# Best Hybrid Mutual Funds To Invest Author: Ankur Choudhary Author URL: https://getbelong.com/blog/author/ankur-choudhary/ Published: 2025-12-22 Category: NRI Investment Category URL: https://getbelong.com/blog/category/nri-investment-guide/ Meta Title: Best Hybrid Mutual Funds India Meta Description: Top hybrid funds ranked by category. Aggressive, balanced advantage, multi-asset compared. Tax rules, NRI eligibility, GIFT City alternatives. Tags: Mutual Funds Tag URLs: Mutual Funds (https://getbelong.com/blog/tag/mutual-funds/) URL: https://getbelong.com/blog/mutual-funds/best-hybrid-funds/ ![Best Hybrid Mutual Funds](https://prod.superblogcdn.com/site_cuid_clx4a3rx6000caheo10zipfw1/images/best-hybrid-mutual-funds-1766558205665-compressed.jpg) Hybrid mutual funds received ₹23,223 crore in June 2025 alone. That's 163% higher than the same month last year. Why the surge? NRIs discovered what we've been telling our [Belong](https://getbelong.com/) community for years: you don't have to choose between growth and safety. Hybrid funds give you both in a single investment. At Belong, we speak with NRIs daily who are torn between fixed deposits that feel too safe and equity funds that feel too risky. Hybrid funds sit right in the middle. They combine equity's growth potential with debt's stability, automatically rebalancing so you don't have to. This guide breaks down all seven hybrid fund categories. We rank funds within each category, explain which suits different risk profiles, and show you the tax implications for NRIs. By the end, you'll know exactly which type of hybrid fund matches your situation. ## **What Are Hybrid Mutual Funds?** Hybrid funds invest in multiple asset classes within a single portfolio. Most combine equity (stocks) and debt (bonds). Some add gold, real estate investment trusts (REITs), or commodities. SEBI classifies hybrid funds into seven categories based on their asset allocation: Category Equity Allocation Debt Allocation Risk Level Conservative Hybrid 10-25% 75-90% Low Balanced Hybrid 40-60% 40-60% Moderate Aggressive Hybrid 65-80% 20-35% Moderately High Dynamic Asset Allocation 0-100% 0-100% Moderate Multi-Asset Allocation Min 10% each in 3 classes Varies Moderate Arbitrage 65%+ (hedged) Rest in debt Low Equity Savings 65%+ (partially hedged) Rest in debt Low-Moderate Each category serves different investor needs. Let's explore them with the best funds in each. ## **Why NRIs Choose Hybrid Funds Over Pure Equity** Living in the UAE means you can't monitor Indian markets daily. Hybrid funds solve three problems: **Automatic rebalancing.** Fund managers shift between equity and debt based on market conditions. You don't need to time your switches. **Reduced volatility.** When equity markets crash, the debt portion cushions the fall. Your portfolio doesn't swing as wildly as pure equity funds. **Single-fund diversification.** Instead of managing separate equity, debt, and gold investments, one hybrid fund covers multiple bases. According to [AMFI data](https://www.amfiindia.com/), hybrid fund AUM crossed ₹8.5 lakh crore in 2025, reflecting growing investor preference for balanced approaches. 👉 **Tip:** If you're within 5-7 years of a major goal (retirement, child's education, property purchase), hybrid funds offer better risk management than pure equity. ## **Best Aggressive Hybrid Funds** Aggressive hybrid funds invest 65-80% in equity and 20-35% in debt. They're treated as equity funds for taxation, making them tax-efficient for NRIs. **Ranking Criteria:** 5-year returns, risk-adjusted performance, and AUM stability. Rank Fund Name 5Y CAGR 3Y CAGR AUM (₹ Cr) Expense Ratio 1 ICICI Prudential Equity & Debt 22.8% 19.6% 49,223 0.90% 2 Bank of India Mid & Small Cap E\\&D 21.1% 18.2% 1,321 0.80% 3 Quant Aggressive Hybrid 20.4% 12.4% 2,110 0.80% 4 Edelweiss Aggressive Hybrid 19.0% 17.9% 3,413 0.40% 5 JM Aggressive Hybrid 18.7% 19.4% 1,850 0.85% 6 Kotak Aggressive Hybrid 17.5% 15.8% 8,462 0.50% 7 SBI Equity Hybrid 15.5% 14.7% 81,952 0.72% _Data as of December 2025. Source: [INDmoney](https://indmoney.com/), [Value Research](https://valueresearchonline.com/), [Groww](https://groww.in/)_ ### **ICICI Prudential Equity & Debt Fund: The Category Leader** The oldest and largest aggressive hybrid fund, managing ₹49,223 crore with a 22.8% five-year return. **Asset allocation:** 73.5% equity, 19.2% debt, 5.1% in real estate and other assets. This diversification beyond traditional equity-debt mix adds another