What are Hybrid Mutual Funds?

Hybrid mutual funds are investment vehicles that combine instruments such as equity, fixed income, gold etc within one portfolio. These funds aim to provide investors with a diversified strategy, balancing the potential for capital growth from stocks with the stability and income generation potential of bonds. You can choose hybrid funds based on your financial goals, investment horizon and risk appetite. Here's why hybrid funds can be apt choice across life stages:

  • For beginners, Hybrid Funds provide a balanced approach. The equity component offers growth potential, while the fixed-income part adds stability.

  • The mix of assets in Hybrid Funds helps cushion the impact of market volatility. When markets are down, the debt portion can provide stability, and when markets are up, they can contribute to growth. This balance reduces overall portfolio risk.

  • Hybrid Funds can be an excellent choice for retirement planning. They offer the potential for long-term growth while safeguarding capital. As you age and approach retirement, you can shift towards a more conservative allocation within the same fund.

  • Even after retirement, you need your investments to continue growing to beat inflation. Hybrid Funds can provide a steady income stream through dividends and interest payments, helping maintain your lifestyle while still offering growth potential.

Why Hybrid Mutual Funds can be a suitable choice?


You can invest in multiple asset classes like Equity, Fixed Income & Gold through one fund.


Mix of multiple asset classes help provide stability to your portfolio.

Tax Efficiency

These funds provide equity/ non-equity taxation benefits depending on the asset allocation.


Provides you the flexibility to choose a fund based on your risk profile and specific financial goals.

Types of Hybrid Funds

Arbitrage Funds

We seek differences or arbitrage opportunities in the prices of our daily shopping and benefit from the savings. These funds predominantly invest in similar arbitrage opportunities in the pricing of securities in the markets to generate returns. They are low risk compared to other hybrid funds, ideal for investors looking to park money for the short term and benefit from equity taxation on investments compared to traditional options.

Aggressive Hybrid Funds 

Want the power of equity with a little stability of fixed income? These funds invest in equity with the remaining in fixed income to generate wealth over the long-term. They offer lower risk compared to pure equity funds and are suitable for investors with a moderate risk appetite while looking to invest in equities for their goals.

Conservative Hybrid Funds 

Want to give your portfolio a little dose of equity to boost returns while investing predominantly in fixed income? Choose Conservative Hybrid Funds. These are debt-oriented funds, ideal for those looking to start investing in equity, closer to retirement or seeking better inflation-adjusted returns than traditional options.

Retirement-Oriented Funds 

Well begun is Half Done, they say! So is planning for your retirement. These funds let you get the discipline of investing for retirement with sub – plans having a different mix of equity and debt in each as per your age and risk profile. There is a lock-in of 5 years or till retirement age (whichever is earlier) to help gain from the power of compounding over time.

Children-Oriented Funds 

Children grow quickly. So do their needs! The earlier you plan and invest for your children, the better it is for their future. There is nothing more fulfilling as a parent than to be well prepared for your children’s education, marriage or to support their passion. These funds usually come with two options which have a different mix of equity and debt to help you invest according to your objectives. A lock-in period of 5 years in this fund ensures that you are committed to investing for your child and helps the power of compounding take effect.

Equity Savings Funds 

Want to take conservative approach to equity while benefiting from equity taxation? These are equity-oriented funds which invest in equity, fixed income, and arbitrage opportunities to generate capital appreciation, manage risk, and enhance return potential while providing equity taxation benefits.

Multi Asset Allocation Funds 

Each asset class does well in different market conditions. These funds invest in equity, fixed income, and gold with an aim to diversify the portfolio, reduce volatility and provide optimal returns in the long term.

Balanced Advantage Funds 

Markets can be volatile, but your life goals should not! These funds dynamically manage allocation between equity and debt in their portfolio to capitalise on potential gains and reduce volatility. Choose these funds if you wish to keep up with market movements and let the expert fund managers decide the optimal allocation for you.

Contact your Mutual Fund Distributor/Advisor.

An Investor Education and Awareness Initiative.

Investors should deal only with registered Mutual Funds, details of which can be verified on the SEBI website (https://www.sebi.gov.in ) under ‘Intermediaries/Market Infrastructure Institutions’. Please refer to website of mutual funds for process for completing one-time KYC (Know Your Customer) including process for change in address, phone number, bank details etc. Investors may lodge complaints on https://www.scores.gov.in against registered intermediaries if they are unsatisfied with their responses. SCORES facilitates you to lodge your complaint online with SEBI and subsequently view its status.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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