Of many, the two significant advantages of these funds are that they help to bring diversity to your portfolio via a single investment. The second advantage is that their combination of debt and equity investments mitigates the risk factor

There are mainly five types of mutual funds in India. They are - Equity mutual funds, Debt mutual funds, Hybrid mutual funds, Solution oriented schemes, Other schemes like Index Funds & ETFs.

Because of their equity component, hybrid funds are comparatively riskier than debt mutual funds. However, they carry less risk than equity-oriented funds owing to their debt component.