Hybrid Funds

How can you define a hybrid fund?

A hybrid mutual fund is defined as the union or combination of debt and equity investments. They are designed to meet the requirements of the investor. An investor should read the scheme properly before investing. Proper research about the returns and other areas is required for a good investment plan.

A hybrid fund is designed according to the debt and equity funds. It is specifically created to meet the needs of the investors that are interested in exploring different areas of investment. Many hybrid funds are available such as SBI equity hybrid fund, Nippon India Equity Hybrid Funds, SBI Debt Hybrid Funds and many others. 

What Are The Different Types Of Hybrid Mutual Funds?

There are various types of hybrid funds. They are mentioned below to provide the required information. 

• Equity oriented hybrid funds:

It is a fund that focuses on investing at least 65% of total assets in the area of equity and equity-related instruments of different companies. The remaining 35% of the share is invested in debt securities and other money markets instruments. 

• Debt oriented hybrid funds:

A debt-oriented hybrid fund is interested to invest at least 60% of its total assets in securities such as government areas, debentures, bonds, etc. The other remaining share of 40% is invested in the equity area. There are some funds in the market that can invest in liquid schemes. 

• Balanced funds:

Balanced funds invest a minimum of 65% of the total assets in equity-related investments and other assets are kept for the cash and securities. For taxation purposes, they are considered equity funds. 

• Monthly income plans:

It is a hybrid fund that invests in fixed income securities and other parts are invested in small areas of equity-related investments. They have the potential to generate better returns as compared to other schemes of the equity and hybrid areas. Additionally, the investors will get a regular income option if they opt for these plans. 

• Arbitrage funds: 

Arbitrage funds are those funds that can buy stocks at a low price from one area of the market and sell it at higher rates in another market. Fund managers focus on targeting the potential aspects so that investors can get better returns. In case, good opportunities are not available then there are chances that the fund manager may invest in the cash and debt securities. They are considered as one of the safest methods of investment. Investors must note that long term capital gains are eligible for taxation like equity funds. 

How Does The Hybrid Fund Work?

If the investors are interested in creating a balanced and attractive portfolio then they should choose hybrid funds. They can offer the regular income option to their investors. The fund manager will create a portfolio to cater for the needs of the objectives of the scheme and can assign the funds in the areas of equity and debt instruments. Additionally, the manager may buy or sell the assets depending upon the situation of the markets. There are many types of hybrid mutual funds in the market such as SBI equity hybrid fund, Nippon India equity hybrid fund, etc. 

Who Is Eligible For The Hybrid Mutual Funds?

Hybrid mutual funds are considered safer than equity funds. People interested in investing their money in low-risk areas should consider these funds. If there are some new investors that are trying to explore the market can also choose the hybrid funds. 

Conclusion 

Investments are one of the most important aspects of life. In the era of technological advancements, financial planning is the key to having a balanced life. People from every age group are interested to invest their hard-earned money in some good areas so that they can earn higher returns. In recent times the concept of hybrid mutual funds is getting extremely popular. Many types of funds are available in the market such as SBI equity hybrid fund, Nippon India equity hybrid fund and SBI debt hybrid fund including many more.