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What are hybrid mutual funds?

By Finserv MARKETS - Aug 27,2019
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What are hybrid mutual funds?

Mutual funds have always been acknowledged as the best investment plan for investors looking to hedge their bets against the market. Mutual funds are a type of investment instrument wherein a single fund is invested into different instruments, to ensure the highest returns and maximum security. Mutual funds can be invested into equity instruments, debt instruments or other kinds of securities depending on the goals and risk appetite of the investors.

The strategy which decides the allocation of the fund across these securities is based on the above mentioned factors. Investors who aim for high returns usually invest in top performing mutual funds which are more invested in equity funds, whereas investors who are keen on maintaining the security of their invested funds usually prefer funds which invest more heavily in debt and related securities. Mutual funds invested in debt securities, money market instruments, treasury bills and others usually provide a fixed income which is regularly paid out to the investors.

Investing in mutual funds on Finserv MARKETS provides investors with a plethora of options among which to choose their best investment plan. Based on their goals, whether short-term like building a corpus for their children’s education; or long-term such as for meeting retirement goals; investors can choose from top performing mutual funds which guarantee high returns and security from market fluctuations. Investors can choose to manage funds themselves by opting for Direct Investment Plans, which allow them to save on commission fees or can opt for a qualified fund manager to take decisions on their behalf.

Among mutual funds, hybrid mutual funds are gaining popularity as the best investment plan. These are usually balanced mutual funds which ensure regular returns as well as security for investors. A well-managed hybrid fund would aim to achieve both short-term and long-term goals. A well planned distribution of the fund across different asset classes would ensure a regular income for investors in the short-term, and capital appreciation which could help build a substantial corpus in the long-term.

Hybrid mutual funds hold appeal for both new and seasoned investors. New investors can begin their market investments through hybrid funds, and it can help them figure out their risk appetite since these funds will help them get a taste of every kind of instrument. For seasoned investors, hybrid mutual funds are the best investment plan since they allow for wide diversification of their investment portfolio. Hybrid mutual funds are also divided into three types on the basis of their asset allocation. Read on to identify the best investment plan for you.

  1. Equity Oriented Hybrid Mutual Funds:
    These mutual funds place higher emphasis on capital appreciation, in order to help investors meet their long term goals. Over 65% of the investment resources are aligned towards purchasing equity stocks of different companies. Upto 35% or even lesser of these funds would be allocated towards the purchase of debt and other securities. While the latter ensures security of the investors’ funds, the former allows for high returns.
  2. Debt Oriented Hybrid Mutual Funds:
    Over 75% of the resources of these funds are allocated into treasury bills, money market instruments, bonds and other debt instruments which guarantee a steady income to investors. These funds are also known as Monthly Income Plans since they allow investors the possibility of a regular income paid out in the form of dividends. Investors can choose the frequency at which they want to receive the dividends – they can either be monthly, quarterly, semi-annually or even annually. While 25% or lesser of this fund is invested into equity stocks, these kind of funds also offer investors the choice of reinvesting their dividends in a bid to facilitate capital appreciation. Investors can invest in debt oriented hybrid mutual funds through Finserv MARKETS, where they have access to the top performing mutual funds and can avail customised offers based on their goals. These funds are usually counted among top performing mutual funds, since they post positive returns and guarantee investors a fixed income.
  3. Arbitrage Funds:
    These kinds of mutual funds exploit the differences in trade value of shares by simultaneously purchasing and selling the same shares in different markets. Since shares are being purchased in the cash market while being simultaneously sold in the futures market, the price differential is used to create a profit. Arbitrage fund managers are usually able to generate profits by exploiting this difference.

Top performing mutual funds usually involve a healthy mix of diversification across portfolios which generate high returns while also guaranteeing optimum security of the funds invested. Investing in mutual funds via Finserv MARKETS provides investors with access to detailed information on different funds and portfolios, and allows them to take informed decisions on the funds they wish to invest in. While opting for a Direct Investment Plan lets them gain benefits of 0% commission fees, they can also choose to avail the services of qualified professionals and ensure that their investments guarantee them the best returns.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no-cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522