Type to search

Why is Hybrid Funds the Right Investment Option for You?


Why is Hybrid Funds the Right Investment Option for You?


Hybrid funds are nothing but a type of Mutual Funds (MFs) that invest your money in more than one asset class. These asset classes include both debt and equity instruments along with real estate and gold. Investing in this financial instrument allows you to diversify your portfolio truly. Additionally, these funds try to minimize risk and maximize returns by hedging money into multiple asset classes.

Right Investment

Why are hybrid funds an excellent investment opportunity?

Here are the top benefits of opting for hybrid funds:

Invest in different assets with one fund

It is never wise to put all your money in only one type of assets, such as debt, equity, or gold. Certain asset classes are high risk, but they can provide exceptional returns, while others are nearly zero-risk and still provide a humble return.

To mitigate risk and optimize return, you must have your fingers in multiple pies. Simply put, strike a balance by investing your money in both low, moderate, and high-risk assets. This is possible only when you simultaneously invest in different asset classes – something possible through hybrid funds.

Diversify within an asset class

Hybrid funds don’t just serrate your money within different asset classes like debt, equity, gold, etc. They further hedge or divide it into sub-classes within each category for improved safety and higher returns.

For instance, if you invest in equity, your fund manager will divide your money into small-cap, mid-cap, and high-cap stocks. Further, they will also invest in growth stocks. Such heavy diversification within each asset class ends up bearing significant returns in both the short and long term.

Holds steady against market volatilities

Whether you buy hybrid mutual funds online or offline, they are historically known to offer healthy returns. And, this is true even when the stock market turns volatile because they invest in debt securities which are a safer sub-asset class.

Therefore, hybrid funds should be your go-to if you don’t have the stomach for relatively higher risks. They tend to perform somewhat better when the market is facing a downward trend.

Offers varied risk tolerance

Sure, several risk-averse individuals gain a lot by investing in hybrid funds. But, the opposite end of the spectrum also supports this instrument for significant returns. And, hybrid funds cater to all risk profiles.

If you are an aggressive risk-taker, invest in equity-oriented hybrid funds. If you are risk-averse, opt for debt-oriented funds. And, if you’re looking for relatively stable returns even when market conditions turn volatile, go for arbitrage hybrid funds.

Parting thoughts

Want to dabble in MFs without investing a lump sum? If so, then test the waters by opening a Systematic Investment Plan or SIP. You can earn significant returns by investing in this instrument, as it supports in MFs.

If you’re looking for an online or a mobile-friendly platform to invest in hybrid funds, MFs, or systematic investment plans, turn to Tata Capital Moneyfy. They offer a bouquet of financial services that can help you grow your wealth exponentially. You can also invest in these funds by downloading their Moneyfy app.

Eula Boone

I have written professionally since 2010 and have been an investor since 2015. My finance blog, economydiva.com, is one of the most visited blogs in the world, with more than 3 million readers a month. I love sharing what I know about investing, saving, and managing money and providing practical tips on how to be a smart and savvy money manager.