Add Hybrid Funds to Your Portfolio

Every ardent cricket fan knows that one cannot make a great team with only super batsmen. Similarly, an all-star team of bowlers can take the wickets of an opponent but won’t win the match when it comes to scoring runs.

M Praveen Kumar Managing Director, Future First Financials (P) Limited

This is why successful teams require a delicate mix of skills. The story is not different for your mutual fund investments. Hybrid funds are mutual fund schemes which invest in more than one asset class i.e. equity, debt and other asset classes so that the risk involved is minimised and the return potential is optimised. In doing so, hybrid funds offer investors the best of both worlds as such investment avenues possess the potential to generate relatively better returns than plain-vanilla debt funds while being less risky than equity funds.

Multiple Benefits — Hybrid mutual funds offer you four distinct advantages. One, the presence of two or more assets makes such a fund imbibe the best qualities of all asset classes, while reducing the downside of each asset class. As a result, investor experience in hybrid funds is much better than single asset-class dominant funds. Furthermore, hybrid structure ensures stability of portfolio returns. For example, if the fund invests in equity and debt, even if there is a sharp correction in equities the downside is protected due to the presence of debt.