There are many types of mutual funds, and one of the most popular ones is Aggressive Hybrid Funds. These funds diversify your capital into equity and debt funds, allowing you to make stable and lower-risk returns.
In this blog, we’ll delve deep into what is an aggressive hybrid fund, determine the top-performing funds, and unfold their benefits, risks, and more. Let’s dive in!
What is an Aggressive Hybrid Fund?
An Aggressive Hybrid Fund refers to a type of mutual fund that primarily invests in equity and debt funds. It allows investors to benefit from the growth of the potential of equities while also having the cushion of low-risk debt.
Simply put, 65% to 80% of capital is invested into equities, contributing to aggressive growth potential, and the remaining capital is invested in debt instruments that offer lower risk and stable income generation.
Therefore, the main objective of these aggressive hybrid funds is to create wealth and regular income over the long term. Let’s have a look at some of the best-performing funds in 2024 in the next section.
Best Performing Aggressive Hybrid Fund in India
| Fund Name | AUM | NAV |
| ICICI Prudential Equity & Debt Fund Direct-Growth | ₹39,090.93 Crores | ₹406.86 |
| SBI Equity Hybrid Fund Direct Plan-Growth | ₹ 94048.24 Crores | ₹ 538.969 |
| SBI Equity Hybrid Fund Direct Plan Growth | ₹73,077.97 Crores | ₹298.29 |
1. ICICI Prudential Equity & Debt Fund Direct-Growth
The ICICI Prudential Equity and Debt Fund presented returns of 23.50% (as per 3 years) by leveraging the growth potential of equities and the stability of debt instruments.
Fund managers adjust portfolios based on market conditions to gain higher returns and mitigate risk.
2. HDFC Balanced Advantage Fund Direct Plan-Growth
Leveraging the equity and debt instruments, HDFC Balanced Funds has generated returns of 24.58% within the last three years.
Here, the fund manager opts for a flexible approach based on the market uptrends and downtrends to deliver stable returns over time.
3. SBI Equity Hybrid Fund Direct Plan-Growth
SBI Equity Hybrid Fund has provided stable returns of 12.80% in the last three years by using the philosophy to maintain a balance between investing in equities and debt funds in order to achieve long-term growth.
SBI’s fund management team has a disciplined approach to stock selection and portfolio management.
Benefits of Aggressive Hybrid Fund
Let’s have some benefits of investing in these funds.
- Diversification: These aggressive hybrid funds diversify their investments into equity and debt, increasing the chances of profits and significantly reducing the risk involved.
- Rebalancing of Portfolio: Aggressive hybrid mutual funds follow stringent asset allocation policies as per SEBI regulations. However, fund managers are allowed to adjust the fund’s portfolio in response to market swings. For instance, fund managers can increase the investment ratio in equities during bull markets to maximize the profits and debt instruments during a weak market to hedge the risk involved.
- Less Volatile than Equity Funds: These aggressive hybrid funds are less affected by market volatility because investing up to 35% of their investments in debt instruments.
- Regular Income: These funds generally provide investors with dividends, allowing them to have regular income.
- Tax Benefits: Since these funds have to invest at least 65% of capital into equities (means fixed income assets), they are also liable to gain equity taxation benefits as per current tax legislation.
Risk Associated with Aggressive Hybrid Fund
Now that you know what is an aggressive hybrid fund and its benefits, let’s understand the involved risks.
- Higher Risk: As aggressive hybrid funds invest around 65% to 85% of the capital into equities, they consist of higher risk levels.
- Liquidity: Some aggressive mutual funds have a locked-in period, like ELSS, which has a 3-year maturity period. Therefore, you can withdraw money during this period.
- No Control: Aggressive hybrid funds do not allow you to control the equity or debt funds directly or indirectly. Thus, you have to completely rely upon the fund manager to make investment decisions.
Who Should Invest in an Aggressive Hybrid Fund?
Here, we’ve mentioned who should potentially invest in these funds.
1. Investors Looking for a Balanced Mix
If you’re looking to invest within a balanced mix of equities and debt instruments in order to achieve stable returns and mitigate risk, aggressive hybrid funds can be one of the most suitable investment options for you.
2. Investors Looking for Building Corpus for Retirement
This fund is also a suitable option for investors who are looking to build a retirement corpus by leveraging the growth potential of equities and risk mitigation of debt funds. Moreover, most of these types of funds also distribute dividends, allowing investors to have regular income.
3. Medium Term Investors
These funds are also a suitable investment option for investors looking for medium-term periods such as 3-5 years. In this investment horizon, you may receive good and stable returns.
Conclusion
Aggressive hybrid funds leverage the growth potential of equities and the stability of debt instruments. They allow investors to generate attractive returns over time but also have higher risks. We hope this blog helps you understand everything about aggressive hybrid funds.