layer of protection. **Top holdings:** TVS Motor (5.3%), ICICI Bank (4.1%), HDFC Bank (3.8%), and exposure across financial services, consumer cyclicals, and industrials. **What sets it apart:** The fund maintains equity exposure at the higher end of the 65-80% range during bull markets and shifts toward debt during corrections. This dynamic approach has helped deliver consistent outperformance. **Fund Manager:** Sankaran Naren, known for his contrarian investment style. **AUM:** ₹49,223 crore **Expense Ratio:** 0.90% **Minimum SIP:** ₹100 ### **SBI Equity Hybrid Fund: The Giant** India's largest aggressive hybrid fund by AUM at ₹81,952 crore. This reflects institutional trust built over decades. **Asset allocation:** 68% equity, 25% debt. The fund maintains a conservative-aggressive balance, leaning toward large-cap stocks for the equity portion. **Returns:** 15.5% over 5 years, 14.7% over 3 years. Lower than category leaders but with significantly lower volatility. **Why choose it:** If you want aggressive hybrid exposure with the stability of India's largest fund house, SBI Equity Hybrid offers predictable performance. The massive AUM ensures liquidity and professional management. **Expense Ratio:** 0.72% **Minimum SIP:** ₹500 ### **Edelweiss Aggressive Hybrid Fund: The Cost Leader** The lowest expense ratio (0.40%) among aggressive hybrid funds, combined with strong 19% five-year returns. **Why it matters:** On a ₹50 lakh investment over 10 years, the 0.50% expense difference from average funds saves approximately ₹8-10 lakh in fees. **Best for:** Cost-conscious investors who want aggressive hybrid exposure without paying premium fees. 👉 **Tip:** Always choose Direct plans over Regular plans. The difference saves 0.5-1% annually, which compounds significantly over time. ## **Best Balanced Advantage Funds (Dynamic Asset Allocation)** Balanced advantage funds (BAFs) dynamically adjust equity exposure from 0-100% based on market valuations. They buy more equity when markets are cheap and reduce exposure when valuations stretch. This is the most popular hybrid category, with funds like HDFC BAF crossing ₹1 lakh crore AUM. Rank Fund Name 5Y CAGR 3Y CAGR AUM (₹ Cr) Expense Ratio 1 HDFC Balanced Advantage 23.0% 19.1% 1,06,494 0.73% 2 ICICI Prudential BAF 13.9% 14.1% 68,450 0.87% 3 Edelweiss Balanced Advantage 16.8% 15.2% 12,500 0.52% 4 Kotak Balanced Advantage 14.5% 13.8% 18,200 0.62% 5 Nippon India Balanced Advantage 15.2% 14.5% 9,800 0.78% _Data as of December 2025. Source: [Value Research](https://valueresearchonline.com/), [Tickertape](https://tickertape.in/)_ ### **HDFC Balanced Advantage Fund: India's Largest Hybrid Fund** Managing over ₹1,06,494 crore, HDFC BAF is India's most trusted balanced advantage fund. Its 23% five-year return significantly outperforms the category average. **Current allocation:** 60.6% equity, 28% debt, 11.4% others (including arbitrage positions and cash). **Top holdings:** HDFC Bank, ICICI Bank, Axis Bank, Infosys, Reliance Industries. The fund maintains a large-cap bias in its equity portion. **PE Ratio:** 19.19 versus category average 25.10. This lower PE indicates the fund buys at more reasonable valuations. **Standard deviation:** 8.05, indicating lower volatility than category peers. **What makes it special:** HDFC BAF uses a counter-cyclical approach. When markets fall, it increases equity exposure. When markets rally excessively, it books profits and moves to debt. This automatic contrarian strategy has delivered stellar risk-adjusted returns. **Fund Managers:** Srinivasan Ramamurthy, Gopal Agrawal, Anil Bamboli **Minimum SIP:** ₹100 **Exit Load:** 1% for redemption exceeding 15% within 1 year ### **ICICI Prudential Balanced Advantage Fund: The Consistent Performer** The second-largest BAF at ₹68,450 crore, with a more conservative approach than HDFC BAF. **Returns:** 13.9% over 5 years, 14.1% over 3 years. Lower than HDFC but with remarkably consistent performance across market cycles. **Current allocation:** 66% equity (including derivatives for hedging), remaining in debt and money market instruments. **Ranking:** #2 out of 18 funds in the dynamic asset allocation category according to [INDmoney](https://indmoney.com/). **Why choose it:** If you prefer steadier returns with less dramatic swings, ICICI Prudential BAF's conservative approach delivers. The fund has consistently outperformed its benchmark (Dynamic Asset Allocation Index) across 1, 3, and 5-year periods. **Expense Ratio:** 0.87% **Minimum SIP:** ₹100 ### **HDFC BAF vs ICICI Pru BAF: Which to Choose?