Hybrid Funds on WebNotes

Aggressive hybrid mutual fund

Tue, 12 May 2026 00:00:00 +0000

An aggressive hybrid mutual fund in India is an open-ended hybrid scheme that must invest between 65% and 80% of its total assets in equity and equity-related instruments and between 20% and 35% in debt instruments, under SEBI ’s October 2017 scheme categorisation circular. This category corresponds to what was historically marketed as “balanced funds” in India before SEBI’s rationalisation. The equity allocation of 65% to 80% qualifies aggressive hybrid funds for equity-oriented taxation, making them more tax-efficient than purely debt-oriented or conservative hybrid funds. Each AMC may offer only one aggressive hybrid fund.

Arbitrage mutual fund

Tue, 12 May 2026 00:00:00 +0000

An arbitrage mutual fund in India is an open-ended hybrid scheme that generates returns primarily by exploiting the price difference between the cash (spot) market and the futures market for the same equity security. The strategy involves simultaneously buying a stock in the cash market and selling an equivalent futures contract on the same stock at a higher price (the futures premium). The spread between the cash price and the futures price, captured at the time of trade, represents a near risk-free return that is crystallised when the futures contract expires and the prices converge.

Balanced advantage fund

Tue, 12 May 2026 00:00:00 +0000

A balanced advantage fund (BAF) – formally categorised by SEBI as a dynamic asset allocation fund – is an open-ended hybrid scheme that dynamically manages the allocation between equity and debt instruments based on market conditions, valuation models, or other quantitative triggers, with no regulatory floor or ceiling on equity allocation. SEBI’s October 2017 scheme categorisation circular merged this category with the earlier “balanced advantage” label under the single heading “Dynamic Asset Allocation or Balanced Advantage”. Balanced advantage funds are among the largest hybrid fund categories by AUM in India, with several schemes managing over ₹50,000 crore each.

Conservative hybrid mutual fund

Tue, 12 May 2026 00:00:00 +0000

A conservative hybrid mutual fund in India is an open-ended hybrid scheme that must invest between 75% and 90% of its total assets in debt instruments and between 10% and 25% in equity and equity-related instruments, under SEBI ’s October 2017 scheme categorisation circular. The category is designed for investors who primarily seek income and capital preservation with a modest equity participation for inflation-beating returns. Because equity constitutes less than 65% of the portfolio, conservative hybrid funds are classified as debt-oriented funds for tax purposes.

Equity savings mutual fund

Tue, 12 May 2026 00:00:00 +0000

An equity savings mutual fund in India is an open-ended hybrid scheme that combines three sources of return: unhedged equity (directional equity exposure), equity arbitrage (market-neutral hedged equity positions), and debt instruments. SEBI ’s October 2017 scheme categorisation circular defines the category by requiring a minimum 65% total equity allocation (which includes both unhedged and arbitrage equity), a minimum 10% in debt, and a minimum 10% in unhedged equity. Because total equity (unhedged plus arbitrage) is at least 65%, equity savings funds qualify for equity-oriented taxation, making them more tax-efficient than debt-oriented hybrid categories such as conservative hybrid funds .

Multi-asset allocation mutual fund

Tue, 12 May 2026 00:00:00 +0000

A multi-asset allocation mutual fund in India is an open-ended hybrid scheme that must invest in at least three asset classes, with a minimum of 10% of its total assets in each of those asset classes, under SEBI ’s October 2017 scheme categorisation circular. The most common combination is domestic equity, domestic debt, and gold (or gold-linked instruments). Some AMCs include international equity, silver, or real estate investment trusts (REITs) as the third or fourth asset class. Multi-asset allocation funds represent the broadest diversification available within a single open-ended mutual fund in India.