What Are Hybrid Mutual Funds?
Hybrid mutual funds Include equity and debt instruments in their portfolios, offering both growth potential and income stability. They typically invest across asset classes like:
Equity (stocks)
Debt (bonds, money market instruments)
Depending on their mandate and allocation, hybrid funds Comes Under categories such as Aggressive Hybrid, Balanced Advantage, Multi-Asset Allocation, and Conservative Hybrid. Each category carries different risk-return profiles.
Recent Trends & Inflows
Hybrid mutual funds are seeing surging investor interest:
In June 2025, net inflows hit a record ₹23,223 crore, marking a whopping 162% YoY increase, driven by arbitrage, multi-asset allocation, and balanced advantage segments.
A standout performer, the Baroda BNP Paribas Aggressive Hybrid Fund, turned a ₹10,000 monthly SIP (2017–2025) into an impressive ₹18.38 lakh.
These figures reflect how hybrid funds are becoming go-to instruments for investors seeking balanced risk and return.
Top Hybrid Mutual Funds in India (2025)
A. Based on 5-Year CAGR (Aggressive/Multi-Asset)
The following hybrid mutual funds have shown strong performance over the last 5 years (as of April 2025):
| Fund Name | Category | 5-Year CAGR (%) |
|---|---|---|
| Quant Multi Asset Allocation Fund | Multi-Asset Allocation | 27.76% |
| ICICI Pru Equity & Debt Fund | Aggressive Hybrid | 25.40% |
| Bank of India Mid & Small Cap Equity & Debt Fund | Aggressive Hybrid | 24.33% |
| ICICI Pru Multi-Asset Fund | Multi-Asset Allocation | 24.16% |
| HDFC Balanced Advantage Fund | Balanced Advantage | 23.71% |
| JM Aggressive Hybrid Fund | Aggressive Hybrid | 22.50% |
| Mahindra Manulife Aggressive Hybrid Fund | Aggressive Hybrid | 21.96% |
| Edelweiss Aggressive Hybrid Fund | Aggressive Hybrid | 21.72% |
| Kotak Aggressive Hybrid Fund | Aggressive Hybrid | 20.91% |
B. Notable Aggressive Hybrid Performers
Some aggressive hybrid funds stand out for delivering consistently high returns:
- JM Aggressive Hybrid Fund – 26.24% (5Y)
- Quant Absolute Fund – 26.22% (5Y)
- ICICI Pru Equity & Debt Fund – 26.11% (5Y)
C. Other Noteworthy Funds
Other hybrid funds worth considering for a balanced portfolio include:
- Nippon India Balanced Advantage Fund (Direct): 5-year return approx. 14.9%; expense ratio ~0.6%.
- HDFC Hybrid Equity Fund (Direct): 5-year return around 18%; expense ratio ~1.1%.
Why Invest in Hybrid Funds in 2025?
Record Inflows: As per industry reports, hybrid funds saw inflows of over ₹23,000 crore in June 2025, reflecting growing investor confidence.
Reduced Volatility: Equity markets are often volatile; hybrid funds balance this with debt exposure.
Ideal for SIPs: Systematic Investment Plans (SIPs) in hybrid funds have shown strong wealth creation over long periods.
Tax Benefits: Some hybrid funds with over 65% equity portion qualify for equity taxation, which can be tax-efficient compared to debt funds.
Who Should Invest in Hybrid Funds?
Hybrid mutual funds are designed to suit a wide range of investors because they balance growth (equity) and stability (debt). Here’s who can benefit the most from investing in them:
1. First-Time Investors
Perfect for beginners entering mutual funds for the first time.
Offers a safe entry point into equities without taking on full market risk.
Helps in learning how equity and debt together shape portfolio returns.
2. Moderate Risk Takers
Ideal for those who want higher returns than debt funds but lower risk than pure equity funds.
Aggressive Hybrid Funds provide strong growth potential, while Balanced Advantage Funds manage volatility.
3. SIP (Systematic Investment Plan) Investors
Hybrid funds work well for SIPs as they smoothen returns over the long term.
Even during market downturns, the debt portion cushions against sharp losses.
4. Retirement Planners
Those planning for retirement can use hybrid funds to maintain a balance of safety and steady growth.
Conservative Hybrid Funds are especially suitable for near-retirement individuals seeking regular income.
5. Investors with Medium-Term Goals
Suitable for goals like children’s education, buying a car, or building a safety corpus.
Typically best for investment horizons of 3–7 years.
6. Busy Professionals
For people who don’t have time to actively track and rebalance their portfolios.
