what is a hybrid fund 
a hybrid fund is an investment fund that is characterized by diversification among two or more asset classes these funds typically invest in a mix of stocks and bonds they may also be known as asset allocation funds understanding hybrid fundshybrid funds offer investors a diversified portfolio the term hybrid indicates that the fund strategy includes investment in multiple asset classes in general it can also mean that the fund uses an alternative mixed management approach hybrid funds are commonly known as asset allocation funds in the investment market asset allocation funds can be used for many purposes these funds offer investors an option for investing in multiple asset classes through a single fund hybrid funds evolved from the implementation of modern portfolio theory in fund management these funds can offer varying levels of risk tolerance ranging from conservative to moderate and aggressive in all cases hybrid funds will include some mix of two or more asset classes in risk targeted and balanced funds allocations will typically remain at a fixed proportion in funds targeting a specified utilization date the proportion of asset mix will vary over time in all of the funds the investment manager may actively manage the individual holdings within each asset category to respond to changing market conditions and potential capital appreciation opportunitiesexamples of hybrid fundsinvestment managers offer a wide range of options for hybrid funds below are two examples this fund has a 60 40 balance among stocks and bonds the stock portion of the portfolio seeks to replicate the crsp u s total market index the bond portion of the portfolio seeks to replicate the bloomberg u s aggregate float adjusted index the fund has an expense ratio of 0 06 as of q2 2021 1the t rowe price retirement 2060 fund is a hybrid target date fund as of may 2021 it had more than 90 of the portfolio in stocks and approximately 8 in bonds and other fixed income securities the fund uses a fund of funds approach with 19 of the portfolio in a growth stock fund the fund has an expense ratio of 0 71 as of q2 2021 2 