NEW YORK (MainStreet) — Hybrid funds, which invest in a mix of stocks and bonds, have been gaining in popularity over the past ten years, along with index funds and specialty exchange-traded funds or ETFs.
Here are some popular trends in mutual funds for investors to consider as they diversify assets and increased returns in their retirement portfolio.
Hybrid Mutual Funds Gain In Popularity
Aside from 2008, hybrid funds, which are also known as asset allocation or balanced funds, have seen “inflows every year in the past decade,” according to the Investment Company Institute, the Washington, D.C.-based national association of U.S. investment companies.
Many of these funds will allocate 65% of the assets in equities while the remaining 35% is in bonds, said Robert Johnson, CEO of The American College of Financial Services in Bryn Mawr, Pa. This strategy gives investors “a way to balance the potential capital appreciation of common stocks with the income and relative stability of bonds over the long term,” he said.
The rise of their popularity stems from the fact that they give investors an option on how to have a “managed, balanced portfolio” of stocks and bonds, Johnson said. During the last seven years, investors have added $384 billion in net new cash and reinvested dividends to these funds, he said. In 2013 alone, investors added a record $73 billion in net new cash flow to hybrid funds, up from $47 billion in 2012.