5 of India’s top 10 mutual fund schemes are hybrids. What's driving their popularity?
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Hybrid funds get investors’ attention
Hybrid funds have gained popularity in recent years, with nearly 17% of individual mutual fund assets invested in this category. Five of the top 10 mutual fund schemes by assets are hybrid funds. Here is a detailed breakdown of the top 10 schemes by AUM and why these hybrid funds are gaining investors’ attention, as reported by ETWealth.
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Two flexicap funds
Parag Parikh Flexi Cap Fund and HDFC Flexi Cap Fund are the top two funds with the highest AUM of Rs 1.47 lakh crore and Rs 1.13 lakh crore, respectively.
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Two from HDFC Mutual Fund
HDFC Mid Cap Fund and HDFC Balanced Advantage Fund had an AUM of Rs 1.08 lakh crore and Rs 1.07 lakh crore, respectively.
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Two hybrid funds
SBI Aggressive Hybrid Fund and ICICI Pru Multi Asset Allocation Fund had an AUM of Rs 88,668 crore and Rs 87,833 crore, respectively.
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Nippon India Small Cap Fund and ICICI Prudential Large Cap Fund
Nippon India Small Cap Fund and ICICI Prudential Large Cap Fund had an AUM of Rs 82,580 crore and Rs 80,206 crore, respectively.
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The other two hybrid funds
Kotak Arbitrage Fund and ICICI Pru Balanced Advantage Fund had an AUM of Rs 75,712 crore and Rs 75,399 crore, respectively.
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Growth in assets
Assets managed under hybrid categories have doubled after the 2023 shift in tax regime for debt funds. From Rs 3.1 trillion in August 2020, the assets managed have grown to Rs 11.0 trillion as of August 2026.
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Hybrid funds have a specific role
Many advisers harness hybrid funds for a very specific role in the portfolio. This is to lower the overall risk of the investor’s portfolio. Hybrid funds are perceived as providing a degree of stability to the portfolio, aided by presence across two or more uncorrelated asset classes. Over longer time frames, they tend to show much lower volatility than pure equity funds. This stability can anchor an equity-heavy portfolio when market conditions turn hostile.
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Expert take
“Over five years and beyond, a hybrid costs the investor returns versus staying in equity. But the hybrid is what makes staying likely in the first place.” Hybrids materially reduce the number of moments where quitting feels like the rational choice and that, not any return figure, is the argument for the category, said Tarun Birani, Founder and CEO of TBNG Capital Advisors