A mutual fund that constitutes an an ope-ended scheme investing mostly in hybrid equity (equity and equity related instruments). Its objective is to produce long term capital appreciation (growth) by investing in a mix of debt and equity, while allowing for liquidity (movement in and out). The fund invests in a diversified collection of equities of high growth firms, while investing the rest in credit-worthy debt securities (fixed income securities). The scheme, however, dos not guarantee investment results (in terms of attaining expected/ promised returns).
By composition, an equity hybrid fund may be constructed as follows:
- Equity and equity related instruments (including equity derivatives)- asset allocation percentage: 65%-80; risk factor: very high (aggressive);
- Real estate units/ REIT– asset allocation percentage: 0%-10%; risk factor: medium to high; and
- Debt instruments (including securitized debt) and money market instruments: asset allocation percentage: 20%-35%; risk factor: low to medium
