loader2
Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

What are Hybrid Mutual Funds?

Introduction

Mutual Fund investors get broadly classified into three following different categories – risk-takers, safe players, and guaranteed return seekers. The first category invests in Equity Funds, while the second category opts for Debt Funds, and the third type is Hybrid Fund.

What are Hybrid Mutual Funds?

A Hybrid Mutual Fund invests in Equity and Debt instruments to enjoy diversification and reduce the overall risk. An ideal blend of Equity and Debt, a Hybrid Fund offers higher returns than Debt Funds and has lower risk than Equity Funds. It helps get an appreciation of wealth over the long term and generates regular income in the short term. If you are new to Mutual Fund Investment and want to get Equity exposure, consider Hybrid Funds.

Types of Hybrid Funds

Hybrid Funds get categorised based on asset allocation. Some funds have a high Equity allocation, while some others are inclined towards debt. Here are different types of hybrid funds.

Equity-Oriented Funds: When the fund invests anything higher than 65% of the total assets in Equities, it is Equity-Oriented Funds. The balance gets invested in Debt and Money Market Instruments. The Equity aspect in the fund includes healthcare, finance, automobile, and some other sectors.

Debt-Oriented Funds: They invest higher than 65% of the total assets towards Debt instruments. It includes fixed-income investments like Bonds, Debentures, Government Securities, Treasury Bills, and more.

Arbitrage Funds: The fund manager here buys the stocks at a low cost in one market and sells them at a high price in a different market to generate high returns. But arbitrage opportunities are not readily available, and in such cases, the funds can get invested in Debt instruments. The fund is safer like Debt Funds. They get treated like Equity Funds when it comes to Long-Term Capital Gain Tax.

Balanced Funds: They invest a minimum of 65% in Equity and Equity-related instruments and the balance in Debt instruments. For tax purposes, they are considered Equity Funds, but you get a tax exemption on the Long-Term Capital Gain of up to Rs. 1 lakh. Balanced Funds mitigate the volatility that comes with Equity investment.

Monthly-Income Plans: This is a Hybrid Fund that primarily invests in fixed-income securities and has a small part allocated to the Equity and Equity-related instruments. It generates higher returns than the pure Debt schemes and offers regular income to investors. Such a Hybrid Fund is ideal for investors who do not want to take the risk of investing in Equity and want consistent income. It helps select a fund keeping the investment goals and risk appetite in mind.

Keywords:

Hybrid Fund – 4 times

Hybrid Mutual Fund  - 1 time

Types of Hybrid Fund – 1 time

Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100.  AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.