Hybrid fund investing: Here’s all you need to know

Hybrid Fund is one such category of mutual fund that invests in both equity and debt asset classes. If the returns in equity deteriorate, then debt can balance the overall return and in case returns in debt deteriorates, then equity helps. Hybrid funds provide the benefits of both asset allocation and diversification to investors.

Hybrid funds differ from each other on the basis of equity and debt participation in the scheme. In an aggressive hybrid fund, 65-80% is invested in equities and 20-25% is invested in debt. In a balanced hybrid fund, around 40-60% of the total assets are invested in equity or debt instruments. So, in the balanced advantage fund scheme, 100% of the total investment remains in equity or debt. It manages its investments in a dynamic manner. Money9’s exclusive conversation with Mirae Asset CEO Swarup Mohanty throws light on the specialty of hybrid funds.

How do hybrid funds reduce risk?

According to Mohanty, hybrid mutual funds are a good investment for new investors as one can invest in both equity and debt through a single fund. The risk is less as compared to other categories as the investment in both equity and debt gets diversified. If the returns in equity deteriorate, then debt can balance the overall return and if the case in debt deteriorates, then equity helps. Hybrid funds have also given better returns.

Watch the full conversation with Mirai Asset CEO Swaroop Mohanty