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Gayatri Surendran made post

Does conservative hybrid mutual fund give less return as compared to regular hybrid funds?

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Ira Shah answered.
9 months ago

Hybrid funds are schemes that invest in both debt and equity. One of the sub-categories of Hybrid funds is Conservative hybrid funds. This scheme is meant for those who want only small exposure to equity to earn extra returns but don’t have the risk appetite to invest in aggressive hybrid or pure equity funds. These schemes are mandated to invest 10% to 25% of their total assets in equity and equity-related instruments. And rest of the corpus shall be invested in debt funds. This helps in earning better returns than pure debt funds.

However, in the case of general hybrid funds, there is no bar on the mix of debt and equity. So, investors can have more exposure to equity and can change the mix accordingly. The chances of getting higher returns increase in the case of general hybrid funds as it is based on the most beneficial mix of debt and equity. Since the return on debt, funds are fixed and hence lower. But when it comes to equity the returns fluctuate with the market. However, equity funds have a comparatively higher risk.