Hybrid funds invest in more than one type of investment. Most of them have a portfolio made up of stocks, bonds, and short term deposits.
There are two types of hybrid funds:
- Balanced Funds.
- Flexible Portfolio Funds.
In these funds, the balance of different types of investments is set and does not change. A typical division in a balanced fund may be as follows:
- 60% Stocks.
- 20% Bonds.
- 20% Short Term Deposits.
Flexible Portfolio Funds
The managers of flexible funds can change the makeup of the portfolio as market conditions change. It is possible that in an extreme situation a flexible fund will place all of its assets in a certain investment type.