** Parameter HDFC BAF ICICI Pru BAF 5Y Returns 23.0% 13.9% AUM ₹1,06,494 Cr ₹68,450 Cr Expense Ratio 0.73% 0.87% Volatility Higher Lower Strategy Aggressive counter-cyclical Conservative dynamic Best For Growth-oriented investors Stability seekers **Our take:** HDFC BAF for higher returns with some volatility. ICICI Pru BAF for steadier, predictable growth. ## **Best Multi-Asset Allocation Funds** Multi-asset funds invest in at least three asset classes, typically equity, debt, and gold. This triple diversification protects against scenarios where both equity and debt underperform. Rank Fund Name 5Y CAGR 3Y CAGR AUM (₹ Cr) Expense Ratio 1 Quant Multi Asset 27.1% 21.7% 3,201 0.61% 2 ICICI Prudential Multi Asset 22.5% 20.0% 75,067 0.72% 3 Nippon India Multi Asset 18.3% 21.6% 4,500 0.75% 4 UTI Multi Asset Allocation 16.3% 20.6% 4,963 0.42% 5 Tata Multi Asset Allocation 17.2% 16.9% 3,800 0.65% 6 SBI Multi Asset Allocation 15.7% 18.7% 6,983 0.54% 7 HDFC Multi Asset 15.0% 15.7% 3,844 0.79% _Data as of December 2025. Source: [Groww](https://groww.in/), [Dhan](https://dhan.co/), [Angel One](https://angelone.in/)_ ### **ICICI Prudential Multi Asset Fund: The Category Giant** The largest multi-asset fund at ₹75,067 crore, managed by the legendary Sankaran Naren. **Asset allocation:** 48% equity, 17% debt, 35% others (gold, silver, REITs, international assets). **5-year return:** 22.5% with a Sharpe ratio of 1.44, the highest among multi-asset funds. This indicates exceptional risk-adjusted returns. **What makes it special:** The fund actively rebalances across six asset classes based on valuations. When gold rallied in 2024, the fund had already built significant gold exposure. When equity corrected, it shifted toward debt. **Recent inflows:** ₹1,890 crore in a single month, demonstrating strong investor confidence. **Best for:** Investors who want exposure to gold and commodities alongside equity and debt, without managing separate investments. **Minimum SIP:** ₹100 **Exit Load:** 1% for redemption exceeding 30% within 1 year ### **Quant Multi Asset Fund: The Returns Leader** The highest five-year return (27.1%) among multi-asset funds, but with higher volatility. **Asset allocation:** 54% equity, 11% debt, 35% others (primarily gold and commodities). **Investment approach:** Quant uses its proprietary VLRT framework (Valuation, Liquidity, Risk, Time) to make aggressive allocation shifts. **Sharpe Ratio:** 0.80, lower than ICICI Prudential despite higher returns. This indicates the extra returns come with proportionally more risk. **Best for:** Aggressive investors who want multi-asset diversification with maximum growth potential. **AUM:** ₹3,201 crore **Expense Ratio:** 0.61% ### **UTI Multi Asset Allocation: The Cost Champion** The lowest expense ratio (0.42%) among multi-asset funds with solid 16.3% five-year returns. **Asset allocation:** More balanced approach with roughly equal weights across equity, debt, and gold. **Best for:** Cost-conscious investors seeking true diversification without paying premium management fees. 👉 **Tip:** Multi-asset funds work well as your core holding. The built-in gold allocation provides inflation hedging without you managing a separate [gold investment](https://getbelong.com/blog/sovereign-gold-bonds-everything-nris-need-to-know/). ## **Best Conservative Hybrid Funds** Conservative hybrid funds invest 75-90% in debt and only 10-25% in equity. They're ideal for risk-averse investors who want slightly better returns than pure debt funds. Rank Fund Name 5Y CAGR 3Y CAGR AUM (₹ Cr) Expense Ratio 1 Kotak Debt Hybrid 12.3% 11.5% 3,065 0.50% 2 Aditya Birla SL Regular Savings 12.1% 10.2% 1,531 0.90% 3 HDFC Hybrid Debt 12.0% 11.0% 3,342 1.10% 4 SBI Conservative Hybrid 12.0% 10.5% 9,787 1.10% 5 Canara Robeco Conservative Hybrid 10.0% 9.8% 1,200 0.65% _Data as of December 2025. Source: [Scripbox](https://scripbox.com/), [INDmoney](https://indmoney.com/)_ ### **When to Choose Conservative Hybrid Over FDs** Conservative hybrid funds have delivered 10-12% over five years. Compare that to [bank FD rates](https://getbelong.com/tools/nri-fd-rates/) of 6-7%. **The catch:** Conservative hybrids aren't guaranteed like FDs. During market crashes, the equity portion (though small) can cause temporary losses. **Tax advantage:** If equity allocation exceeds 65%, they're taxed as equity funds (12.5% LTCG after 1 year). If equity