Over the five years to 28 September 2026, the larger aggressive hybrid funds returned between 7.67% (HDFC) and 13.86% (ICICI Prudential) a year, with total expense ratios from 0.62% to 1.10%. Choose the hybrid category first, because it decides both the risk and the tax, then compare hybrid mutual funds within it. A hybrid fund holds a mix of shares and bonds (and sometimes gold) in one portfolio; the bond part cushions falls in the share part, at the cost of lower long-run growth. This guide explains the categories, compares the larger funds in three of them and sets out how each is taxed.
The 7 Types of Hybrid Funds
SEBI's circular of 26 February 2026 on scheme categorisation defines seven hybrid categories. Many schemes were renamed in 2026 so that their names match their category, which is why several funds below have new names.
- Conservative Hybrid: 10–25% equity, 75–90% debt.
- Balanced Hybrid: 40–60% equity, the rest in debt, with no arbitrage.
- Aggressive Hybrid: 65–80% equity, 20–35% debt.
- Dynamic Asset Allocation / Balanced Advantage: equity and debt are "managed dynamically". SEBI sets no fixed range, and since 2026 these funds may hold only equity and debt instruments.
- Multi Asset Allocation: at least three asset classes, with at least 10% in each.
- Arbitrage: at least 65% in equity, fully hedged with futures, so there is almost no market risk.
- Equity Savings: at least 65% in equity including arbitrage positions, 15–40% net (unhedged) equity, and at least 10% in debt.
Balanced advantage, multi-asset and arbitrage funds have their own guides (linked at the end). Below we cover aggressive hybrid, conservative hybrid and equity savings funds.
Aggressive Hybrid Funds
These are the most widely used hybrid funds for long-term SIPs. The debt share softens falls but does not prevent them. In the February–March 2020 crash, the five funds below fell 25.7–30.7% from peak to trough, against 38.4% for a Nifty 50 index fund.
| Fund (current name) | 3 years (a year) | 5 years (a year) | Total expense ratio | Base expense ratio | AUM (₹ Cr) | Equity |
|---|---|---|---|---|---|---|
| ICICI Prudential Aggressive Hybrid Fund (formerly Equity & Debt Fund) | 12.58% | 13.86% | 1.06% | 0.77% | 52,454 | 74.8% |
| Mirae Asset Aggressive Hybrid Fund (formerly Hybrid Equity Fund) | 10.58% | 9.44% | 0.62% | 0.40% | 9,596 | 76.1% |
| SBI Aggressive Hybrid Fund (formerly Equity Hybrid Fund) | 11.30% | 9.17% | 0.75% | 0.56% | 88,668 | 74.1% |
| Canara Robeco Aggressive Hybrid Fund (formerly Equity Hybrid Fund) | 10.14% | 8.85% | 0.69% | 0.54% | 11,396 | 79.2% |
| HDFC Aggressive Hybrid Fund (formerly Hybrid Equity Fund) | 5.85% | 7.67% | 1.10% | 0.90% | 22,297 | 69.2% |
Direct plan, Growth option. Returns are annualised, calculated from AMFI NAVs to 28 September 2026, and sorted by 5-year return. AUM and equity share (gross, including hedged positions) as of 31 August 2026. Expense ratios as of 22–28 September 2026. Since 1 April 2026, funds disclose a base expense ratio (the fund house's own charges) and a total expense ratio that adds brokerage and statutory levies; both are shown.
A note on HDFC: older lists name an "HDFC Balanced Fund". That fund no longer exists. It was merged into HDFC Hybrid Equity Fund on 1 June 2018, and that fund is now HDFC Aggressive Hybrid Fund. It has the lowest returns of the five over three and five years.
What the table tells you
- Returns vary more than you might expect. Over five years the gap between ICICI Prudential (13.86%) and HDFC (7.67%) is over 6 points a year.
- Costs differ too. Total expense ratios run from 0.62% (Mirae Asset) to 1.10% (HDFC). On a ₹10,000 monthly SIP for 20 years, a gap of that size (0.48 points) leaves about ₹3.7 lakh less at a 10% gross return, and about ₹4.8 lakh less at 12%.
- Size is not a quality signal. SBI's fund is the largest at ₹88,668 crore; Mirae Asset's is under ₹10,000 crore.
