Hybrid Funds
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Get A QuoteMaximizing Returns through Diversification: The Power of Hybrid Funds
Invest smartly with Hybrid Funds and achieve your financial goals with a well-rounded portfolio.
What is Hybrid Fund?
Hybrid funds, also known as balanced funds, are a type of mutual fund that invests in a combination of stocks, bonds, and other securities. The objective of hybrid funds is to provide investors with a balanced portfolio that offers both growth and income. The portfolio of a hybrid fund typically consists of a mix of equity and debt securities, with the exact mix depending on the fund’s investment strategy and risk tolerance.
The allocation of assets in a hybrid fund is managed by a professional fund manager, who periodically rebalances the portfolio to maintain the desired mix of stocks and bonds. This provides investors with the benefits of diversification, as well as the potential for steady returns and stability.
Types of Hybrid Funds
There are several types of hybrid funds, each with its own investment strategy and risk/return profile. Some of the most common types of hybrid funds include:
Equity-oriented hybrid funds: These funds invest the majority of their assets in equities, with a smaller portion invested in fixed-income securities. The objective of these funds is to provide capital appreciation through equity investments and stability through debt investments.
Debt-oriented hybrid funds: These funds invest the majority of their assets in fixed-income securities, with a smaller portion invested in equities. The objective of these funds is to provide regular income through debt investments and potential capital appreciation through equity investments.
Balanced hybrid funds: These funds invest in a balanced mix of equities and fixed-income securities, with the objective of providing both capital appreciation and regular income.
Arbitrage funds: These funds invest in both equity and debt markets and exploit market inefficiencies to generate returns. They are generally considered to be low-risk investments.
Multi-asset funds: These funds invest in a mix of asset classes, including equities, bonds, commodities, and real estate. The objective of these funds is to provide a well-diversified portfolio with the potential for both capital appreciation and income.
- Since the investor makes investments in a portfolio made up of many asset classes, provides the investor with the benefit of diversity. As the performance of one asset class is balanced by the performance of another asset class, this can help minimize risk by stabilizing returns.
- Depending on the type of fund and its investment objective, investment in several asset classes provides investors with exposure to equities, debt, gold-related instruments (including ETF), and other asset classes (where permitted). By doing this, investors save the inconvenience of investing in each asset class separately and pay less for each asset class-based fund.
- The advantages that each asset class offers are the benefits of investing in numerous asset classes. Depending on the type of fund, these investments in equities, the stability and lower volatility of debt funds, the perceived safety of gold, and the high liquidity provided by cash all have the potential to provide long-term capital appreciation.