is below 65%, they're taxed as debt funds, which may be less favorable. **Best for:** - Retirees seeking regular income with modest growth - Investors within 2-3 years of a major expense - Risk-averse NRIs who want returns above FDs but can't handle equity volatility ### **SBI Conservative Hybrid Fund** The largest conservative hybrid at ₹9,787 crore. Invests 21% in equity (primarily large-caps) and 74% in high-quality debt instruments. **Returns:** 12% over 5 years, beating most [NRE fixed deposits](https://getbelong.com/blog/nre-vs-nro-vs-fcnr/) while maintaining relative stability. **Best for:** Conservative NRIs who trust SBI's brand and want debt-like stability with some equity upside. ## **Arbitrage Funds: Tax-Efficient Parking** Arbitrage funds exploit price differences between cash and derivatives markets. They buy in one market and simultaneously sell in another, locking in small but consistent gains. **Key benefit:** Though they maintain 65%+ equity exposure (through hedged positions), they carry almost no equity risk. Yet they're taxed as equity funds, making them more tax-efficient than liquid or debt funds. Rank Fund Name 1Y Return 3Y CAGR AUM (₹ Cr) Expense Ratio 1 Kotak Equity Arbitrage 7.8% 7.2% 58,993 0.43% 2 ICICI Prudential Equity Arbitrage 7.5% 7.0% 28,500 0.38% 3 Nippon India Arbitrage 7.6% 7.1% 15,200 0.42% 4 Tata Arbitrage 7.4% 6.9% 12,800 0.35% 5 Edelweiss Arbitrage 7.5% 7.0% 8,900 0.40% _Data as of December 2025. Source: [Value Research](https://valueresearchonline.com/)_ ### **Kotak Equity Arbitrage Fund: The Category Leader** The largest arbitrage fund at ₹58,993 crore, delivering consistent 7-8% annual returns. **Asset allocation:** 68.9% in equity (fully hedged through derivatives), 1.6% in debt, rest in cash equivalents. **Tax benefit:** Gains held over 1 year are taxed at 12.5% (LTCG) versus 20-30% for debt fund gains. For NRIs in tax-free UAE, this advantage matters less, but it's significant for those with Indian tax obligations. **Best for:** - Parking money for 3-12 months while deciding on long-term investments - Emergency fund allocation seeking better-than-savings-account returns - Short-term goals where you can't afford equity volatility **Minimum SIP:** ₹100 **Exit Load:** 0.25% within 30 days, nil thereafter 👉 **Tip:** Don't hold arbitrage funds for more than 1-2 years. For longer periods, balanced advantage or aggressive hybrid funds offer better growth potential. ## **Equity Savings Funds: The Middle Ground** Equity savings funds combine three components: equity (30-50%), arbitrage (20-40%), and debt (20-30%). They offer moderate returns with lower volatility than aggressive hybrids. Rank Fund Name 5Y CAGR 3Y CAGR AUM (₹ Cr) 1 HDFC Equity Savings 12.5% 11.8% 5,200 2 Kotak Equity Savings 11.8% 10.5% 4,800 3 Edelweiss Equity Savings 11.2% 12.3% 2,400 4 ICICI Prudential Equity Savings 10.8% 10.2% 6,100 **Best for:** Investors who find aggressive hybrids too volatile but conservative hybrids too slow. Equity savings funds sit exactly in between. ## **How Hybrid Funds Are Taxed for NRIs** Tax treatment depends on the fund's equity allocation: ### **Equity-Oriented Hybrids (65%+ Equity)** Applies to: Aggressive hybrid, balanced advantage, arbitrage, equity savings funds. Holding Period Tax Rate Notes Less than 12 months (STCG) 20% Changed from 15% in July 2024 More than 12 months (LTCG) 12.5% on gains above ₹1.25L Changed from 10% above ₹1L ### **Debt-Oriented Hybrids (Below 65% Equity)** Applies to: Conservative hybrid funds. Holding Period Tax Rate Notes Any duration Added to income, taxed at slab rate No indexation benefit post-April 2023 ### **TDS Deduction for NRIs** Banks and AMCs deduct TDS at source: - STCG: 20% - LTCG: 12.5% You can claim refunds when [filing ITR](https://getbelong.com/services/nri-tax-filing-india/) if TDS exceeds actual liability. ### **Tax Optimization Strategy** **Harvest gains annually.** Redeem up to ₹1.25 lakh in long-term gains each financial year tax-free. For larger portfolios, split redemptions across two financial years (March and April). **Choose equity-oriented hybrids.