Conservative Hybrid Funds
With 75–90% in debt, these behave like a debt fund with a small equity component. They can still lose money: the worst one-year returns on record for the three funds below were −0.5% (ICICI Prudential), −2.2% (Kotak) and −2.9% (SBI).
| Fund (current name) | 3 years (a year) | 5 years (a year) | Total expense ratio | Base expense ratio | AUM (₹ Cr) |
|---|---|---|---|---|---|
| SBI Conservative Hybrid Fund | 8.13% | 8.49% | 0.98% | 0.80% | 10,226 |
| ICICI Prudential Conservative Hybrid Fund (formerly Regular Savings Fund) | 8.61% | 8.17% | 1.04% | 0.84% | 3,329 |
| Kotak Conservative Hybrid Fund (formerly Debt Hybrid Fund) | 8.23% | 8.16% | 0.61% | 0.49% | 2,833 |
Direct plan, Growth option. Returns from AMFI NAVs to 28 September 2026. AUM as of 31 August 2026; expense ratios as of 22–28 September 2026.
Because more than 65% is in debt, gains on units bought since 1 April 2023 are taxed at your slab rate however long you hold. At 30% plus 4% cess, a 5-year return of 8.2–8.5% becomes about 5.6–5.8% after tax. That is below PPF's tax-free 7.1% (October–December 2026 rate), though PPF has a long lock-in and these funds do not.
Equity Savings Funds
These combine a small amount of unhedged equity with arbitrage positions and debt. Over the three years to September 2026 their daily price swings (annualised volatility) were 2.5–5.7%, against 13.2% for a Nifty 50 index fund. But they are not fixed deposits: in the 2020 crash they fell 16.5% (Kotak), 17.0% (HDFC) and 19.2% (ICICI Prudential) from peak to trough.
| Fund | 3 years (a year) | 5 years (a year) | Total expense ratio | Base expense ratio | AUM (₹ Cr) |
|---|---|---|---|---|---|
| Kotak Equity Savings Fund | 9.84% | 9.85% | 1.07% | 0.57% | 10,684 |
| HDFC Equity Savings Fund | 7.99% | 8.05% | 1.27% | 0.82% | 5,758 |
| ICICI Prudential Equity Savings Fund | 6.63% | 7.27% | 1.13% | 0.43% | 15,795 |
Direct plan, Growth option. Returns from AMFI NAVs to 28 September 2026. AUM as of 31 August 2026; expense ratios as of 22–28 September 2026. The large gap between base and total expense ratio comes from the brokerage and levies on arbitrage trades; these costs are already reflected in the returns.
Five-year returns of 7.3–9.9% are before tax. Because the arbitrage positions count as equity, these funds get equity taxation, which is their main attraction for investors in higher tax brackets.
How Hybrid Funds Are Taxed
For units sold from 1 April 2025, tax depends on what the fund holds, not on its label:
- At least 65% in Indian equity (aggressive hybrid, equity savings, arbitrage, most balanced advantage funds): gains within 12 months are taxed at 20%; after 12 months, at 12.5% on gains above ₹1.25 lakh a year.
- More than 65% in debt (conservative hybrid): slab rate, whatever the holding period.
- Everything in between (balanced hybrid, and many multi-asset funds): 12.5% on gains after 24 months, with no ₹1.25 lakh exemption; slab rate if held 24 months or less.
Before April 2025, funds in that middle band were taxed like debt funds. Many older articles still say so. Dividends (IDCW payouts) are taxed at your slab rate in every category. For more detail, see how mutual funds are taxed in 2026.
How to Compare Hybrid Funds
- Pick the category first. It decides both the risk and the tax. Aggressive hybrids suit longer horizons; conservative hybrids and equity savings funds carry less equity risk.
- Compare 3- and 5-year returns within a category, not across categories, and check how far the fund fell in 2020.
- Compare like-for-like costs. Use the base expense ratio to compare fund-house charges and the total expense ratio to see everything you pay. Always choose the Direct plan; see direct vs regular plans.
- Check the equity share on the latest factsheet if the tax treatment matters to you.
- Don't double up. Holding a hybrid fund alongside separate equity and debt funds often just recreates the same mix at higher cost.
Common Mistakes
- Treating a conservative hybrid as an FD. It can post a negative year.
- Expecting FD-like stability from equity savings funds. They fell up to 19% from peak to trough in 2020.
- Using hybrid funds for an emergency fund. Liquid funds are built for that job.
- Relying on old fund names or old tax rules. Check the current scheme name and the post-April-2025 tax treatment.
This guide explains how to compare these funds. It is not a recommendation to buy any specific fund.
Related fund guides
- Aggressive hybrid funds explained
- Conservative hybrid funds for retirement
- Equity savings funds explained
- Best balanced advantage funds
- Best multi asset allocation funds
- Best arbitrage funds
Run your numbers: if you want a monthly income from a conservative hybrid or equity savings fund, the SWP calculator shows how long a corpus lasts at your withdrawal rate. For a one-time investment in an aggressive hybrid fund, the lumpsum calculator shows how it might grow.
