Debt mutual funds invest in fixed income securities like bonds while hybrid mutual funds invest in both equity and debt securities
Different types of Debt mutual funds are
Liquid funds
These funds invest in low-risk safe debt instruments. They give very low returns but are considered extremely safe. Many people use liquid funds to store money instead of using a savings bank account.
Ultra-short duration funds
These funds too invest in low-risk debt-safe debt instruments but they’re riskier than liquid funds. These usually also give better returns than liquid funds.
Low duration funds:
These funds too invest in low-risk debt safe debt instruments but they’re riskier than ultra-short duration funds. These usually also give slightly better returns than ultra-short duration funds.
Short duration funds
These funds invest in low-risk debt-safe debt instruments but they’re riskier than low duration funds. These usually also give slightly better returns than low-duration funds.
Types of Hybrid mutual funds
(Hybrid funds are also called balanced funds.)
Conservative hybrid funds
These invest up to 25% of their total money in equity markets while investing the rest in debt instruments.
Aggressive hybrid funds
These invest up to 25% of their total money in debt instruments while investing the rest in equity markets. They’re considered riskier than conservative hybrid funds and usually, also give higher returns than them.
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