Investors Flock to Aggressive Hybrid Funds Amid Market Volatility
Indian investors are increasingly turning to aggressive hybrid mutual funds as a strategic response to market turbulence, with the category's asset base swelling to an impressive ₹2.5 lakh crore in October 2025. This represents a substantial 13 per cent increase from the ₹2.21 lakh crore recorded in October 2024, according to the latest data from the Association of Mutual Funds in India (AMFI).
The remarkable growth comes during a challenging period for equity markets, where the benchmark Nifty has experienced a year-long correction and heightened volatility. This environment has prompted investors to seek refuge in blended portfolios that offer both growth potential and stability.
Rising Popularity and Strong Performance
The investor base for aggressive hybrid funds has expanded significantly, with folio numbers climbing by 4 lakh over the past year to reach 60.44 lakh by October 2025, up from 56.41 lakh in October 2024. This surge in popularity reflects the growing appeal of balanced investment approaches that combine equity and debt exposures.
These funds have delivered impressive returns across multiple timeframes. Industry data shows that the category has generated:
- Nearly 7 per cent returns over the past year
- 16.5 per cent returns over two years
- More than 17 per cent returns over five years
Shantanu Awasthi, Co-Founder & CEO of Mavenark Wealth, explains the appeal: "These funds benefit from both sides—equity and debt. Balanced funds tend to emerge as a strong category: in years where equity returns are volatile, the debt portion helps protect returns; and when equity is moving upwards, they capture the upside. They are most favourable for investors with medium or lower risk appetite."
Fund Composition and Top Performers
As per SEBI regulations, aggressive hybrid funds must allocate 65-80 per cent of their corpus to equities. Currently, the category maintains an average of approximately 72 per cent in equity and 21 per cent in debt. While this asset mix suits long-term investors, it does mean investors surrender control over the exact equity-debt allocation.
Feroze Azeez, Joint CEO of Anand Rathi Wealth, notes that nearly 75 per cent of the equity portion in most aggressive hybrid funds is invested in large caps, which might not satisfy investors seeking broader diversification across market segments.
The performance comparison reveals that aggressive hybrid funds have substantially outperformed the benchmark Nifty 50 Hybrid Composite Debt 65:35 Index over both two-year and five-year periods. Leading the pack is ICICI Prudential Equity & Debt Fund with exceptional returns:
- 19.6 per cent 2-year CAGR
- 24.7 per cent 5-year CAGR
Close behind is Mahindra Manulife Aggressive Hybrid Fund, delivering 19.3 per cent over two years and 20.4 per cent over five years. Other notable performers include Bandhan, Edelweiss, and Invesco India Aggressive Hybrid Funds, all posting double-digit returns between 18-19 per cent over two years and 16.5-19.9 per cent over five years.
Market experts recommend investing in well-managed aggressive hybrid funds like ICICI Prudential Equity & Debt Fund and Mahindra Manulife Aggressive Hybrid Fund for meaningful upside potential and long-term wealth creation. These schemes also offer monthly dividend payout options, providing additional benefits for investors seeking regular income, particularly those who can leverage recent tax cuts.