Fund managers dynamically manage asset allocation, reducing the need for constant monitoring.
Things to Consider Before Investing
Risk Profile: Choose aggressive or conservative funds depending on your risk appetite.
Expense Ratio: Lower expense ratio means more savings in the long run.
Fund Manager Track Record: Experienced managers often deliver consistent returns.
Investment Horizon: For best results, invest with a horizon of 5 years or more.
Planning to invest in mutual funds?
Click hereHybrid mutual funds have emerged as one of the most reliable investment options in 2025, offering a unique balance of growth through equity and stability through debt. With record inflows and consistent performance across categories like Aggressive Hybrid, Balanced Advantage, and Multi-Asset Allocation funds, they are gaining popularity among both beginners and seasoned investors.
Whether you are just starting your investment journey, planning for medium-term goals, or building a retirement corpus, hybrid funds provide the right mix of safety and returns. They help reduce market volatility, ensure diversification, and offer flexibility to match different risk profiles.
In short, if you want to grow wealth steadily without taking extreme risks, hybrid mutual funds can be the ideal choice for your portfolio in 2025.
Business News
🏆 Best Hybrid Mutual Funds to Invest in 2025
Here’s a list of top-performing hybrid mutual funds based on returns, consistency, and AUM:
🔹 1. ICICI Prudential Equity & Debt Fund
- Type: Aggressive Hybrid
- 5-Year CAGR: 14.2%
- AUM: ₹41,000+ Cr
- Why Invest: Strong equity focus with consistent long-term returns
🔹 2. Mirae Asset Hybrid Equity Fund
- Type: Aggressive Hybrid
- 5-Year CAGR: 13.7%
- AUM: ₹8,200+ Cr
- Why Invest: High equity quality, suitable for growth-oriented investors
🔹 3. HDFC Balanced Advantage Fund (BAF)
- Type: Dynamic Asset Allocation
- 5-Year CAGR: 11.9%
- AUM: ₹64,000+ Cr
- Why Invest: Adjusts equity-debt mix automatically based on market conditions
🔹 4. Kotak Equity Hybrid Fund
- Type: Aggressive Hybrid
- 5-Year CAGR: 12.8%
- AUM: ₹5,600+ Cr
- Why Invest: High equity potential with limited risk
🔹 5. ICICI Prudential Balanced Advantage Fund
- Type: Dynamic Allocation
- 5-Year CAGR: 11.3%
- AUM: ₹54,000+ Cr
- Why Invest: Ideal for first-time mutual fund investors
📈 Who Should Invest in Hybrid Funds?
Hybrid funds are perfect for:
- 🧓 Retired investors seeking steady income + mild growth
- 👨💼 First-time investors wanting lower equity risk
- 👨👩👧 Families planning mid-term financial goals (3–5 years)
📊 SIP investors seeking portfolio stability
💡 SIP vs Lumpsum in Hybrid Funds
| Mode | Best For | Advantage |
|---|---|---|
🧠 Things to Keep in Mind
- 🔒 Lock-in: Most hybrid funds are open-ended (no lock-in)
- 🧾 Taxation: Based on equity % (if equity >65%, taxed like equity fund)
- 📊 Risk: Lower than pure equity, but higher than pure debt
- 📉 Returns: Typically 10–14% over 5 years (non-guaranteed)
- 🔒 Lock-in: Most hybrid funds are open-ended (no lock-in)
Frequently Asked Questions (FAQs)
Hybrid funds are less risky than equity funds and are ideal for new or conservative investors who want some exposure to the stock market without going all in.
A minimum of 3–5 years is ideal to ride out short-term volatility and enjoy meaningful returns.compounding.
Some conservative hybrid funds offer monthly/quarterly dividend payouts, but they depend on fund performance and are not guaranteed.
- If equity exposure >65%: Taxed like equity (LTCG @10% after ₹1 lakh)
- If equity <65%: Taxed like debt (LTCG @20% with indexation after 3 years)
Funds like HDFC Balanced Advantage Fund or ICICI Balanced Advantage Fund are beginner-friendly due to their auto-balancing features and stable returns.
🏁 Conclusion
- Hybrid Mutual Funds offer the best of both worlds—growth from equity and stability from debt. Whether you’re starting your investment journey or want to balance your existing portfolio, these funds are a smart choice for 2025.
- 👉 Choose a fund based on your risk appetite, financial goals, and investment horizon. Don’t forget to complete your KYC and invest via trusted platforms like Groww, Zerodha Coin, NJ Wealth, or MFU.
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