What is Aggressive Hybrid Fund

When it comes to investing, you need to balance growth and stability. But finding this balance is not easy. While equity and debt funds are great, they come with their own limitations linked to risk and return, respectively. 

This is where an aggressive hybrid fund can be a great choice for you. Offering you the benefit of high growth from equity and stability of debt, these funds are just perfect choices for all investors.

But before you invest, you need to understand the aggressive hybrid mutual funds properly. So, let us explore the same in detail over here.

What Is an Aggressive Hybrid Fund?

An aggressive hybrid fund is a mutual fund scheme that invests in both equity and debt. It invests a larger portion in equities to ensure you enjoy speedier growth. 

According to SEBI guidelines, these funds are designed based on the following:

• 65–80% in equities 

• 20-35% in debt instruments like bonds or government securities. 

This type of asset allocation offers you the benefit of equity-driven growth, and a good debt exposure helps you with reduced risk.

In simple terms, aggressive hybrid mutual funds act as a bridge between pure equity and debt funds. It gives the investors diversification in one product. They are best suited for individuals who want long-term capital appreciation but also need a cushion against sharp market fluctuations.

Features of Aggressive Hybrid Fund

The aggressive hybrid fund offers you a great combination of equity and debt. You get not just good returns but also enjoy a cushion of debt. The key features of the aggressive hybrid fund are as follows:

• Market risk is higher because 65–80% of the portfolio is in equities.

• Returns can fluctuate during periods of economic slowdown or volatility.

• The debt portion may carry interest rate risk, especially when rates rise.

• Not suitable for short-term investors who need quick liquidity.

• Performance depends heavily on the fund manager’s allocation decisions.

Benefits of Aggressive Hybrid Funds

Investors often choose aggressive hybrid funds because they bring together the best parts of equity and debt. But there are various other benefits as well that you get when you invest in the        aggressive hybrid mutual funds, the most prominent ones to know are as follows:

• Higher Return Potential: These funds invest around 65–80% in equities. This makes them perfect to deliver stronger and long-term growth. This is why these funds are better as compared to conservative options.

• Risk Cushioning: These funds also focus on offering you stability and safety. Around 20-35% of the amount is invested in the debt, which makes them a better choice in the volatile market.

• Built-In Diversification: The fund offers you diversification. With exposure to multiple assets in one single scheme, you get a chance to reduce the concentration risk. 

• Ideal for Long-Term Goals: These funds work well for objectives like retirement planning, children’s education, or wealth creation over time.

• Tax Advantages: Treated as equity funds for taxation, they provide better tax benefits on long-term holdings.

Risks of Aggressive Hybrid Funds

Investing in aggressive hybrid mutual funds comes with risks as well. The common risks that are associated with these funds include the following:

• Equity Market Risk: With 65–80% in equities, returns can fluctuate widely during volatile markets.

• Debt-Linked Risk: The debt portion may face interest rate risk. So, when rates rise, there is a chance that your returns might be impacted. 

• Not for Short-Term Needs: These funds are best for long-term investors. If you are a short-term investor, you might not get the returns as expected.

• Fund Manager Dependence: In the end, the performance of the mutual fund is based on the portfolio manager. So, this is something that should be checked for sure. 

• Moderate to High Risk Profile: As compared to the other balanced funds, these are more aggressive in nature. This means the overall risks will be high.

How to Invest in Aggressive Hybrid Funds 

Now that you know the details, it's time to learn how to invest in aggressive hybrid funds. You can invest either through a Systematic Investment Plan (SIP) or a lumpsum plan. The steps that you would need to follow for the same are as follows:

1. Open Your Rupeezy Account: Sign up on the Rupeezy platform with basic details and complete KYC.

2. Search for Aggressive Hybrid Funds: Look for the aggressive hybrid fund options on the app. Compare all the choices to find the one that suits you the best.

3. Choose Investment Mode: Decide on your investment plan. It can be lumpsum or SIP. You can start on either or even both.

4. Set Amount and Duration: This is very important as the amount and time decide on your return, too. You can also go for the systematic transfer plan (STP). This can help with better planning.

5. Invest Now: It's time to get started. Make the payment and ensure to track the same. Keep your money growing with proper support and planning. 

Conclusion

An aggressive hybrid fund is an excellent option. Investors looking to balance growth and stability can invest in the same. You get the opportunity to gain the benefit of the equity and the security of the debt as well. Hence, these are great for most investors.

So, are you ready to explore your investment planning? Well, then, explore the aggressive hybrid mutual funds on Rupeezy. Select the one that you think is perfect for your portfolio and invest today. 

FAQs 

1. What is the minimum investment amount in aggressive hybrid mutual funds?

Most aggressive hybrid funds allow you to start with as little as Rs. 500 through SIP, while lump sum investments generally begin at Rs. 1,000. The exact minimum depends on the fund house.

2. Do aggressive hybrid funds pay dividends?

Yes. There are a few aggressive hybrid mutual funds that offer dividends. It is important to note that this is not a guarantee, but still the chances are good. 

3. How are aggressive hybrid funds taxed in India?

These are the same as the equity fund. So, if you invest for short-term, which is less than 1 year, it will be 15% taxation. And if this is for long-term investment, which is more than 1 year, and above Rs. 1 lakh, it is taxed at 10%.

4. Can NRIs invest in aggressive hybrid mutual funds?

Yes, NRIs can invest in aggressive hybrid funds in India. There are certain rules that they need to follow. These include the KYC and FEMA. 

5. How long should I stay invested in an aggressive hybrid fund?

It is best that you invest for 3-5 years. This will help you to avoid sudden volatility and will give you better chances of generating meaningful returns.