Investing is one of the strategies that may help you reach your financial objectives in life. Many people, however, continue to rely on conventional saving methods such as bank fixed deposits (FDs), traditional life insurance plans and government schemes. People frequently use the terms 'savings' and investment interchangeably. But they must recognize that there are significant differences between the two. Savings refers to the portion of your income that you set away, whereas investment refers to the portion of your savings that you actually put to work.
Having said that, things have changed in recent years, and with reduced returns given by various saving choices, investors are now shifting their investments to mutual funds. As first-time mutual fund investors, they are confronted with a profusion of alternatives, which frequently leaves them perplexed. In such cases, a hybrid fund is an excellent alternative for first-time mutual fund investors. You may now have a slew of questions about hybrid funds. In this article, we will go over all there is to know about hybrid funds, from what they are to the many types of hybrid funds and how to choose the best hybrid fund.
If we closely track the assets under management (AUM) trajectory of hybrid funds, we can find that it has increased from ₹3,41,445 crore to ₹4,79,918 crore in the last three fiscal years, representing a compounded annual growth rate (CAGR) of 12 per cent.
However, the picture changes if we look at its AUM as a percentage of the overall AUM of open-ended schemes.
As seen in the graph above, the contribution of hybrid funds' AUM to total AUM decreased sharply from June 2019 to December 2020. However, it has now begun to climb and is currently approaching the pre-pandemic levels. Further, examining the trend of specific types of hybrid funds would assist us in determining which is the most popular.
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