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Top Hybrid Mutual Funds in 2025 combine equity growth with debt stability for balanced returns.
Hybrid Mutual Funds for Investment in India offer tax benefits when equity exposure is above 65%.
Rising inflows of Rs. 23,223 crore highlight growing trust in Hybrid Mutual Funds for long-term wealth building.
Hybrid mutual funds are a popular choice for investors. These assets bring together equity and debt in one portfolio, aiming to generate growth through equity while reducing risks through debt. For many investors, hybrid mutual funds offer the right balance between return and safety.
Let’s take a look at the top hybrid mutual funds for investment, along with their performance history and benefits.
Hybrid mutual funds for investment in India have seen a major rise in popularity during 2025. In June 2025 alone, these assets recorded net inflows of Rs. 23,223 crore, which was a huge jump of 163% compared to the same time last year. This strong growth was largely driven by categories such as balanced advantage, arbitrage, and multi-asset allocation funds.
Another reason for their growing importance is innovation. In October 2025, Edelweiss Asset Management launched Altiva Hybrid Long-Short Fund, India’s first hybrid long-short solution-oriented fund. It combines arbitrage, debt, and derivative strategies to provide steady returns with lower volatility. This is part of a larger trend where hybrid funds are no longer limited to simple mixes of equity and debt but also include new models and strategies.
Hybrid mutual funds are also popular thanks to their tax benefits. When these assets maintain more than 65% exposure to equity, they are treated as equity-oriented funds for taxation. This means that long-term capital gains above Rs. 1 lakh are taxed at 10%, which is much more favorable than the taxation rules applied to debt funds.
When looking at the top hybrid mutual funds for investment in India, some names stand out for their consistent performance and ability to manage risks.
The JM Aggressive Hybrid Fund (Direct – Growth) has given strong results, delivering returns of 22.65% annually over the last three years. It has assets under management of around Rs. 804 crore and an expense ratio close to 0.66%. Another good performer is the ICICI Prudential Retirement Fund – Hybrid Aggressive Plan, which has returned 22.53% over the last three years and comes from a highly trusted fund house.
The ICICI Prudential Equity & Debt Fund (Direct – Growth) is also a reliable choice, with 21.16% annual returns in the last three years and a very large asset base of Rs. 45,168 crore. Similarly, the HDFC Balanced Advantage Fund, with assets of over Rs. 1,01,079 crore, has produced returns of 20.05% in three years and remains one of the largest and most well-known hybrid schemes in the country.
Other strong hybrid funds include Kotak Aggressive Hybrid Fund, which returned 17.54% in three years, and Edelweiss Aggressive Hybrid Fund, which delivered around 19.78% over the same period. The Bank of India Mid & Small Cap Equity & Debt Fund is another standout, offering one-year returns of 31.84%, three-year returns of 19.31%, and five-year returns of 27.77%. These numbers highlight its ability to balance mid- and small-cap exposure with debt.
For those looking for diversification across different asset classes, the SBI Multi Asset Allocation Fund is a strong option. It has given around 17.6% returns over three years and 16.3% over five years. Meanwhile, the Quant Aggressive Hybrid Fund has delivered an impressive 24.1% over five years, although it has been volatile recently with a small decline of 0.5% over the last year.
Aggressive hybrid funds invest at least 65% of their portfolio in equity, with the remaining portion in debt instruments. These funds are ideal for investors looking for higher growth with some level of safety from the debt component. Over the past five years, the average return of aggressive hybrid funds has been close to 19.5% annually.
Some of the best hybrid mutual funds have also proven effective for systematic investment plans (SIPs). For instance, a monthly SIP of Rs. 10,000 in some of the top aggressive hybrid funds for five years has grown to more than Rs. 9 lakh, showing a return of around 18–19% compounded annually. One example is the Baroda BNP Paribas Aggressive Hybrid Fund, which turned a Rs. 10,000 SIP into nearly Rs. 18.38 lakh over eight years. These results make aggressive hybrid funds one of the best hybrid mutual funds for investment in India in 2025.
