Hybrid Mutual Funds

A hybrid fund is a type of mutual fund that invests in a mix of equity and debt instruments. Hybrid funds aim to seek stable returns and capital protection from debt securities and capital appreciation from the equity component.

Hybrid funds, also known as balanced funds, may also include other asset classes such as real estate, international equities, etc.

There are different types of hybrid funds for different investment objectives such as, conservative hybrid, aggressive hybrid, multi-asset allocation, dynamic asset allocation, etc.

Hybrid funds are suitable for investors seeking relatively stable returns and growth upside from equity.

Hybrid funds offer the best of both asset classes: equity and debt in a single investment. The risk-return metric in hybrid funds depends on the percentage of the equity component. Debt attributes low risk and regular income, controls overall volatility in the fund, while the equity component brings high return potential for long-term wealth creation.

Conservative hybrid funds have a higher debt component, while aggressive hybrid funds allocate a higher portion to equity. Hybrid funds maintain the balance in assets as per the scheme’s objective.

Step 1: Visit the Rupeezy app and navigate to the ‘Invest’ segment.

Step 2: Click on ‘Explore’ and select ‘Hybrid’ category.

Step 3: Select the type of hybrid fund or simply search for the fund name.

Step 4: Analyze risk-return metrics for all funds in a category.

Step 5: Go to ‘List View’ and check each fund’s details and comparison.

Step 6: Select your choice of fund and investment mode as ‘One Time’ or ‘SIP’.

Step 7: Enter investment amount and make payment via UPI or Net Banking.

• Returns: Hybrid funds offer better returns compared to debt funds due to the equity component, along with downside protection from the debt component.
• Lower Risk: Hybrid funds are less volatile compared to pure equity funds with total allocation to direct equities.
• Flexibility: Hybrid funds are ideal for new investors who want to take measured exposure in equity.
• Diversification: Hybrid funds offer wider diversification in varied assets such as stocks, sectors, and bonds.
• Variety: Hybrid funds offer various combinations of debt and equity and even dynamic allocation options as per market conditions.
• Well Regulated: Hybrid funds are secure and operate under stringent SEBI norms.
• Market Risk: Hybrid funds have equity exposure that is vulnerable to market and stock-specific volatility. The debt component can be impacted by interest rate movements and credit risk in fixed income securities.

• Hybrid mutual funds with more than 65% equity exposure are eligible for tax benefits on equity funds. Long-term capital gains tax on equity-oriented hybrid funds held for more than 12 months is 12.5% (above the threshold of Rs. 1,25,000 in a financial year).
• Short-term capital gains tax (for units held for<12 months) in equity-oriented hybrid funds is 20%.
• Capital gain from conservative hybrid funds with more than 65% in debt is treated as income and taxed as per income tax slab rates.