HYBRID FUNDS
Hybrid Funds are mutual fund schemes which invest in more than one asset class i.e. equity, debt and other asset classes depending on the investment objective of the scheme. These funds invest in a mix of different asset classes to diversify the portfolio with an aim to minimise the risk involved. Hybrid funds have the potential to generate relatively better returns than debt funds while being less riskier than equity funds
BENEFITS OF DEBT FUND
- Diversification
Hybrid funds offer the investor the benefit of diversification as it invests in a portfolio consisting of multiple asset classes. This can help lower risk as the performance of one asset class is balanced by the performance of another asset class thus stabilizing returns.
- Convenience
Hybrid funds invest in multiple asset classes giving investors exposure to equity, debt, gold related instruments (including ETF) and other asset classes (as permissible) depending on the type of fund and its investment objective. This saves the investors the hassle of investing in each asset class separately while also reducing the cost involved for investing in each asset class-based fund.
- Benefits of different asset classes
As hybrid funds invest multiple asset classes, it benefits from the advantages each asset class offers. These funds have the potential to generate long term capital appreciation by investing in equity, the stability and lower volatility of debt funds, the perceived safe haven nature of gold and the high liquidity offered by cash depending on the type of fund.