What are Hybrid Mutual Funds?

  Author: Kundan Kishore

As the word, hybrid suggests, hybrid or balanced funds typically invest in a combination of investments categories such as large- , mid-, small-cap stocks and debt securities. Greater diversification or spreading of investments across investment categories reduces the higher risks from only investing in equity investments. At the same time, hybrid funds better the returns typically provided by debt funds.

Hybrid funds are considered lower risk than equity funds, but higher risk compared to debt funds. Experts often recommend them to investors who maybe averse to the higher risk of equity funds but would like to benefit from the typically high growth of equity investments.

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