Types of Hybrid Funds

Hybrid mutual funds, commonly referred to as balanced funds, are investment vehicles designed to offer investors diversification and risk management by combining various asset classes in a unified portfolio.

These funds typically meld stocks (equity) and bonds (debt) to strike a harmonious balance between seeking growth and generating income.

Let’s break down the various types of hybrid funds in simple terms to help you choose the one that aligns with your financial goals.

Conservative Hybrid Fund

Ideal for those who prioritize stability, this fund strikes a balance with 10-25% in equity for potential growth and 75-90% in debt instruments for steady returns. It’s a cautious approach with a focus on minimizing risks.

Balanced Hybrid Funds

Looking for an even mix of growth and stability? This fund allocates 40-60% to equity for some upside potential and 40-60% to debt instruments for a safety net. It’s a middle-of-the-road option suitable for moderate risk-takers.

Aggressive Hybrid Funds

For those with a higher risk appetite, this fund leans towards growth. With 65-80% in equity, it aims for substantial returns, balanced with 20-35% in debt instruments to provide some stability during market fluctuations.

Dynamic Asset Allocation or Balanced Advantage Fund

This fund dynamically manages investments in both debt and equity securities, ranging from 0 to 100%, according on the condition of the market. It adapts to market conditions, making it a versatile choice for those who want an adaptive strategy.

Multi-Asset Allocation Fund

This fund achieves risk diversification across multiple asset classes by investing in a minimum of three classes, with a minimum allocation of 10% in each. It includes a combination of equity, debt, and an extra asset class like gold or real estate.

Arbitrage Fund

Utilizing market inefficiencies while maintaining a conservative risk approach, this fund employs an arbitrage strategy, with a minimum allocation of 65% in equity. It presents a lower-risk alternative compared to pure equity funds, making it well-suited for investors seeking exposure to stocks with reduced volatility.

Equity Savings

Balancing the trio of equity, debt, and derivatives, this fund allocates a minimum of 65% to equity, 10% to debt instruments, and utilizes derivatives for hedging as specified. It’s a comprehensive approach for investors seeking a mix of growth and income.

Understanding these hybrid funds empowers you to tailor your investments to your risk tolerance and financial objectives.

Exploring hybrid funds can help you find the right balance for your investment needs. At MutualFundWala, we offer expert guidance to help you understand the different types of hybrid funds and select the best option for your financial goals.

Our team is here to support you in making informed decisions and optimizing your investment portfolio.