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.

Balanced 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.