What is the Allocation of Equity and Debt in Hybrid Funds?


  • What makes hybrid mutual funds work for investors?
  • The ability to meet the expectations of high returns and stability of income makes hybrid funds popular amongst investors
  • Check out here as to where does a hybrid fund invest the capital to ensure high returns and income stability

Also known as Balanced Funds and Asset Allocation Funds, Hybrid mutual funds are those types of Funds that invest in more than one Holding Investment Asset class. It can be in stocks, bonds or even gold. Equity allocation would fetch an investor higher returns with having higher volatility which means it is highly risky. Same as debt allocation will bring an investor economical but fixed returns having lower risk attached to it. In the different type of hybrid mutual funds, the allocation proportion of equity and debt tends to vary.

The variability of allocation proportion makes this type of mutual fund number one favourite for first-time investors. This kind of investors finds the handling of equity and debt allocation a bit difficult, and hence a hybrid mutual Fund is perfect for them. Also, the type of investors who don’t do their asset allocation by themselves and trust on fixed allocation can also rely on a hybrid mutual fund. 

What are the various categories of Hybrid Mutual Funds and their Allocation Proportion? 

The financial goal of one person can be different from another and it’s totally normal. Hence, the asset allocation should be done by keeping the financial goal in mind. You can choose from the option of allocation to the equity and debt according to market valuation or can choose the one where the debt allocation is fixed and defined. Securities and Exchange Board of India (SEBI) has categorized hybrid funds into various categories according to their allocation proportion. Let’s have a look at the allocation of equity and debt in various categories of hybrid funds.

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Aggressive Equity Hybrid Funds:

If your financial goal is to acquire wealth and get a regular income over a longer period of time, then this hybrid fund will be the perfect choice for you as this fund because of the exposure this fund possesses in both equity securities and debt. An aggressive equity hybrid fund invests around 65%-75% in equity and the remaining percentage in debt funds.

Multi-Asset Hybrid Fund:

This type of mutual fund can have an investment in more than three assets. The allocation of equity ranges around 65%, debt asset between 20%-25%, and rest in gold. Each asset much have an allocation of a minimum of 10%.

Dynamic Asset Allocation or Balanced Advantage Funds:

If you don’t want a fixed type of asset allocation, then you can choose the dynamic asset allocation as you can change the composition according to the market situation. You can invest 100% of assets in either equity or debt instruments. The risk percentage is quite low since the free hand in allocating the asset. 

Equity Savings Hybrid Fund:

This type of hybrid fund invests 10%-40% in equity assets and rest in arbitrage and debt funds. The volatility in this type of hybrid funds is quite low since the less percentage of the longer-term equity.

Debt Hybrid Funds:

Also known as Conservative Hybrid Funds, most of the allocation is invested in debt assets and rest in equity. The debt instruments’ allocation in debt hybrid funds can be around 75% to 85% of the total corpus. The reason for this hybrid fund to be called a conservative fund is the large percentage of allocation in debt instruments. 

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What Are Some of the Top Performing Hybrid Funds to Invest In?

Before investing in any hybrid mutual funds, it is important to keep an eye on factors like returns, volatility (risk involved), your tax slabs, and previous performance of the mutual fund, your financial goal, etc. If you’re planning to invest in a hybrid fund, then you are preparing to take lesser risks. You can have a look at some of the mutual Funds having top-notch performance.

Hybrid Mutual FundsRating 1-Year Return3-Year Return5-Year Return10-Year Return
Principal Hybrid Equity Fund5-star-7.79%8.31%9.45%10.60%
HDFC Hybrid Equity Fund4-star-1.70%7.49%9.74% 14.49%
SBI Equity Hybrid Fund4-star2.60%8.78%10.65%11.97%
ICICI Prudential Regular Savings Fund5-star6.28%7.94%9.68%9.52%
Mirae Asset Hybrid Equity Fund5-star0.88%9.71%--
IDFC Asset Allocation Fund - Moderate Plan4-star-0.91%5.41%7.44%-

Note: All the data that has been mentioned in this article is sourced from Value Research as on Aug 26, 2019. All the data here are in regard to the Regular Plan.

How to Make an Investment in Top-notch Hybrid Mutual Funds?

In the current digital world, where everything can be done from anywhere or anytime with the help of your smartphone, investing can also be done in the same way. The whole process of investing was never this much easy and convenient. With the help of Wishfin, you can easily invest in the hybrid mutual Funds. Wishfin is a financial marketplace where you can check the top-performing mutual funds and make an investment after choosing the right one for you in easy steps. The steps are mentioned below. 

  • Go to wishfin.com
  • Click on Mutual Funds.
  • Go to ‘Register’.
  • Enter your Mobile Number
  • Click on ‘Get started’.
  • Mention your name, email id and other required details.
  • Create a password according to the required details.
  • Click on Sign Up.
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After creating an account, follow the details stated below.

  • Go to ‘Explore Mutual Funds’ Options
  • Click on the ‘Hybrid’ option.
  • A list of hybrid funds with different ratings, indicated with stars, will come on the screen.
  • Click on the ‘Invest’ below any of the mutual fund schemes you like to invest in.

Disclaimer – “Mutual fund investments are subject to market risks. Please read the scheme document carefully before investing”.

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