Mutual funds are one of the safest investment tools in the market that guarantee safe returns. Other than mutual funds, people who like to invest can also opt to invest in Hybrid Funds.
A hybrid fund is a mutual fund scheme that invests in both equity and debt. If you aren’t sure and don’t want to take risk in the market then Hybrid funds are for you because it offers less risk and higher returns.
Why choose Hybrid Fund?
A hybrid fund invests money in equity, debt assets and gold. Since it invests in different classes of assets, the risk is minimum and the investor gets benefits from diversification.
For example, in case the money you invested in equity decreases then the fund balance is done through money invested in debt and gold. If gold price reduces then the balance is done between equity and debt.
There are a total of 6 types of Hybrid funds:
– Aggressive Hybrid Fund: This invests 60-80% investment in Equity, 20- 30% in Debt for a period of five years.
– Conservative Hybrid Fund: This invests 10-25% in equities and the remaining amount in debt assets for stable or regular income.
– Dynamic Asset Allocation Fund: This und uses a dynamic manner across asset classes and 100% invests in equity or debt.
– Multi-Asset Allocation Fund: This fund invests 65% in equity, 20-30% in debt assets and 10-15% in gold.
– Arbitrage Fund: Arbitrage funds take advantage of the price differential of stock either on two different exchanges or between two different markets (the cash and derivative market).
– Equity Savings Fund: This fund is a prudent mix of equity, debt and arbitrage. It invests a minimum of 65% in equity and arbitrage positions and the balance in fixed income instruments.
