Kolkata: Indian mutual fund investors had a rollicking time when the bulls had a stupendous run on Dalal Street. However, the FIIs (Foreign Institutional Investors) began pulling out their investments since October 2024, the market indices began moving in the opposite direction. Most common investors were not prepared for the correction and were had an unpleasant surprise. Suddenly, the constant rise in their portfolio stopped and began dipping. Those who had entrusted equity mutual funds with a lot of their money were especially jolted.
All market experts urge investors not to panic when bears take control of the market. While some investment strategists advise that volatility and dips often create quality buying opportunities, those investors who do not have appetite, or the time, or the inclination to wait for the markets to recover, can think of hybrid funds.
What is a hybrid fund
Hybrid funds constitute a wide category of mutual funds which invests in multiple asset classes, chief among these being equities and debt paper. The declared goal of any hybrid fund manager is to offer portfolio diversification for investors, who can enjoy growth in value in a relatively less risky condition than that offered by equity-oriented mutual funds. A typical hybrid fund could allocate resources in stocks, bonds, real estate and precious metals such as gold and silver. Hybrid funds can appeal to a wide range of investors who can be conservative to aggressive in their risk tolerance. Almost all fund houses in India offer an array of hybrid funds.
What is the difference between equity and hybrid funds
There are crucial differences between equity funds and hybrid funds. While equity funds primarily put their money in stocks, managers of hybrid funds invest in both stocks and debt instruments. Since hybrid funds combine a basket of equity and debt, they try to strike a balance between growth and stability. A point to note is that while hybrid funds are less risky than equity funds, they are riskier than debt funds. In short, they walk the middle ground. There are a few sub-categories of hybrid funds:
- Conservative hybrid funds
- Balanced hybrid funds
- Aggressive hybrid funds
- Dynamic asset allocation funds
- Multi-asset allocation funds
- Arbitrage funds
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
The Indian stock market has become volatile and somewhat turbulent. Since equities are taking a beating, you can have a look at hybrid funds which invest in both stocks and bonds in order to achieve a diversified portfolio. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
