Aggressive Hybrid Funds

Aggressive hybrid funds are a form of hybrid funds that combine debt securities with equity, but opt for an aggressive investment strategy. In short, major allocation is towards equities (stocks).

Usually, the fund managers allocate 20% to 35% to debt securities and 65% to 80% to stocks as per their asset allocation strategy. With some stability from debt investments, this combination seeks to give investors balanced growth potential.

(Note: Earlier, these funds were known as “Balanced Funds,” with major equity exposure. However, after the 2017 SEBI classification of mutual funds, this category was renamed as “Aggressive Hybrid Funds” since “balanced” word implied a 50–50 mix.)

These funds work by establishing a diverse portfolio that mostly consists of stocks (65-80%) along with debt securities (20-35%) in a defined proportion.

While the debt component seeks to lower volatility and generate consistent income, the equity part seeks capital appreciation. And the rest is for debt and other liquid investments. During this process, the fund managers may constantly change the portfolio depending on the state of the market.

Aggressive hybrid funds can suit investors who:

• Have a relatively high risk tolerance.
• Seek better growth prospects than traditional debt funds but with less volatility than pure equity funds.
• Those looking for a single investment option that offers both growth and income.
• Have an investment horizon of at least 3 to 5 years to ride out market fluctuations.

Looking to invest in Aggressive Mutual Funds online?

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Discover aggressive hybrid funds that balance growth potential with market stability.

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Before investing in aggressive hybrid funds, consider your risk tolerance, investment goals, time horizon, and income level.

• Risk Profile: Compared to debt, the fund is more equity-focused and carries market risks. Hence, understanding the product profile and the individual's risk profile is necessary.
• Investment Horizon: Investing with a longer investment period (3-5 years) in mind is advisable to maximise potential proceeds.
• Expense Ratio: Apart from risk appetite, reviewing the fund's expense ratio can help in increasing overall results.
• Fund Manager's Experience: Understanding the fund manager's experience provides an overview of their strategy for balancing equity and debt.
• Fund Performance: Analyse the fund's historical performance and compare it with peers.

In India, aggressive mutual funds follow tax rules similarly to equity funds:

• Short-Term Capital Gains (STCG): If units are sold within 12 months, gains are taxed at 20%.
• Long-Term Capital Gains (LTCG): For units held longer than 12 months, gains up to ₹1.25 lakh are tax-exempt. Any gains exceeding ₹1.25 lakh are taxed at 12.5%.