1. In Debt funds, the money pooled from people are invested in fixed income instruments like government bonds, corporate bonds, non-convertible debentures and other highly-rated instruments.
2. Hybrid mutual funds: Invest the money gather into both debt and equity. These are diversified mutual funds having perfect balance between risk and returns on investment.
3. Risk:
Debt Fund:
Low
Balanced Fund :
Medium
4. Those who are more aggressive can avoid a pure debt fund and instead go for balanced and equity funds, while highly conservative investors can pick balanced and debt funds.
5. A debt fund provides a steady but low income relative to equity.
6. Hybrid Funds:
There are schemes that invest in two assets, for instance, equity and debt, or debt and gold.
7. Returns:
Debt Fund:
Low (4-10% p.a.)
Balanced Fund:
Medium (10-15% p.a)
8. Investing in hybrid funds can help avoid the hassles of investing separately in both debt and equity.
9. Suggested Investment horizon:
Debt Fund:
Flexible
Hybrid Fund:
Medium-Long (1-2 years)
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