** The 12.5% LTCG rate is more favorable than slab-rate taxation on debt-oriented funds. For detailed guidance, use our [NRI tax filing service](https://getbelong.com/services/nri-tax-filing-india/) or check [DTAA benefits](https://getbelong.com/blog/india-uae-dtaa-guide-for-nris/) available to UAE residents. ## **A Tax-Free Alternative: GIFT City Funds** Here's what most NRIs overlook: [GIFT City mutual funds](https://getbelong.com/blog/gift-city-vs-regular-mutual-funds/) offer potentially tax-free returns for UAE residents. Under Section 10(4D) of the Income Tax Act, capital gains from GIFT City funds are exempt from Indian tax. Combined with UAE's zero-tax environment, you effectively pay 0% on investment gains. ### **Regular Hybrid vs GIFT City Comparison** Parameter Regular Hybrid Fund GIFT City Alternative STCG Tax 20% 0% (for UAE NRIs) LTCG Tax 12.5% above ₹1.25L 0% (for UAE NRIs) Currency INR USD TDS Yes No Rupee Risk Fully exposed Protected ### **The Math** Invest ₹50 lakh in an aggressive hybrid earning 18% annually for 10 years: - **Regular fund:** Corpus ₹2.34 crore, Tax on gains ~₹23L = Net ₹2.11 crore - **GIFT City:** Corpus ₹2.34 crore, Tax = ₹0 = Net ₹2.34 crore That's ₹23+ lakh saved purely through tax efficiency. Explore options through our [GIFT City mutual funds explorer](https://getbelong.com/tools/gift-city-mutual-funds/). Funds like [DSP Global Equity Fund](https://getbelong.com/tools/gift-city-mutual-funds/dsp-global-equity-fund/) and [Tata India Dynamic Equity Fund](https://getbelong.com/tools/gift-city-mutual-funds/tata-india-dynamic-equity-fund/) offer diversified exposure with tax advantages. ## **Which Hybrid Fund Category Suits You?** ### **Conservative Investor (Capital Preservation Priority)** Allocation Category Recommended Fund 60% Conservative Hybrid SBI Conservative Hybrid 20% Arbitrage Kotak Equity Arbitrage 20% [Debt Fund](https://getbelong.com/blog/debt-funds-vs-fixed-deposits/) HDFC Short Term Debt **Expected returns:** 9-11% with minimal volatility ### **Moderate Investor (Balanced Growth & Safety)** Allocation Category Recommended Fund 50% Balanced Advantage HDFC Balanced Advantage 30% Multi-Asset ICICI Prudential Multi Asset 20% Equity Savings HDFC Equity Savings **Expected returns:** 14-16% with moderate volatility ### **Growth-Oriented Investor (Returns Priority)** Allocation Category Recommended Fund 60% Aggressive Hybrid ICICI Prudential Equity & Debt 25% Multi-Asset Quant Multi Asset 15% [Flexi Cap](https://getbelong.com/blog/best-mutual-funds/) Parag Parikh Flexi Cap **Expected returns:** 18-22% with higher volatility ## **How Hybrid Funds Perform in Different Markets** ### **Bull Markets** Aggressive hybrids and high-equity balanced advantage funds outperform. HDFC BAF's 23% five-year return includes strong bull market performance because it maintained high equity allocation during rallies. ### **Bear Markets** Conservative hybrids and low-equity balanced advantage funds protect capital. The debt portion cushions equity losses. ICICI Pru BAF's consistent returns come from its defensive positioning during corrections. ### **Sideways Markets** Arbitrage and equity savings funds shine. When markets move sideways, arbitrage strategies continue generating 7-8% returns regardless of direction. ### **Inflationary Periods** Multi-asset funds with gold exposure outperform. Gold typically rises during inflation, offsetting equity and debt underperformance. ## **Common Mistakes to Avoid** ### **1\. Treating All Hybrids as Equal** An aggressive hybrid with 80% equity is fundamentally different from a conservative hybrid with 20% equity. Match the fund's risk profile to your tolerance. ### **2\. Chasing Recent Returns** Quant funds topped recent charts but with higher volatility. Past returns don't guarantee future performance, especially with aggressive strategies. ### **3\. Ignoring Expense Ratios** The difference between 0.40% (Edelweiss) and 1.10% (SBI Conservative) compounds significantly over decades. Choose Direct plans and compare costs. ### **4\. Over-Diversifying Within Hybrids** One good balanced advantage fund or aggressive hybrid is enough. Holding 3-4 funds from the same category creates overlap without additional diversification. ### **5\. Missing Tax-Efficient Alternatives** UAE NRIs paying 12.5-20% tax unnecessarily. [GIFT City investments](https://getbelong.com/blog/gift-city-benefits-for-nris/) offer potentially zero tax on identical strategies. ## **How to Invest in Hybrid Funds as an NRI** ### **Step 1: Complete KYC** Required documents: - PAN card - Passport with valid visa - Overseas address proof - Passport-size photograph Most AMCs offer [video KYC](https://getbelong.com/blog/mutual-fund-kyc-nri/) for remote completion. ### **Step 2: Open NRE/NRO Account** You'll need an Indian bank account for investments: - [**NRE account**](https://getbelong.com/blog/nre-vs-nro-vs-fcnr/) **:** Full repatriation of principal and gains - [**NRO account**](https://getbelong.com/blog/best-nro-account/) **:** ₹1 million annual repatriation limit Compare options using our [NRI FD comparison tool](https://getbelong.com/tools/nri-fd-rates/). ### **Step 3: Choose SIP or Lump Sum** **SIP works better for most investors.