Among the many categories of mutual funds, one of the most popular categories is Hybrid Fund. Hybrid funds are considered the best for investors who have to take less risk than equity funds and get more returns than debt funds.
In this article, what are Hybrid Mutual Funds, how Hybrid Mutual Funds work, what are the types of Hybrid Funds, what are the benefits of Hybrid Mutual Funds, we will talk about all these in detail and will also discuss them together. Which hybrid fund will be suitable for whom? So let us try to understand all these points one by one.
What are Hybrid Mutual Funds
Hybrid Mutual Funds are those funds in which there is an opportunity to invest in equity and debt instruments at the same time. These are also called balanced means balance funds. Hybrid funds are an asset class based category of mutual funds.
By the way, there is a whole category of mutual funds, if we talk about some of its main categories, they are equity funds, debt funds and hybrid funds. These three hoi asset class are the best funds. To understand hybrid funds, it is very important for you to understand equity and debt funds.
Hybrid Mutual Funds can be called a mixture of Equity and Debt Mutual Funds. In this, your money is invested little by little in both the equity and debt funds. This plan is specially designed for those making short term investments and also an attempt has been made to balance the risks in it.
Hybrid Mutual Funds invest money in more than one asset-best fund. There are equity and debt asset class based funds in this, sometimes this scheme also invests money in gold. By the way, their investments are quite diversified, before understanding hybrid funds, it is important to understand mutual funds well.
How Hybrid Mutual Funds Work
As you know, Hybrid Fund is a combination of Equity and Debt. Let us tell you that equity fund money is invested in company’s stocks and shares, while debt fund money is invested in government bonds, corporate bonds, money market, securities.
So the money of Hybrid Mutual Fund is invested in the stock market i.e. in company shares, government bonds, corporate bonds, all these in different places.
In this way, an attempt has been made to balance the risk and return in this fund. Hybrid funds are slightly more risky than debt funds and slightly less risky than equity funds.
Types of Hybrid Funds
SEBI has defined hybrid funds in 6 categories.
aggressive hybrid fund:- In this category of mutual fund 65-80% investment is done in equity fund while 20-35% investment is done in debt fund.
Balanced hybrid fund:- Invests about 40 to 60% of its total assets in equity or debt instruments. This scheme does not invest in arbitrage.
Balanced advantage fund & dynamic asset allocation:- This scheme of mutual fund can invest 100% of the cool investment in equity or debt. It manages its investments in a dynamic manner.
Multi asset allocation fund: – In this category of mutual fund, equity, debt, gold can be invested in all three types of asset classes. In this 65% equity, 20-25% debt in 10-15% investment can be done in gold.
Arbitrage Fund:– They have to invest at least 65% of their cool assets in equity or equity related instruments.
Equity savings fund:- This scheme of mutual funds invests in equity, debt and arbitrage, in which at least 65% of the total assets have to be invested in shares and 10% in debt.
Advantages of Hybrid Mutual Funds
- In hybrid funds, your money is invested little by little in a diversified manner by the experience fund manager with his entire team of research. These people are dedicated for this work. These people are experts in finance and economics. They have a good understanding of the market and keep an eye on the market movements at all times. Due to which your money is invested in the right place and you get good profit i.e. good return.
- You do not need much money to invest in a hybrid fund, in this you can take a monthly SIP (systematic investment plan) as per your convenience or starting from a minimum of ₹ 500.
- One can invest in three types of asset classes through Hybrid Mutual Funds which include Equity, Debt and Gold.
- Considering the risk of market volatility, the facility of long-term investment has been given. You can invest money in aggressive hybrid schemes by taking care.
- For investors who want to invest in equities but have a low risk appetite, hybrid funds can prove to be good.
I hope you have understood my article What are Hybrid Mutual Funds, How Hybrid Mutual Funds Work, What are the Types of Hybrid Funds, What are the Benefits of Hybrid Mutual Funds, all these points.
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