Why I started to invest in Parag Parikh Conservative Hybrid Fund

Published: May 1, 2022 at 6:00 am

From this month onwards, I have started to invest in Parag Parikh Conservative Hybrid Fund. A look at some of the fund’s profile and the reasoning behind my decision.

The fund is on the verge of completing one year (launched May 26th 2021) and after observing its portfolio for some months we included it in our Handpicked List of Mutual Funds Apr-Jun 2022 (PlumbLine).

I have been investing for my son’s future for the last 12.5 years. He has another six years to go to college. For most of this time, the equity allocation was 60%. I recently dropped it down to 55%. I will be decreasing the equity allocation further over this year and beyond.

The investments used for this goal are:

  • Equity
    • HDFC Bal Adv Fund
    • ICICI Multi-asset Fund
    • Mirae Large cap
  • Debt
    • ICICI Arbitrage Fund
    • ICICI Gilt Fund
    • PPF minor account in his name
    • PPF account in my mother’s name (was opened specifically for this purpose).

I was looking for another debt fund in between the risk profile of the arbitrage fund and a gilt fund. A fund that is more rewarding than an arbitrage fund and more stable than gilt fund rewards.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

A money market fund is an obvious candidate from a goal-based point of view. After all, it is essentially a cash-like holing which I can keep increasing as the goal deadline nears.

However, expenses for my son’s education are unlikely to stop at the UG level (which in itself is spread over 3-4 years). If he goes down the path of academia then he would need support for 10-15 years after school. If our parents did that for us (wife and me) with their sweat, toil and sacrifice, we have no excuse to not do it. If he does not, then the unspent amount will become part of our retirement corpus.

Meaning a money market fund would be a bit of an overkill. The existing arbitrage fund plays the role of “cash” well enough. The gilt fund is indeed a suitable choice for a “long term” goal such as this but it can it quite a bumpy ride. So I wanted something to stabilize the debt portfolio without going overboard doing that.

Also, we have already achieved our target corpus for this goal. So the next few years will be one of consolidation. I wanted a fund that I can continue using beyond this goal for retirement as well.

Parag Parikh Conservative Hybrid Fund fits the bill reasonably. I am sure there are many other good funds available. For example, HDFC Corporate Bond Fund or Kotak Short Term Bond Fund but my mind was set on the Parag Parikh fund and went for it (call it AMC bias if you will).

No claim is made that it is the best choice. It is a choice. If it goes bad, I will get up, dust myself and move on. There is no time or place for regret in the capital markets.

I plan to tag half the investments made to the retirement goal. For details about the retirement portfolio see Portfolio Audit 2021: How my goal-based investments fared this year.

The average portfolio maturities of the two debt funds in my portfolio are shown below. The ICICI fund as mentioned earlier is a dynamic bond kind of fund that focuses on long term bonds of varying tenure. So far the Parag Parikh Fund has had a steady portfolio but it too can be flexible.

Month EndICICI Gilt FundParag Parikh Connservative Hybrid Fund

So Parag Parikh Conservative Hybrid Fund is expected to be lower in volatility compared to a gilt fund (unless there is a big market up or down and the 12-14% equity acts up). I expect this to reasonably bolster the debt portfolio during times when gilts are down.

Readers must appreciate that the fund invests in medium-term state development loans (about 70%) along with 12-14% equity and about 8-9% of REITs. This will not be a joyride! Investors new to debt funds should use the fund only for long-term goals without specific return expectations.

Ideas about risk appetite, asset allocation and how we decide to de-risk a portfolio change with time. In 2009 (when we started investing for our son) I probably would have never chosen a gilt fund or a conservative hybrid fund. Things change! The key is to react by looking at our own circumstances. No one can understand it better than ourselves.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)