Hybrid Mutual Funds: There is also a hybrid fund in different categories of mutual funds. Such schemes invest in both equity and debt asset classes. If you are a conservative investor, that is, you do not want to take the risk of the market, then hybrid mutual funds are a good option for you. In these, where the risk is less than other categories, the returns are also getting better. During the last 3 to 5 years, there are many such funds, which have given more than 10 percent return in double digit. Experts say that if investors are confused about the uncertainty in the market in the COVID 19 crisis, then risk in hybrid funds can be protected.
Getting better returns
There are also different schemes in these. These include Aggressive Hybrid, Conservative Hybrid, Balanced Hybrid, Dynamic Asset Allocation or Balanced Advantage, Multi Asset Allocation, Arbitrage and Equity Saving Scheme. Talking about the last 5 years, the average return of aggressive hybrid funds has been 10.50 per cent. The average return of balanced hybrid segment has been around 8 per cent in 5 years. Conservative hybrid has a 5-year average return of 7 per cent. The average return of 5 years in hybrid equity savings has been more than 7 per cent.
Characteristic of Hybrid Funds
Hybrid mutual funds invest in more than one asset class. These include equity and debt assets. Many times these schemes also invest in gold. That is, there is an opportunity to invest money in equity, debt and gold in a single product. Their investment in this way is quite diversified. The advantage of this is that if returns in equity deteriorate, then returns of debt or gold can balance overall returns. In the same way, if the returns in debt or gold are weak, then the return of equity balances it.
Who should invest
Focusing on asset allocation and diversification, these schemes of mutual funds invest in all asset classes. Investors can also invest in them, who can take equal risk. They are also true for those with little risk-taking ability. However, aggressive investors can also invest in them. If you are a new investor in mutual funds, then this scheme can be better.
Hybrid fund will be severed
Aggressive Hybrid Fund: In this category of mutual funds, 65 to 80 percent of the investment is in equity. At the same time, 20 to 35 percent investment is made in debt.
Balanced Hybrid Fund and Aggressive Hybrid Fund: Balanced hybrid funds invest around 40 to 60 per cent of their total assets in equity or debt instruments. These schemes cannot invest in arbitrage.
Dynamic Allocation or Balanced Advantage Fund: This scheme of mutual funds can invest 100 per cent of the total investment in equity or debt. It manages its investments dynamically.
Multi Asset Allocation Fund: In this category of mutual funds, equity, debt and gold can be invested in all three types of asset classes. Of this, 65 percent is invested in equity, 20 to 25 percent is invested in debt and 10 to 15 percent is invested in gold.
Arbitrage funds: They have to invest at least 65 per cent of their total assets in equity or equity related instruments.
Equity Savings Funds: This scheme of mutual funds invests in equity, debt and arbitrage. At least 65 per cent of the total assets will have to be invested in shares. Similarly, at least 10 percent investment has to be made in debt.
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