The ultimate guide to top 6 hybrid funds. All you need to know.

Hybrid mutual funds are the type of mutual fund scheme that invests in two or more asset classes, i.e., equity, debt, and other asset class, depending upon the fund’s objective.

This helps the fund manager to diversify the portfolio not only among the sectors but also among different asset classes.

Hybrid funds are sub-divided into different categories, i.e., based on equity-debt allocation, based on solutions, and others.

In this blog, we’ll only cover the Equity-Debt Allocation. We’ll dive into the top 2 performing funds of each sub-category.

1. Aggressive Allocation: The fund has the flexibility to invest 65-80% in equity & equity-related instruments and 20-35% in debt instruments.
2. Balanced Hybrid: The fund has the flexibility to invest 40-60% in equity and equity-related instruments and 40-60% in debt instruments.
3. Conservative Allocation: The fund can invest 10-25% in equity & equity-related instruments and 75-90% in debt instruments

Advantages:

1. Multi-Asset Class Exposure: Hybrid funds provide multi-asset allocation to the portfolio by investing in equity, debt, and other asset classes.
2. Diversified Risk: By having exposure to different asset classes, the risk of the fund spread and diversified.
3. Actively Managed: All the hybrid funds are actively managed by professional fund managers. So, as per the market condition, the fund manager has the flexibility to change the fund’s allocation.
4. Diversification: Since these funds can invest across sectors, market capitalization companies, and different asset classes, due to this reason, the fund provides a good diversification to the portfolio.

Top 6 hybrid funds

S.No.	Fund Name	3-Yr Annualized Performance
1	Quant Absolute Fund Growth Option Direct Plan	28.29 %
2	Bank of India Mid & Small Cap Equity & Debt Fund Direct-Growth	25.71 %
3	Edelweiss Balanced Advantage Fund Direct Plan-Growth	16.37 %
4	Baroda BNP Paribas Balanced Advantage Fund Direct-Growth	16.05 %
5	Bank of India Conservative Hybrid Fund Direct-Growth	14.74 %
6	Kotak Debt Hybrid Direct Growth	12.17 %

1. Quant absolute fund growth option direct plan

Fund analysis:

The fund has the flexibility to invest 65-80% in equity & equity-related instruments and 20-35% in debt instruments. The risk grade is above average, and the returns grade is high.

The fund has given consistent performance over different trailing period returns. The fund has outperformed the category average over the period. It has invested in equity and debt securities.

Pros	Cons
Fund has outperformed the category average with good margins. Attractive risk-to-reward ratio.	Low Assets Under Management.

2. Bank of India mid & small cap equity & debt fund direct growth

Fund analysis:

The fund’s objective is to provide capital appreciation and income distribution to investors from a portfolio constituting mid and small-cap equity and equity-related securities as well as fixed-income securities.

The fund holds major holdings in mid-cap companies and the cyclical sector holds 62.84% weightage followed by sensitive 20.52% and defensive 16.64%. The risk grade is high, and the returns grade is also high.

Pros	Cons
High growth potential. Invested in AAA quality bonds.	High expense ratio.

Additional read: Top 10 Midcap mutual funds

3. Edelweiss balanced advantage fund direct plan-growth

Fund analysis:

The fund’s objective is to generate capital appreciation with relatively lower volatility over a longer tenure of time. The Scheme will accordingly invest in equities, arbitrage opportunities, derivative strategies on the one hand, and debt and money market.

instruments on the other. The Scheme may also invest in Infrastructure Investment Trusts and Real Estate Investment Trusts. The fund has outperformed the category average over the long-term period.

The fund has a well-diversified portfolio of 113 equity holdings and 14 bond holdings. The risk grade is average and the returns grade is high. The fund has the flexibility to invest 0-100% in equity instruments and 0-100% in debt instruments.

Pros	Cons
Fund has outperformed the category average with good margins. Fund has invested in both value & growth stocks along with AAA-rated bonds in the debt category.	Fund has underperformed the category average over 3-Months & 6-Months trailing returns.

Additional read: Top 10 ELSS mutual funds

4. Baroda BNP Paribas balanced advantage fund direct growth

Fund analysis:

The fund has the flexibility to invest 0-100% in equity instruments and 0-100% in debt instruments. The risk grade is average, and the returns grade is high.

The fund has a well-diversified portfolio of value & growth stocks and has invested across sectors. In the debt market, the fund has invested majorly in aaa-rated bonds and money market instruments.

Pros	Cons
5-star rated by Morningstar. The risk grade is average, and the returns grade is high.	Fund has underperformed the category average over 3-Months & 6-Months trailing returns.

5. Bank of India conservative hybrid fund direct-growth

Fund analysis:

The fund can invest 10-25% in equity & equity-related instruments and 75-90% in debt instruments. The risk grade is high, and the returns grade is also high.

The fund has a blended style of investing, indicating both value & growth stocks. The fund has invested across sectors and AAA-rated bonds. The fund has 23.99% in equity, 50.20% in bonds, and 25.81% in cash & money market instruments.

Pros	Cons
Fund has outperformed the category average over different trailing period returns. The fund has captured the market well when it was falling & rising, better than the category average.	High expense ratio.

Kotak debt hybrid direct growth

Fund analysis:

The fund’s focus is to provide regular income by investing in debt instruments, along with some exposure to equity & equity-related instruments to enhance returns. The fund may also invest in derivatives to hedge the position. The risk grade is average and the returns grade is high.

The has given a consistent performance over the period and has also outperformed the category average by good margins. The fund has invested 24.88% in equity, 66.94% in bonds, and 8.18% in cash & money market instruments.

Pros	Cons
Consistent performance. The fund has captured the market well when it was falling & rising, better than the category average.	Fund has underperformed the category average over 6-Months trailing returns.

Conclusion:

Investors should consider hybrid funds as part of their portfolios. As they can provide you attractive risk-to-reward ratio along with low volatility.

Consult an expert advisor to get the right plan for you