Aggressive Hybrid Funds Surge 12% as Investors Seek Balanced Strategy Amid Market Volatility

Category Assets Hit ₹2.26 Lakh Crore in April 2025; Investor Folios Cross 58 Lakh​

New Delhi, May 11 – Aggressive hybrid mutual funds are witnessing renewed interest from retail investors, with the asset base of the category growing by 12 per cent year-on-year to ₹2.26 lakh crore in April 2025, as per data released by the Association of Mutual Funds in India (Amfi).

The number of investor folios also saw a significant jump, rising by 3.5 lakh over the past year to reach nearly 58 lakh by April 2025. The surge underscores investors' preference for a balanced approach combining growth and stability in a volatile market environment.

Balanced Exposure Drives Performance​

Aggressive hybrid funds allocate 65 to 80 per cent of their portfolio to equities, distinguishing them from conservative and balanced hybrids. This higher equity exposure boosts return potential while maintaining some level of downside protection through debt investments.

Industry data highlights that these funds have delivered solid returns over various timeframes:

• 1 year: ~9% average return
• 2 years: ~20%
• 3 years: ~15%
• 5 years: ~21%

“These funds are ideal for investors with moderate risk appetite and a 3-5 year investment horizon,” said Trivesh D, COO of Tradejini. He added that aggressive hybrids have become more attractive in the wake of SEBI’s tightening of Futures & Options regulations, leading investors to explore more tax-efficient and balanced investment options.

Top-Performing Funds Stand Out​

Among the top performers in this segment are:

• Mahindra Manulife Aggressive Hybrid Fund
• DSP Aggressive Hybrid Fund
• Bandhan Aggressive Hybrid Fund
• Invesco India Aggressive Hybrid Fund
• SBI Equity Hybrid Fund

These funds recorded 12-18 per cent returns over the past year (as of April 30, 2025) and 19-24 per cent over two years. Over a five-year period, returns ranged from 18.5 to 24 per cent, with Mahindra Manulife delivering a category-best 23.62 per cent.

The Mahindra Manulife fund, in particular, has focused on overweight allocations in large-cap equities across banking, consumer durables, and construction materials, while adopting a cautious stance toward IT, oil & gas, and metals. Its debt portion not only provides stability but also holds potential upside amid expectations of a bond market rally, especially if interest rate cuts are introduced.

Strategic Allocation and Tax Efficiency Fuel Growth​

Experts say aggressive hybrid funds offer the best of both worlds—stability from debt in volatile markets and participation in economic growth via equities.

“Given the current market dynamics, aggressive hybrid funds offer a stable yet rewarding path forward for both new and experienced investors,” said Sunita Satapathy, Director, Glosome Wealthx.

From a taxation angle, these funds are treated as equity-oriented schemes, making them favorable for long-term capital gains tax planning.

SIPs and Asset Allocation Recommendations​

Experts advise using Systematic Investment Plans (SIPs) to mitigate market volatility and maintain investment discipline. Depending on risk tolerance, they suggest allocating 15-25 per cent of a portfolio to hybrid funds.

The broader hybrid mutual fund category also witnessed robust growth, with total assets increasing 21 per cent year-on-year to ₹9.15 lakh crore and the total folio count climbing by over 22 lakh to 1.58 crore as of April 2025.

Conclusion​

With their consistent performance, tax efficiency, and ability to balance risk and return, aggressive hybrid mutual funds have carved a niche among investors seeking both security and growth. The continued momentum in folios and asset growth indicates sustained interest in this versatile investment category.