** Regular investments average out purchase prices across market cycles. **Lump sum** works when you have a windfall (gratuity, bonus) and markets appear reasonably valued. ### **Step 4: Select Direct Plans** Always choose Direct plans to avoid distributor commissions. This saves 0.5-1% annually. ## **FAQs** ### **Which hybrid fund is best for NRIs in 2025?** For growth: ICICI Prudential Equity & Debt (aggressive hybrid) or HDFC Balanced Advantage (dynamic allocation). For stability: SBI Conservative Hybrid. For tax efficiency, consider [GIFT City alternatives](https://getbelong.com/blog/gift-city-mutual-funds-vs-offshore-funds/). ### **Is hybrid fund better than FD for NRIs?** Equity-oriented hybrids have historically delivered 15-23% versus 6-7% from FDs. But hybrids carry market risk. For guaranteed returns, stick with [FCNR deposits](https://getbelong.com/blog/highest-fcnr-deposit-rates/). For growth potential with some stability, hybrid funds work well. ### **What is the difference between balanced advantage and aggressive hybrid?** Aggressive hybrids maintain fixed 65-80% equity allocation. Balanced advantage funds dynamically adjust equity from 0-100% based on market valuations. BAFs offer more automatic risk management. ### **How much should I invest in hybrid funds?** Financial advisors typically recommend 30-50% of your portfolio in hybrid funds as the core holding. Supplement with pure equity for growth or debt for stability based on your goals. ### **Are hybrid mutual funds taxable for NRIs?** Yes. Equity-oriented hybrids (65%+ equity) attract 20% STCG (under 1 year) and 12.5% LTCG on gains above ₹1.25 lakh. Debt-oriented hybrids are taxed at your income slab rate. TDS is deducted at source for NRIs. ### **Which is better: HDFC BAF or ICICI Pru BAF?** HDFC BAF offers higher returns (23% vs 14% over 5 years) with more volatility. ICICI Pru BAF delivers steadier, consistent performance. Choose HDFC for growth, ICICI for stability. ## **Take Your Next Step** Hybrid funds give NRIs the balance they need: growth from equity, stability from debt, and professional rebalancing without constant monitoring. For tax-efficient investing, explore [GIFT City mutual funds](https://getbelong.com/tools/gift-city-mutual-funds/) that offer potentially zero tax on capital gains. Check your [residential status](https://getbelong.com/tools/nri-residential-status-calculator/) to understand which rules apply to you. Use [Belong's NRI FD Comparison Tool](https://getbelong.com/tools/nri-fd-rates/) to compare stable alternatives for the conservative portion of your portfolio. Have questions about which hybrid fund category matches your situation? Join our [WhatsApp community](https://chat.whatsapp.com/EaxmhRZ6fTiChXQAZhqFK4) where many NRIs discuss their investment strategies daily. Or [download the Belong app](https://app.getbelong.com/LywZ/blogs) to start investing in tax-efficient GIFT City products. * * * _Disclaimer: Mutual fund investments are subject to market risks. Past performance does not guarantee future returns. Rankings in this article use transparent criteria and should not be considered investment recommendations. Consult a SEBI-registered advisor before investing._ _Published: December 2025_ _Author: Ankur Choudhary, CEO, Belong \| SEBI-Registered Investment Advisor_ * * * ## **Sources** - [AMFI - Association of Mutual Funds in India](https://www.amfiindia.com/) - [SEBI - Securities and Exchange Board of India](https://www.sebi.gov.in/) - [Value Research Online](https://www.valueresearchonline.com/) - [Tickertape Fund Analysis](https://tickertape.in/) - [INDmoney Hybrid Funds](https://www.indmoney.com/mutual-funds/hybrid-funds) - [Groww Hybrid Mutual Funds](https://groww.in/mutual-funds/category/best-hybrid-mutual-funds) - [Analytics Insight - Hybrid Funds 2025](https://analyticsinsight.net/) - [Scripbox Conservative Hybrid](https://scripbox.com/mutual-fund/conservative-hybrid) - [Angel One Multi-Asset Funds](https://angelone.in/mutual-funds/category/multi-asset-allocation-funds) ## FAQs Q: Which hybrid fund is best for NRIs in 2025/2026? A:

