Best Hybrid Mutual Funds
Hybrid funds are a type of mutual fund that invests in a mix of different asset classes, like stocks (equity) and bonds (debt). By spreading investments across different types of assets, the best hybrid mutual funds help reduce the risks of market ups and downs.
This diversification can lead to more stable returns compared to funds that focus on just one type of investment. While most hybrid funds invest in a combination of stocks and bonds, some may also include other assets like gold or international stocks.
Learn in detail about these funds to make informed investment decisions in 2025 while choosing mutual funds in India.
What Are Hybrid Funds?
Most hybrid funds in India generally consist of 2 main asset classes: equity and debt. However, they may also include other assets, such as commodities like gold. This diversification allows investors to spread their investments across different sectors, helping to balance risk and return within a single fund. Moreover, hybrid funds cater to various investor profiles, allowing individuals to choose investments based on their risk tolerance.
Who Should Invest in the Best Hybrid Mutual Funds?
Hybrid funds are an ideal option for different types of investors because they mix various types of investments. Individuals mainly invest in hybrid funds for reasons, such as portfolio diversification, capital appreciation and wealth accumulation. Whether you are a conservative, moderate, aggressive investor or even a beginner, hybrid funds can suit your goals and how much risk you are comfortable with.
Factors to Consider While Investing in the Best Hybrid Mutual Funds
Here are the factors to consider while investing in hybrid mutual funds:
- Consider the potential returns of these funds based on the underlying asset classes. Understand the equity exposure and assess the risks in line with your risk tolerance and investment goals.
- Hybrid funds are usually better for medium-term investments. If you are planning to invest for 3 to 5 years, a hybrid fund could be a good choice.
- Make sure to check the asset allocation in your hybrid fund portfolio before investing to reduce high risks.
- Checking the expense ratio before you invest is essential to maximise your actual investment returns.
Pros of Investing in the Best Hybrid Mutual Funds
You can enjoy the following benefits of hybrid mutual funds:
- Hybrid mutual funds help manage risk by balancing different asset classes in your portfolio, which can reduce the impact of market fluctuations.
- In addition to investing in multiple asset categories, hybrid funds also invest across different sub-categories within each asset class. For example, the equity portion of a hybrid fund might include investments in a mix of large cap, small cap and mid cap stocks.
- By investing in hybrid funds, you can gain exposure to multiple asset classes at once, all through a single fund, making it easier to diversify your portfolio.
A Detailed Overview of the Top 5 Hybrid Mutual Funds
Here is a quick overview of some of the best hybrid mutual funds in 2025:
1. HDFC Balanced Advantage Fund
HDFC Balanced Advantage Fund (Direct Growth) invests 65.13% in domestic equities comprising 44.1% in large cap stocks, 5.05% in mid cap stocks and 4.08% in small cap stocks. In addition, the fund invests 30.88% in debt funds wherein 12.05% and 18.36% are in government securities and low-risk securities respectively.
- Asset Under Management: ₹90,374.53 crore (approximately)
- Launch Date: January 2013
- Expense Ratio: 0.81%
- Exit Load: 1%
- Investment Details: Equity (65.13%), Debt (30.88%), Others (3.99%)
2. SBI Equity Hybrid Fund
SBI Equity Hybrid Fund (Direct Growth) fund composition includes 68.02% in domestic equities. This composition further includes 47.41% large cap stocks, 8.27% mid cap stocks and 4.04% small cap stocks. The total debt composition of this fund is 25.45% wherein 12.11% is in government securities and 11.52% in low-risk securities.
- Asset Under Management: ₹68,440.31 crore approximately
- Launch Date: January 2013
- Expense Ratio: 0.81%
- Exit Load: 1%
- Investment Details: Equity (68.02%), Debt (25.45%), Others (6.53%)
3. ICICI Prudential Balanced Advantage Fund
ICICI Prudential Balanced Advantage Fund (Direct Growth) invests 66.07% in Indian equities wherein 46.89%, 8.24% and 0.26% are in large cap, mid cap and small cap stocks. Additionally, the fund comprises 19.17% investment in debt wherein 8.18% and 9.59% are in government securities and low-risk securities. The minimum amount of investment in this fund is ₹100 for SIP and ₹500 for lump sum.
- Asset Under Management: ₹58,716.56 crore approximately
- Launch Date: December 2006
- Expense Ratio: 0.92%
- Exit Load: 1%
- Investment Details: Equity (66.07%), Debt (19.17%), Others (14.76%)
4. Kotak Equity Arbitrage Fund
Kotak Equity Arbitrage Fund (Direct Growth) has a 68.88% investment in domestic equities comprising 45.18%, 11.47% and 1.77% in large, medium and small cap stocks. The fund’s debt investment of 1.63% is in low risk securities.
- Asset Under Management: ₹58,992.98 crore approximately
- Launch Date: January 2013
- Expense Ratio: 0.43%
- Exit Load: 0.25% (if sold before 30 days)
- Investment Details: Equity (68.88%), Debt (1.63%), Others (29.49%)
5. ICICI Prudential Multi Asset Fund
ICICI Prudential Multi Asset Fund (Direct Growth) invests 66.04% in Indian equities. This equity portfolio includes 46.52%, 3.69% and 1.82% in large cap, mid cap and small cap stocks. The debt portion of this fund comprises 5.29% government securities and 7.59% low risk securities, making a total of 13.82%.
- Asset Under Management: ₹52,257.08 crore approximately
- Launch Date: January 2013
- Expense Ratio: 0.7%
- Exit Load: 1%
- Investment Details: Equity (66.09%), Debt (13.82%), Others (20.08%)
Key Takeaway
The best hybrid mutual funds in India allow you to invest in multiple asset classes, using a single fund. Before investing, it is important to review the fund's holdings in equity, debt and other asset classes to ensure you are comfortable with the level of risk. Additionally, consider your risk appetite when selecting a hybrid fund, as this will help you choose a fund that aligns with your goals and helps minimize potential risks.
Frequently Asked Questions
1. What is the difference between a hybrid fund and a balanced fund?
Hybrid funds invest in multiple asset classes including commodities like gold, equity, debt or even real estate. Usually, these funds invest in these asset classes in various proportions. Balanced funds are a type of hybrid fund where the proportion of equity and other instruments are balanced or equal.
2. What are the different types of hybrid mutual funds?
The Securities and Exchange Board of India (SEBI) classifies hybrid funds into 7 core categories such as conservative hybrid funds, aggressive hybrid funds, balanced hybrid funds, dynamic asset allocation or balanced advantage funds, arbitrage hybrid funds, multi-asset allocation funds and equity savings funds.
3. What are the risks involved in best hybrid mutual fund investments?
Hybrid mutual funds are subject to market volatility due to equity performance fluctuations. In addition, for the debt portion of the fund, there might be interest rate fluctuations during changes in economic conditions. As a result, the fund performance is unpredictable for hybrid funds.
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