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Balanced advantage funds adjust their mix between equity and debt depending on market conditions. For example, when equity valuations are high, these assets reduce equity exposure and increase debt allocation. When valuations are low, they increase equity exposure to capture upside potential.
The HDFC Balanced Advantage Fund is a prime example, with assets over Rs. 1 lakh crore and a strong track record of delivering more than 20% annual returns over the last three years. Such funds are highly popular among investors who want a smoother investment journey without being locked into fixed equity and debt ratios.
Multi-asset allocation funds invest across equity, debt, and other assets such as gold, commodities, and real estate investment trusts. This diversification helps reduce dependence on just two asset classes.
One of the top hybrid mutual funds in this category is the SBI Multi Asset Allocation Fund, which has delivered more than 17% annual returns over the last three years. With five-year returns at 16.3%, this fund shows how including multiple asset classes can provide stability while still generating strong growth.
Conservative hybrid funds are designed for risk-averse investors who want the safety of debt with only a small equity exposure. These funds are required to keep 75% to 90% of their debt investments and only 10% to 25% in equity.
Some of the best conservative hybrid mutual funds for investment in India in 2025 include ICICI Prudential Regular Savings Fund, Canara Robeco Conservative Hybrid Fund, Kotak Debt Hybrid Fund, and SBI Conservative Hybrid Fund. These funds offer modest returns but come with lower risk, making them suitable for those who prefer stability over high growth.
Hybrid funds face both challenges and opportunities in 2025. On the challenging side, global inflation, interest rate hikes, and geopolitical issues may create volatility for equity-heavy hybrid funds. Rising bond yields can also affect the debt portion of these portfolios. Additionally, competition from passive funds and exchange-traded funds is increasing.
On the positive side, record inflows into hybrid funds show that more investors are turning to them for balanced risk and reward. Product innovation is also boosting the sector, with the introduction of hybrid long-short strategies and derivative-based models. Regulatory support is another tailwind, with SEBI encouraging easier rules for passive hybrid funds. Moreover, since 74% of equity mutual funds reported negative returns on one-year lump sum investments recently, hybrid funds are gaining attention as safer alternatives.
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Hybrid mutual funds for investment in India continue to stand out in 2025 as an excellent way to combine growth and safety. The top hybrid mutual funds, such as JM Aggressive Hybrid Fund, ICICI Prudential Equity & Debt Fund, HDFC Balanced Advantage Fund, and Bank of India Mid & Small Cap Equity & Debt Fund, are delivering strong returns while managing risk effectively.
With inflows at record highs and innovative products entering the market, hybrid mutual funds are becoming a central part of investment portfolios. By diversifying across aggressive hybrids, balanced advantage funds, multi-asset hybrids, and conservative hybrids, investors can enjoy steady growth, better risk management, and tax benefits. These qualities make hybrid mutual funds one of the most attractive options for investment in India.
Q1. What are Hybrid Mutual Funds?
Hybrid Mutual Funds are investment schemes that combine equity and debt in one portfolio. They aim to deliver growth from equities while reducing risk through debt.
Q2. Which are the Top Hybrid Mutual Funds for Investment in India in 2025?
Some of the top performers in 2025 include JM Aggressive Hybrid Fund, ICICI Prudential Equity & Debt Fund, HDFC Balanced Advantage Fund, SBI Multi Asset Allocation Fund, and Bank of India Mid & Small Cap Equity & Debt Fund.
Q3. Why are Hybrid Mutual Funds popular in 2025?
They have gained popularity due to record inflows of Rs. 23,223 crore in June 2025, innovative strategies like long-short hybrids, and better tax benefits when equity allocation is above 65%.
Q4. Are Hybrid Mutual Funds suitable for beginners?
Yes, hybrid mutual funds for investment are often recommended for beginners as they balance risk and reward, providing both safety and growth in a single fund.
Q5. How are Hybrid Mutual Funds taxed in India?
If equity allocation is 65% or more, they are taxed like equity funds, with long-term capital gains above Rs. 1 lakh taxed at 10%. If equity is less than 65%, they are taxed like debt funds, with long-term capital gains taxed at 20% after indexation.
