Any investment fund that shows a mix of different asset classes is called as a hybrid fund.

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A typical hybrid fund is a mixture of both equity and debt funds.

One of the key feature of a hybrid fund is the fact that it will provide investors with a portfolio that is extremely diversified.

The merit of having both stocks and bonds in your portfolio is that it will give you the option of achieving wealth growth in long term, but also the opportunity to generate quick income in the short term.

Hybrid funds can be classified based on which type of fund they favour.

If more investment is made on equity funds than debt funds, it is called an equity-oriented fund.

On the other hand, when the fund is more tilted in favor of debt funds, they are called as debt oriented fund.

While these types of funds have several merits including lower risk than pure equity funds and also a better returns than debt funds, they too have their risks.

The funds too can be affected by the fluctuations of the market, particularly if it has a higher share of equity funds in it.

So, hybrid funds are a great option for both conservative and novice investors, proper care should be observed when assessing the risk aspect.

First Published:Jun 25, 2018 7:07 PM IST