New Delhi: In a landscape defined by market volatility, aggressive hybrid mutual funds have emerged as a beacon of opportunity for investors. As of April 2025, this category has witnessed a remarkable surge in its asset base, climbing to Rs 2.26 lakh crore—an impressive 12% increase compared to the previous year.
Growing Investor Interest
The explosive growth isn’t just in dollar figures; the number of investor folios has also surged, with an additional 3.5 lakh investors joining the ranks over the past year. This brings the total investor base to nearly 58 lakh
as reported by the Association of Mutual Funds in India (AMFI). This impressive trend underscores the escalating appeal of aggressive hybrid funds, which offer a delicate balance of growth and stability.
Performance Highlights
Aggressive hybrid funds stand out as a unique investment solution, combining **equity and debt** exposures. Over various timeframes, they have demonstrated strong returns—averaging nearly 9% over the past year, and boasting remarkable returns of 20% over two years, 15% over three years, and an impressive 21% over five years.
Understanding Aggressive Hybrid Funds
What sets aggressive hybrid funds apart from other mutual funds is their substantial equity allocation, investing 65-80% in equities. This higher equity exposure distinguishes them from conservative or balanced hybrids, offering better return potential alongside elevated risks. Consequently, they are ideal for investors with a moderate risk appetite and a horizon of 3-5 years, as explained by Trivesh D, COO of Tradejini.
Future Outlook
The outlook for aggressively managed hybrid funds remains optimistic. Market trends are increasingly leaning towards sector-specific and stock-specific movements rather than broad market rallies. Fund managers employing a dynamic and adaptive approach are more likely to seize emerging opportunities.
The Retail Investor Surge
The surge in retail interest is largely fueled by investors seeking balanced, tax-efficient investment avenues, particularly after the recent tightening in F&O by SEBI, as noted by Trivesh. Performance-wise, the industry data reveals that 31 aggressive hybrid mutual funds yielded returns close to 9% over the last year.
Top Performers
Among the high-flying performers in this space are notable names like the DSP Aggressive Hybrid Fund, Bandhan Aggressive Hybrid Fund, and SBI Equity Hybrid Fund. These funds have generated returns ranging from 12% to 18% over the past year and between 19% and 24% over the last two years.
Success Stories: Strategies That Work
A standout in this category is the Mahindra Manulife Aggressive Hybrid Fund, which delivers the highest return at an astounding 23.62% over five years. This fund’s success is attributed to a methodical allocation strategy focused primarily on large-cap equities, particularly in sectors like banking, consumer durables, and construction materials, which offer a robust blend of stability and growth potential.
Smart Investing
The fund also adopts a cautious stance towards more volatile sectors such as IT and oil & gas, pairing its equity strategy with a debt allocation that adds a layer of safety. The potential for a bond market rally, especially with anticipated policy rate cuts, makes this strategy even more attractive.
Experts widely believe that aggressive hybrid funds cater to the best of both worlds: providing investors with stability through the debt component during turbulent times while allowing them to benefit from economic upswings through equities.
Maximizing Your Investment
From a taxation standpoint, aggressive hybrid funds enjoy the advantage of being classified as equity-oriented schemes, making them particularly appealing for long-term investors aiming to optimize their capital gains tax. Financial experts advocate for utilizing a Systematic Investment Plan (SIP) for investments in these funds, as this approach not only mitigates market volatility but also fosters disciplined investing.
Typically, financial advisors suggest allocating around 15-25% of an investor’s portfolio towards hybrid funds, contingent upon individual risk tolerance.
The Bigger Picture
In summary, the hybrid mutual fund category has enjoyed substantial growth, with its asset base swelling by 21% year-on-year to Rs 9.15 lakh crore as of April 2025. Additionally, over 22 lakh folios have been added, bringing the total to an impressive 1.58 crore. This remarkable momentum indicates a significant shift in investor sentiment towards hybrid solutions
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(Except for the headline, this article has not been edited by FPJ’s editorial team and is auto-generated from an agency feed.)
