If You Want To Invest In Equity Then You Can Choose Any Of Equity Mutual Funds Like Small-Cap Funds, Large Cap Funds Or Mid Cap Funds. And If You Want To Invest In Securities Like Corporate Bonds Or G-SECS Then You Can Choose Debt Mutual Funds. But What If ?, If You Want To Invest In Both Of Them. This Is Where Hybrid Mutual Funds Comes In.
In This Article, You Are Going To Learn About Hybrid Mutual Funds And Different Types Of Hybrid Mutual Funds.
Hybrid Mutual Funds
As The Name Suggests Hybrid Mutual Funds Are a Combination Of Both Equity Mutual Funds And Debt Mutual Funds. The Main Advantage Of Hybrid Mutual Funds Is, It Will Diversify Your Portfolio.
As These Hybrid Mutual Funds Are Actively Managed By Fund Manager, Whenever The Market Is At It Peaks.
The Fund Manager Can Shift Some Funds From Equity To Debt Market Or Whenever The Stock Market Is At Good Levels The Fund Manager Can Shift Some Funds From Debt To Stock Market.
So In Hybrid Mutual Funds, We Wil Get Exposure To Both Debt And Equity.
Types Of Hybrid Mutual Funds
There Are Different Types Of Hybrid Mutual Funds Let’s Learn About One By One.
Aggressive Hybrid Funds
In This Type Of Funds, Equity Segment Will Have Majority Portion.
Fund Manager Can Invest Minimum Of 65% To Maximum Of 80% Funds In Equity Segment. And Minimum Of 20% To a Maximum Of 35% Funds In Debt.
For Example, If The Total Funds Are 100Rs Then The Fund Manager Needs To Invest At least 65Rs In Equity Or Can Invest Up To 80Rs In Equity And He Needs To Invest Al least 20Rs In Debt Or Can Invest Up To 35Rs In Debt.
Assets Under Management In Aggressive Hybrid Funds Are Way Higher Than Any Other Types Of Hybrid Mutual Funds.
Conservative Hybrid Funds
In This Type Of Funds Debt Category Will Have Majority Portion.
Fund Manager Can Invest Minimum Of 75% To Maximum Of 90% Funds In Debt And Minimum Of 10% To Maximum Of 25% Funds In Equity.
Balanced Hybrid Funds
As The Name Suggests These Funds Are Equally Balanced Between Equity And Debt.
The Fund Manager Can Invest Minimum Of 40% To Maximum Of 60% Funds In Equity And Minimum Of 40% To Maximum Of 60% Funds In Debt.
Dynamic Asset Allocation Or Balanced Advantage Hybrid Funds
In This Type Of Funds, There Are No Restrictions.
So If The Equity Valuations Are Higher The Fund Manager Can Shift The Funds From Equity To Debt Or If The Equity Valuations Are Lower The Fund Manager Can Shift The Funds From Debt To Equity.
So Here The Fund Manager Will Have Full Flexibility Over The Funds.
Arbitrage Funds
Minimum 65% Of Funds Are Invested In Equity.
If We Observe Correctly We Can See That Some Stocks Will Trade At Different Prices In NSE And BSE. There Will Be Small Difference Between The Price Of Same Stock Trading In NSE And BSE, Mostly The Difference Will Be In Paisa Or Sometimes In Rupees.
So The Fund Manager Will Take Advantage Of This And Buys In One Exchange And Sells In Other Exchange.
And Also For the Same Stock, If There Is A Price Difference Between Cash Market And Futures Market. The Fund Manager Will Take Advantage Of This And Buys From One Market And Sells In Another Market.
Equity Savings Funds
In This Type Of Funds, Equity Segment Will Have Majority Portion.
The Fund Manager Needs To Invest a Minimum of 65% Of Funds In Equity And a Minimum of 10% Of Funds In Debt.
For the remaining 25%. The Fund Manager Can Maintain For Arbitrage. Or Can Invest In Equity Or Debt.
Multi Asset Allocation Funds
In This Type Of Funds, The Fund Manager Needs To Invest In At Least Three Asset Classes With A Minimum Allocation Of At Least 10% Each.
The Different Asset Classes Are Equity, Debt, Gold, Silver, Or Any Other Assets.
But Mostly The Funds Are Invested In Equity, Debt, And Gold.
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