Hybrid funds are Mutual Funds (MFs) that invest your money in multiple asset classes. These asset classes include debt, equity instruments,h real estate,e, 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.

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 asset, such as debt, equity, or gold. Certain asset classes are high-risk but can provide exceptional returns, while others are nearly zero-risk and still offer a humble return.

You must have your fingers in multiple pies to mitigate risk and optimize return. Put, strike a balance by investing your money in 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 results in significant short– and long-term returns.

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 faces 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, 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 to help you grow your wealth exponentially. You can also invest in these funds by downloading their Moneyfy app.