​For growth: ICICI Prudential Equity & Debt (aggressive hybrid) or HDFC Balanced Advantage (dynamic allocation). For stability: SBI Conservative Hybrid. For tax efficiency, consider GIFT City alternatives.​

Q: Is hybrid fund better than FD for NRIs? A:

​Equity-oriented hybrids have historically delivered 15-23% versus 6-7% from FDs. But hybrids carry market risk. For guaranteed returns, stick with FCNR deposits. For growth potential with some stability, hybrid funds work well.​

Q: What is the difference between balanced advantage and aggressive hybrid? A:

​Aggressive hybrids maintain fixed 65-80% equity allocation. Balanced advantage funds dynamically adjust equity from 0-100% based on market valuations. BAFs offer more automatic risk management.​

Q: How much should I invest in hybrid funds? A:

​Financial advisors typically recommend 30-50% of your portfolio in hybrid funds as the core holding. Supplement with pure equity for growth or debt for stability based on your goals.​

Q: Are hybrid mutual funds taxable for NRIs? A:

Yes. Equity-oriented hybrids (65%+ equity) attract 20% STCG (under 1 year) and 12.5% LTCG on gains above ₹1.25 lakh. Debt-oriented hybrids are taxed at your income slab rate. TDS is deducted at source for NRIs.

​

Q: Which is better: HDFC BAF or ICICI Pru BAF? A:

​HDFC BAF offers higher returns (23% vs 14% over 5 years) with more volatility. ICICI Pru BAF delivers steadier, consistent performance. Choose HDFC for growth, ICICI for stability.​

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