Hybrid Fund

Equity-Oriented Hybrid Mutual Funds: Also known as Balanced Funds, equity-oriented hybrid schemes allocate over 65% of their investment resources towards purchasing the equity stock of companies. The remaining 35% or less is invested in debt securities or other opportunities. These balanced funds allow the investor to explore the possibility of high returns and reduce the risk exposure at the same time.

Debt-Oriented Hybrid Mutual Funds: Also known as Monthly Income Plans, hybrid fund schemes that invest over 75% of their resources in treasury bills, money market instruments, bonds, and other debt instruments are called debt-oriented hybrid schemes. The remaining 25% or less is invested in equity stocks on companies and cash/cash equivalents. As the name indicates, these plans offer the possibility of providing the investor with a regular income in the form of dividends. These dividends can be paid out at different intervals, depending on the investor’s choice – annually, semi-annually, quarterly, or even monthly. An additional facility offered by these funds is the “growth option” which reinvests dividends to facilitate capital appreciation.

Arbitrage Funds: These funds simultaneously purchase and sell the same shares in different markets, exploiting the difference in trade value of the shares to generate profitable gains. Shares are purchased in the cash market and simultaneously sold in the futures market, making use of the price differential to create a profit.