a debt equity fund is not a single category. it is a hybrid fund. it invests in both stocks and bonds.
sebi classifies these as aggressive hybrid funds. they must keep 65% to 80% in equities. the remaining 20% to 35% goes into debt instruments.
this mix aims for growth from stocks. and stability from bonds. it sits between pure equity funds and pure debt funds.
what the allocation looks like
icici prudential equity & debt fund had about 74.8% in stocks and 19% in bonds as of july 2026. cash accounted for the rest.
abbott india features among its top holdings. the bond portfolio has short-term papers. average maturity is roughly 1.66 years. yield to maturity is about 7.2%.
this mix is not fixed. it can shift within the sebi mandate. the fund manager decides the exact allocation based on market conditions.
how it differs from other hybrid funds
| fund type | equity allocation | debt allocation |
|---|---|---|
| aggressive hybrid | 65-80% | 20-35% |
| balanced hybrid | 40-60% | 40-60% |
| conservative hybrid | 10-25% | 75-90% |
aggressive hybrid funds behave more like equity funds. balanced hybrid funds are more balanced. conservative hybrid funds act more like debt funds.
the aggressive hybrid category has a longer track record. balanced hybrid funds are newer. sebi only recently allowed amcs to offer both categories.
who should consider these funds
aggressive hybrid funds suit investors who want equity-like returns with some downside protection. the debt portion provides a cushion during market falls.
suitable for. first-time equity investors. those with a moderate risk appetite. investors with a 5-8 year horizon. people nearing retirement who want to gradually reduce equity risk.
not suitable for. high-risk investors seeking maximum equity returns. those looking for short-term gains. investors who want guaranteed returns.
taxation matters
the tax treatment depends on equity exposure. aggressive hybrid funds have over 65% equity. so they qualify as equity-oriented funds.
- held for more than 12 months. long-term capital gains. gains above ₹1.25 lakh taxed at 12.5%.
- held for 12 months or less. short-term capital gains. taxed at 20%.
balanced hybrid funds with 40-60% equity do not qualify for equity taxation. they are taxed like debt funds. holding period for ltcg is 24 months. rate is 12.5% without indexation.
how they perform
the fund returned about 15.1% annually over 3 years. the category average is around 12.5%.
in 2025, it gave 13.99% returns. that was the best in its category for that year.
over 10 years, it delivered 15.4% annualised returns. this is higher than many pure debt funds. lower than top-performing equity funds.
frequently asked questions
1. is an aggressive hybrid fund safe?
it carries “very high” risk as per sebi’s riskometer. the debt portion reduces some volatility. but it is still an equity-heavy product.
2. what is the minimum investment?
most funds accept ₹5,000 for lumpsum. sips can start from ₹500 or ₹1,000.
3. how is it different from a balanced advantage fund?
balanced advantage funds can change equity allocation dynamically. aggressive hybrid funds must stay within 65-80% equity band. the allocation is more predictable.
4. can an nri invest in these funds?
yes. nris can invest through nre or nro accounts. kyc is mandatory.
5. which is better: aggressive hybrid or pure equity fund?
pure equity funds have higher growth potential. aggressive hybrid funds offer some protection during downturns. the choice depends on risk tolerance.
