors. A recent report by AMFI-Crisil has highlighted the shifting investment preferences across different age groups, indicating that younger investors favoured equity mutual funds, while older investors had stronger inclination towards debt and hybrid funds.
The pattern that has emerged is that their investment approach becomes more conservative with age as stability older investors prioritise stability over high returns. Here is how the age of an investor affects the mutual fund selection.
Debt Mutual Funds
Debt mutual funds which offer lower volatility and steady returns are primarily preferred by investors aged above 58, with 48.9% of this group opting for them.
- Age 58 and above: 48.9%
- Age 45-58: 30.6%
- Age 25-44: 15.7%
- Below 25: 1.4%
Equity Mutual Funds
Equity mutual funds have a potential to generate higher long-term returns. These funds are preferred by a wide range of age groups who prefer long investment horizons and have high-risk tolerance.
- Age 58 and above: 31.9%
- Age 45-58: 30.6%
- Age 25-44: 30.2%
Hybrid Mutual Funds
The hybrid funds combine elements of equity and debt and are a huge hit among older investors who are looking for a balanced investment approach that includes capital appreciation as well as risk management.
- Age 58 and above: 51.0%
- Age 45-58: 29.1%
- Age 25-44: 16.1%
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.