Hybrid Fund
A mutual fund that invests across both equity and debt, in proportions set by its stated category.
Formula
Test: the scheme holds a defined mix of equity and debt, with the allocation range specified in the scheme document
Unit
%
In depth
Hybrid funds bundle asset allocation into a single product, which suits investors who would otherwise not rebalance — the fund does it internally without triggering a taxable event for the investor. That internal rebalancing is a genuine and underrated tax advantage over doing it oneself across two funds. The categories differ sharply: an aggressive hybrid holds 65% to 80% equity while a conservative hybrid holds 10% to 25%, and the tax treatment follows the equity proportion. The cost is loss of control: the investor cannot adjust the mix as circumstances change.
Worked example
An aggressive hybrid at 70% equity in a year when equity falls 30% and debt returns 6% loses 0.70 x 30 - 0.30 x 6 = 21 - 1.8 = 19.2%, against 30% for a pure equity fund.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Hybrid Fund” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.