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Aggressive Hybrid Mutual Funds-Everything You Want to Know

Investing in mutual funds can get you higher returns than any other investments. Based on risk and returns, there are different types of mutual funds you can invest in. Mutual funds with high risk might give you better returns, but you may also lose money as the returns are directly linked to market performance. Meanwhile, mutual funds that are low on risk might not get you better returns but you may not lose your investment. Hybrid mutual funds are one such type of mutual funds.

Hybrid funds are mutual funds investment that can increase the returns with capital appreciation. Hybrid funds invest your money in both debt funds as well as equities. Thus, it spreads your investment across different funds and ensures that you have a diversified portfolio. The equity investment is for capital appreciation, and the debt investment is for reducing risk.

Here are some types of hybrid mutual funds-

What Are Debt Hybrid Mutual Funds

Debt hybrid mutual funds allocate more than 75% of the investment in debt instruments such as bonds, treasury bills, etc. Meanwhile, the other proportion is invested in equity. The dividends can be paid annually, monthly, etc.

What Are Aggressive Hybrid Mutual Funds

Aggressive hybrid funds invest more than 65% of the investor's money in equity instruments. Meanwhile, the other proportion is allocated in debt. Aggressive funds might increase returns and reduce risk at the same time.

Benefits of aggressive hybrid funds-

  • A significant portion of the investment is allocated to equity funds, which increases your chances of getting higher returns in the long-run. With aggressive funds , you can also benefit from the returns of debt investment.

  • The risk and returns in aggressive hybrid funds are balanced. The risk of equity investments is balanced with debt investments. You might get higher returns with reduced risk.

  • Aggressive hybrid funds might help you in the future. Be it for a child's education or retirement. Your investment can help you in the longer run.

Factors to Consider Before Investing in Aggressive Hybrid Funds-

  • Explore the history of funds. Study if they will do good in the longer run. Also, see their returns if you want to invest for a short time.

  • The allocation of the investment helps you get returns with reduced risks. Study how your funds are diversified. Aggressive hybrid funds have higher risk, but the allocation for debt can reduce it.