An Aggressive Hybrid Fund holds 65–80% in equity and 20–35% in debt — combining equity growth potential with a debt cushion to reduce volatility.
SEBI mandates aggressive hybrid funds to invest 65–80% in equity and 20–35% in debt instruments. The equity portion drives long-term growth; the debt portion provides a buffer during equity market downturns. Since equity exposure is above 65%, these funds qualify for equity taxation — LTCG at 12.5% after 12 months (above ₹1.25 lakh). They are one of the most popular hybrid fund categories in India, offering a balanced risk-return profile for moderate-risk investors.
An Aggressive Hybrid Fund is like a plate that's mostly (65–80%) dal-makhni (equity — rich, hearty, slightly volatile) with a side of curd rice (debt — calming, stable). The equity part grows your wealth over the long term; the debt part absorbs some of the shock when markets crash. You don't panic as much because not everything falls at once. It's equity-oriented but more comfortable than a pure equity fund.
Equity: 65–80% in stocks (fund manager decides large/mid/small cap mix).
Debt: 20–35% in bonds, treasury bills, corporate bonds (depending on strategy).
Equity taxation applies since equity >65% — same as pure equity fund tax treatment.
Rebalancing: during market crashes, equity falls more, so the fund rebalances toward equity (buying low); during rallies, it may trim equity.