A hybrid fund is a combination of equity and debt investments which are designed to meet the investment goals of the investor.
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Investors are always prone to risks and failures in profitable investments. In such cases, a large number of investors have turned towards mutual funds for better returns. If you are also a mutual fund investor then you can choose a hybrid fund for investments. This type of investment scheme will give you a balanced return. A hybrid fund is a combination of equity and debt investments which are designed to meet the investment goals of the investor.
Equity investments are high-risk investments in which the shares of the companies are bought by the people in exchange for money. Debt investments are when an investor lends money to the firm or sponsor. They get a return with an added interest. It is a low-risk investment.
Hybrid mutual fund adds the advantages of both. When the market is down the equity investment’s lack of returns is cushioned by the debt investments.
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The financial managers create a balanced portfolio to offer regular income from the hybrid mutual funds. There can be several types of hybrid mutual funds. One of them is the Equity-Oriented Hybrid Fund in which the investor invests at least 65 per cent of total assets in equity and the rest in debts.
Another is debt investments, in which 60 per cent of the total asset is invested in government securities, debentures, etc. The rest is invested in equity. Similarly, there is another type named Balanced Hybrid Mutual Fund.
Hybrid Funds have been working well in the market. Nippon India Multi-Asset and Nippon India Equity are some of the Hybrid funds in India. It has given a return of 16.43 per cent and 18.74 per cent respectively. At the same time, HDFC Multi Asset Fund and TATA Multi Asset Fund have given a return of 13.98 per cent and 15.25 per cent during the same year.
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Balanced hybrid funds like ICICI Prudential and Sundaram have given an annual return of 10.9 per cent and 11.06 per cent respectively. Nippon India’s balanced advantage fund has given a high return of 11.29 per cent in the last year.
