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Conservative hybrid funds invest majorly in debt instruments with little exposure to equities. According to the SEBI guidelines, conservative hybrid funds must invest around 75% to 90% in debt instruments and the remaining in equity instruments.
The objective of the conservative hybrid fund is to generate moderate returns with high safety by investing majorly in debt instruments.
As these funds invest the majority of pooled funds in debt assets, they provide stable returns with lower risks. This makes them suitable for risk-averse investors trying to generate slightly better returns compared to FDs by taking slightly higher risks. We believe that aggressive debt investors can invest in these funds as a slight allotment in equity will help them in generating marginally better returns compared to pure debt funds and bank FDs. They are also suitable for individuals seeking regular income as at least 75% of the assets are debt assets. The ideal time horizon is 3 years and more.