A mutual fund (specifically a balanced fund) that invests primarily in stocks (equity and equity-related securities) with certain, limited allocation to fixed-income instruments (e.g., FD-like instruments)/ money market instruments. The equity investments are spread out, making the fund less risky than pure equity funds, while attaining similar returns in the long run. In terms of composition, equity-oriented hybrid funds consist of up to 75% of equity investments, while the remainder goes to fixed-income instruments. The former chunk allows the fund to grow its money over time, while the latter provides some level of cushion against unfavorable movement in the market (if equity prices fall).

Equity-oriented hybrid funds suit mid- to long-term investment horizon (from 3 years, onward). Hybrid schemes invest in multiple asset classes, mainly equity and debt.

These funds are also known as aggressive hybrid funds.