{"id":42568,"date":"2026-08-26T14:00:00","date_gmt":"2026-08-26T08:30:00","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=42568"},"modified":"2026-08-25T20:01:19","modified_gmt":"2026-08-25T14:31:19","slug":"what-is-debt-equity-fund","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/","title":{"rendered":"what is debt equity fund ?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_86 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#what_the_allocation_looks_like\" >what the allocation looks like<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#how_it_differs_from_other_hybrid_funds\" >how it differs from other hybrid funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#who_should_consider_these_funds\" >who should consider these funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#taxation_matters\" >taxation matters<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#how_they_perform\" >how they perform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/#frequently_asked_questions\" >frequently asked questions<\/a><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\">a debt equity fund is not a single category. it is a hybrid fund. it invests in both stocks and bonds.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">sebi classifies these as aggressive hybrid funds. they must keep 65% to 80% in equities. the remaining 20% to 35% goes into debt instruments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">this mix aims for growth from stocks. and stability from bonds. it sits between pure equity funds and pure debt funds.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"what_the_allocation_looks_like\"><\/span><strong>what the allocation looks like<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">icici prudential equity &amp; debt fund had about 74.8% in stocks and 19% in bonds as of july 2026. cash accounted for the rest.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">this mix is not fixed. it can shift within the sebi mandate. the fund manager decides the exact allocation based on market conditions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how_it_differs_from_other_hybrid_funds\"><\/span><strong>how it differs from other hybrid funds<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">fund type<\/th><th class=\"has-text-align-left\" data-align=\"left\">equity allocation<\/th><th class=\"has-text-align-left\" data-align=\"left\">debt allocation<\/th><\/tr><\/thead><tbody><tr><td>aggressive hybrid<\/td><td>65-80%<\/td><td>20-35%<\/td><\/tr><tr><td>balanced hybrid<\/td><td>40-60%<\/td><td>40-60%<\/td><\/tr><tr><td>conservative hybrid<\/td><td>10-25%<\/td><td>75-90%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">aggressive hybrid funds behave more like equity funds. balanced hybrid funds are more balanced. conservative hybrid funds act more like debt funds.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">the aggressive hybrid category has a longer track record. balanced hybrid funds are newer. sebi only recently allowed amcs to offer both categories.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"who_should_consider_these_funds\"><\/span><strong>who should consider these funds<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">aggressive hybrid funds suit investors who want equity-like returns with some downside protection. the debt portion provides a cushion during market falls.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>suitable for.<\/strong>&nbsp;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.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>not suitable for.<\/strong>&nbsp;high-risk investors seeking maximum equity returns. those looking for short-term gains. investors who want guaranteed returns.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"taxation_matters\"><\/span><strong>taxation matters<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">the tax treatment depends on equity exposure. aggressive hybrid funds have over 65% equity. so they qualify as equity-oriented funds.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>held for more than 12 months. long-term capital gains. gains above \u20b91.25 lakh taxed at 12.5%.<\/li>\n\n\n\n<li>held for 12 months or less. short-term capital gains. taxed at 20%.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how_they_perform\"><\/span><strong>how they perform<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">the fund returned about 15.1% annually over 3 years. the category average is around 12.5%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">in 2025, it gave 13.99% returns. that was the best in its category for that year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">over 10 years, it delivered 15.4% annualised returns. this is higher than many pure debt funds. lower than top-performing equity funds.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"frequently_asked_questions\"><\/span><strong>frequently asked questions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1. is an aggressive hybrid fund safe?<\/strong><br>it carries &#8220;very high&#8221; risk as per sebi&#8217;s riskometer. the debt portion reduces some volatility. but it is still an equity-heavy product.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2. what is the minimum investment?<\/strong><br>most funds accept \u20b95,000 for lumpsum. sips can start from \u20b9500 or \u20b91,000.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3. how is it different from a balanced advantage fund?<\/strong><br>balanced advantage funds can change equity allocation dynamically. aggressive hybrid funds must stay within 65-80% equity band. the allocation is more predictable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>4. can an nri invest in these funds?<\/strong><br>yes. nris can invest through nre or nro accounts. kyc is mandatory.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>5. which is better: aggressive hybrid or pure equity fund?<\/strong><br>pure equity funds have higher growth potential. aggressive hybrid funds offer some protection during downturns. the choice depends on risk tolerance.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/what-is-debt-equity-fund\/\">Read 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