What Are Hybrid Mutual Funds?

What Is the Meaning of Hybrid Funds?

What Are the Types of Hybrid Funds?


The different types of hybrid funds are as follows -

Types of Hybrid Mutual Funds


Aggressive hybrid funds

These schemes must invest at least 65% and not more than 80% in the equity asset class. Furthermore, SEBI regulations require such funds to allocate a minimum of 20% and a maximum of 35% to debt securities.

Conservative hybrid fund

As per rules of SEBI, these hybrid funds must invest 10-25% of the fund corpus in equity and equity-related. That said, fund managers of such schemes must allocate the remaining portion of the pooled funds to debt securities.

Balanced hybrid funds

Balanced funds must invest at least 40% and not more than 60% of their financial assets in equity and debt.

Dynamic asset allocation or balanced advantage fund

These hybrid funds are managed dynamically. In other words, fund managers of such mutual fund schemes can vary the proportion of investment in debt and equity based on the changing market scenario. There are no restrictions in terms of asset allocation percentages.

Arbitrage fund

Fund managers of such schemes follow an arbitrage strategy. It involves purchasing securities in the cash market and selling them in the futures market to earn a profit through the price differential. Fund managers of these funds continuously seek arbitrage opportunities to generate maximum returns for investors. Arbitrage funds invest 65-100% in equity and 0-35% in debt securities. If the market conditions are unfavourable, fund managers increase the proportion of investment in debt to reduce portfolio risk.

Equity Savings fund

These funds invest 65-100% in equity and 0-35% in debt instruments. Furthermore, such a scheme may include derivatives in the portfolio. That said, as per SEBI’s instructions, the minimum hedge and unhedged needs to be mentioned in the Scheme Information Document (SID).

Multi asset allocation fund

These schemes invest in a minimum of three asset classes. Keep in mind that SEBI rules required multi asset allocation funds to allocate at least 10 percent of the investment corpus to each of these asset classes.

Hybrid fund types help make an investor's investment portfolio diverse and enjoy the best result of the investment.

How Does a Hybrid Fund Work?

Benefits of Hybrid Mutual Funds

Returns from Hybrid Mutual Funds


Here are the 5 year-returns of top hybrid funds:


Fund Name

5 Year Return

Mirae Asset Hybrid Fund


Canara Robeco Equity Hybrid Fund


Kotak Equity Hybrid Fund


Sundaram Equity Hybrid Fund


SBI Equity Hybrid Plan


Who Should Invest in Hybrid Funds?

How to Invest in Hybrid Funds?

Factors to Consider Before Investing in Hybrid Funds

Frequently Asked Questions