Aggressive hybrid mutual funds have gained significant traction among investors, with the asset base for this category reaching ₹2.5 lakh crore in October 2025, marking a 13 per cent increase from the previous year.
This surge occurs against the backdrop of a year-long correction in the benchmark Nifty, coupled with periods of increased market volatility. Many investors are now seeking stability through blended investment portfolios.
The investor base has grown substantially, with the number of mutual fund folios increasing by 4 lakh over the past year, rising to 60.44 lakh in October 2025 from 56.41 lakh in October 2024, according to the latest data from the Association of Mutual Funds in India (AMFI).
This trend underscores the growing appeal of a balanced investment strategy that merges growth potential with stability. In response to this rising interest, aggressive hybrid funds—investment vehicles combining equity and debt—have generated robust returns over various timeframes.
On average, the category produced returns of about 7 per cent over the past year, 16.5 per cent over two years, and more than 17 per cent over five years, industry data reveals.
Shantanu Awasthi, Co-Founder & CEO of Mavenark Wealth, noted, “These funds benefit from both sides—equity and debt. Balanced funds often emerge as a strong category: during years of volatile equity returns, the debt portion helps protect returns, while in positive equity climates, they capture upside. They are particularly suited for investors with medium or lower risk appetites.”
Per Securities and Exchange Board of India (SEBI) regulations, aggressive hybrid funds are required to allocate 65-80 per cent of their corpus to equities. However, industry averages currently reflect approximately 72 per cent in equity and 21 per cent in debt. While this allocation may be appropriate for long-term investors, it limits precise control over equity-debt distribution, according to Feroze Azeez, Joint CEO of Anand Rathi Wealth. He also mentioned that nearly 75 per cent of the equity holdings in most aggressive hybrid funds are concentrated in large-cap stocks, which may not satisfy those seeking a more diversified investment.
AMFI data indicates that the asset base of aggressive hybrid funds has grown from ₹2.21 lakh crore in October 2024 to ₹2.5 lakh crore in October 2025, reflecting a year-on-year increase of 13 per cent.
Over two- and five-year periods, aggressive hybrid funds have notably outperformed the benchmark Nifty 50 Hybrid Composite Debt 65:35 Index.
Among these funds, ICICI Prudential Equity & Debt Fund leads with a two-year compound annual growth rate (CAGR) of 19.6 per cent and a five-year CAGR of 24.7 per cent. It is followed by Mahindra Manulife Aggressive Hybrid Fund, which has achieved a CAGR of 19.3 per cent over two years and 20.4 per cent over five years.
Other funds, including Bandhan, Edelweiss, and Invesco India Aggressive Hybrid Funds, have also delivered double-digit returns, ranging from 18-19 per cent over two years and 16.5-19.9 per cent over five years. In contrast, the benchmark has yielded a significantly lower return of 13.1 per cent.
Market experts suggest that investing in well-managed aggressive hybrid funds, particularly schemes like ICICI Prudential Equity & Debt Fund and Mahindra Manulife Aggressive Hybrid Fund, can provide substantial upside potential and help investors achieve long-term wealth creation. Both funds have shown strong performance over two- and five-year horizons.
Additionally, these funds offer a monthly dividend payout option, which can be advantageous for investors seeking regular income, especially in light of recent tax cuts.
Published on November 28, 2025.
