Hybrid Fund — Mutual Fund Term Explained

A mutual fund investing in both equity and debt. Middle ground between pure equity (high risk) and pure debt (low risk).

Hybrid funds invest in a mix of equity and debt. The equity-debt ratio determines risk level and tax treatment. Funds with equity > 65% are taxed as equity funds.

Types: Aggressive Hybrid (65-80% equity), Conservative Hybrid (10-25% equity), Balanced Advantage (dynamic allocation).

Related terms

• Balanced Advantage Fund (BAF) — An equity-debt hybrid that dynamically adjusts allocation based on market valuations — reducing equity when expensive, increasing when cheap.
• Equity Fund — A mutual fund investing primarily (≥65%) in stocks. Highest long-term return potential but highest short-term volatility.
• Debt Fund — A mutual fund investing in fixed income securities — bonds, G-Secs, commercial paper. Lower risk than equity but also lower returns.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.