Lesson 4 of 5 · Choosing and understanding funds
Equity, Debt and Hybrid Funds: What's the Difference?
1 min read · Beginner
Mutual funds can invest in different types of assets.
Equity funds primarily invest in shares. They can offer exposure to business growth but may experience substantial fluctuations and losses.
Debt funds primarily invest in debt instruments such as bonds and money-market securities. They carry risks including credit risk and interest-rate risk; they are not the same as guaranteed deposits.
Hybrid funds combine equity and debt exposure according to their investment mandate. Their risk depends on the actual allocation and strategy.
How do you choose?
Start with your goal, time horizon, ability to bear losses and need for liquidity. Do not choose a fund solely because it recently delivered a high return.
This lesson is for general education. Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing. Disclosures