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4 Advantages of Hybrid Funds in India

Advantages of Hybrid Funds

A Brief About Hybrid Funds

Investments, in general, can be classified into three types: equity funds, debt funds, and hybrid funds. Most investment advisors recommend that investors create an investment plan to set their investment goals, investment horizon, and risk tolerance to start investing. Most investors have plans, making it difficult to understand and segregate low-risk and high-risk takers. Because of this, we have Hybrid Funds, which offer low risk and will help you achieve better results. Hybrid funds are designed so that these schemes offer a balance between equity funds and debt funds. These funds are made with different combinations of equity and debt funds in such a way that it fulfills the investor’s objectives. 

Advantages of Hybrid Funds

Some of the benefits that Hybrid Mutual Funds offer are as follows:


Hybrid Funds offers investors the opportunity for diversification, as it is a combination of equity funds and debt funds. When stock prices fall, the debt part in the hybrid mutual funds ensures stability. As a result, these funds can endure blows during this period. In general, debt and equity have an inverse relationship; they move in opposite directions. As a result, having a balanced fund allows you to hedge your chances. Keep in mind that balanced funds perform poorly when the market is in a bull market. 

Investing in a hybrid fund has the advantage of diversifying your portfolio and asset allocation. It does not restrict your investment to a single asset class. Diversification allows you to reduce your financial risks while increasing your capital returns. You can choose how much danger you wish to take. In this manner, you’re laying the groundwork for long-term wealth creation while also ensuring regular returns. Another aspect to consider is that when stock prices rise, fund managers will be forced to sell equities in these hybrid mutual funds to maintain the required equity-debt ratio.

Balances Risk and Return 

The most significant benefit of a hybrid mutual fund is that it helps investors balance risk and return. The equity fund will earn higher returns, while the debt funds will generate consistent returns at a lesser risk. Investors can also select the best mix of stock and debt for their requirements. Hybrid funds are less risky because of the various asset allocation. 

Since you’re not focusing just on one asset, the odds of you incurring excessive risk are low. Your money is distributed over many types of support, thus lowering your risk. An aggressive balanced fund, for example, If someone will invest more than 75% in equities and the rest in debt. A conservative fund may invest less than 50% of its assets in equity. The SIP calculator app will help assess the returns that you will get from your investments. 


Another advantage of a hybrid fund is that you can invest small amounts of money each month through a SIP, based on your ability to save. So is there any difference between whether you invest in a big amount or installments? The answer is that you are mostly investing in debt. However, it will matter if the hybrid funds have a bigger equity component because you risk entering the stock market when prices are high. 

SIPs are preferable in hybrid funds with a bigger equity component since you benefit from rupee cost averaging. Axis Mutual fund offers the SIP app in which you can invest in hybrid funds and get detailed analysis about the fund. This app also provides the SIP calculator app; one can easily calculate their hybrid fund’s future value and estimate their returns and the monthly investment needed to be done. The application is very easy to operate and will help you plan your investment better. SIP calculator app are intended to provide prospective investors with information about mutual fund investments.

Higher Returns and Lower Expenses

Hybrid funds have outperformed equity funds in several cases. In recent years, hybrid funds have outperformed large-cap funds in terms of returns. It is especially true in an unstable market. Axis Mutual fund provides information about their funds with returns estimated in years. So, the investors can select the period they want to invest. They help you choose which funds are capable per your requirements and help you with the process.

Most balanced funds have a predetermined amount of stocks and bonds, and fund managers tend to bet on large-cap equities, so active portfolio management is unnecessary. As a result, hybrid funds will have lower expense ratios. 

Other Advantages Of Hybrid Funds

  • These funds are very well suited for first-time users/investors who want to enter this market. Particularly if they choose the equity funds, they will get exposure to these hybrid funds, and the risk is not too great when the stock prices increase and decrease. Axis Mutual Fund helps first-time investors with their queries regarding the investment plan they would like to invest in.
  • In this market, many investors would panic and make mistakes. In Hybrid funds, having the debt component helps bring stability to these funds, and the managers will be able to handle them better while ensuring stable returns to investors.
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