What is an example of a hybrid mutual fund?

One of the long running hybrid mutual funds in India is the HDFC Balanced Fund. This fund invests in a mix of equity and debt instruments to generate returns for investors. The fund has an asset allocation of 65-75% in equities and 25-35% in debt securities, making it suitable for investors looking for moderate levels of risk and return.

Explore the Power of Hybrid Mutual Funds

What are Hybrid Mutual Funds?

Hybrid Mutual Funds are investment funds that combine equities and fixed-income securities in a single portfolio. They aim to balance growth potential and income stability, offering diversification and reducing overall risk. They cater to both conservative and aggressive investors by adjusting the mix of assets.

Features of Hybrid Funds

Invests in two or more asset classes
Risk diversification
Flexible allocation through asset rebalancing

Benefits of investing in Hybrid Funds

Consistent returns in all market conditions
Lower risk exposure

Simplified investment
Regular income with the bond component

Types of Hybrid Funds

Aggressive Hybrid Funds

Larger allocation in equities and smaller allocation in debt/bond

Conservative Hybrid Funds

Larger allocation in fixed-income securities, such as bonds, and smaller allocation in equities.

Balanced Funds

Mix of equity and fixed-income investments, ideal for investors seeking a blend of growth and stability

Multi-Asset Allocation

Investments across asset classes, including equities, bonds, commodities, and real estate

Dynamic Asset Allocation

Investment reallocation across asset classes as per market conditions and economic forecasts

Arbitrage Fund

Maximises returns while minimising risks by leveraging price differences across cash and derivative markets

Equity Saving Fund

Investments in a mix of equities, debt, and arbitrage opportunities to provide balanced growth with reduced risk

Who Should Invest in Hybrid Funds?

Conservative Investors
Conservative Hybrid Funds allocate a higher proportion to fixed-income securities, providing stability and steady income with lower risk exposure.
Moderate Investors
Balanced Hybrid Funds offer an equal mix of equities and fixed-income securities, aiming to balance risk and reward for moderate growth and income.
Aggressive Investors
Aggressive Hybrid Funds have a higher allocation to equities. These funds target significant capital appreciation while still incorporating fixed-income securities for some level of risk mitigation.

Top performing mutual funds

Scheme Name	5 Y
Bank of India Mid & Small Cap Equity & Debt Fund-Dir (G)	195.89%	Invest Now
JM Aggressive Hybrid Fund - Direct (Bonus)	191.26%	Invest Now
JM Aggressive Hybrid Fund - Direct (Half-Bonus)	191.26%	Invest Now
JM Aggressive Hybrid Fund - Direct (Quarterly-Bonus)	191.26%	Invest Now

FAQs

Are Hybrid mutual funds safe?

The risk involved in hybrid mutual funds is lower than pure equity funds and therefore hybrid funds are considered relatively safe investments.

Which is better, Hybrid or Equity mutual funds?

Investing in hybrid or pure equity mutual funds will depend on the investor’s risk appetite and investment goals. Equity mutual funds provide higher returns over a longer-term period. However, they come with a higher level of risk. Hybrid Mutual Funds are more suitable for investors looking for moderate levels of risk and return.

Is a Hybrid Mutual fund good for the long term?

Yes, Hybrid Mutual Funds are suitable for long-term investments. This is because over a longer term, the risk of Hybrid Funds balances out and investors benefit from the compounding effect as well as capital appreciation

What are the benefits of hybrid mutual funds?

Hybrid mutual funds are an attractive option for investors looking to diversify their portfolio and benefit from returns generated by both equity and debt instruments. They carry moderate level of risk and generate moderate returns, making them suitable for investors with medium term goals or those who have just started investing in the stock markets. Moreover, they offer tax benefits depending on the type of securities and instruments held by the fund.

How many types of hybrid mutual funds are there?

There are two main types of Hybrid mutual funds: Equity-oriented Hybrid funds and Debt-oriented Hybrid funds. Equity-oriented Hybrid funds invest a majority of their corpus in equity instruments, while debt-oriented hybrid funds invest primarily in debt instruments. Amongst these main types, there are 7 different types of hybrid funds – Aggressive, Balanced, Multi Asset Allocation, Conservative, Equity Savings, Arbitrage, Dynamic Asset Allocation.