How to Invest in Hybrid Funds

This article explains the utility of hybrid funds in your portfolio, and how to invest in them.

It’s a tightrope walk with most market-linked investments. On the one hand, you want your money to grow fast so that you could be sitting pretty on wealth in just a few years. On the other hand, you don’t want to suffer any losses in a sluggish or unpredictable economy. So which choices can you make, and how can you get the best of both?

We’ll tell you: invest in hybrid mutual funds. They offer the right balance between growth and stability. Plus, they’re so easy to buy online as well.

What are hybrid funds?

Hybrid mutual funds, or balance funds, are MFs that offer investment in a mix of assets. Primarily, they balance your investment between equities and debt, so that you get the benefits of both.

Owing to the mix of asset classes, your capital investment sees appreciation via equities, and steady returns from debt instruments. Thus, if you do not want a high element of risk from your investment but still wish to see growth tempered by caution, then hybrid mutual funds are the right option for you.

The biggest benefit of hybrid balance funds is that they keep your investment steady even in the most volatile markets. The propensity for losses is greatly reduced with these funds.

Why hybrid funds are great for you

* Hybrid mutual funds allocate your money in cash, stocks and bonds. This ups the ante on the fund’s earning potential.

* The fund may grow quite aggressively with increased equity exposure during slow market trends, while pacing itself carefully with higher debt exposure during a market upswing.

* The hybrid balance fund can be chosen from leading fund houses in India based on your investment horizon, strategy and the fund’s basic objectives.

* Leading fund houses offer a lower average expense ratio. Combined with the advantages of stocks and bonds, it minimises your investment risk.

* With relatively safer access to stocks, you can create an essential tranquillity in your portfolio with good hybrid mutual funds. Leading fund houses in India offer a choice between multiple hybrid balance funds, with returns up to 8% per year.

How to invest in hybrid funds online

• Partner with leading fund houses to purchase the hybrid fund. Research their current offerings and ask questions about which one is best suited for you.
• You have the option of starting the investment with an SIP instead of parking a lump sum amount of money upfront.
• You can buy the hybrid fund online by registering yourself with the fund house. The registration process is a simple one, but you must complete the requisite KYC process to proceed (Aadhaar and PAN number are mandatory for registration).
• Once registered, you can proceed to buy the hybrid fund online and begin your investment journey.