Hybrid Funds

What are hybrid funds? Factors to consider before Investing

Any traditional investor at this point in time faces the same old dilemma however – “I want to invest in something with the least risk but also earn the highest returns through debt funds.”

For such conservative investors, hybrid funds are the solution. 

What is a Hybrid Fund?

Hybrid funds basically are a type of mutual fund which basically invests in more than one asset class. These funds are, most often, a combination of equity and debt assets. Such hybrid funds may include a gold or Real estate.  

What you need to consider before investing in hybrid funds?
  • The returns: it is essential to know that hybrid funds don’t always guarantee returns. The returns are affected by the performance of the investments. You must know that in a rising market, hybrid funds performance lags the funds which have 100% equity allocation and in a falling market it will basically outperform pure equity funds. 
  • The returns: something you just cannot overlook, hybrid funds come with risk. The higher the equity component you invest in, the riskier is the fund. 
  • Time horizon: hybrid funds usually are suited for a medium term horizon, say roughly 3-5 years. The longer is your time horizon, the better are your chances of getting stable returns. 
  • Cost of the fund: just like every mutual fund, hybrid funds also charge a fee. This is known as expense ratio. The lower is the expense ratio, the better it is for the investor. 
In conclusion

These are some of the things you need to look into before getting yourself hybrid funds and thereby asses your risks to returns ratio. In the investing scene, only those who are constantly vigilant make maximum money. 

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