Hybrid funds are funds with portfolios that are a blend of equity, debt and money market securities. The proportion of the three instruments is decided by the fund manager. There are various kinds of hybrid funds available in India. There are balanced funds where the portfolio includes assets such as debt securities, convertible securities, equity and preference shares held in a relatively equal proportion. The objective is to reward investors with a regular income, moderate capital appreciation and at the same time minimize the risk of capital erosion. Then there are growth-and-income funds that combine features of growth funds and income funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds.
Source :ET
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