Last Updated on October 29, 2019 at 7:17 am
The performance of aggressive hybrid funds (previously known as balanced funds) over the past year is compared with diversified equity funds like large cap, large and midcap and multi-cap funds. We also report the latest portfolio summary of aggressive hybrid (agg -hy) funds.
Let us begin with the portfolio summary starting from the lowest-rated bonds. The credit rating profile of agg-hy funds is often ignored. The NAV fluctuations due to the large stock exposure drown out the NAV movement due to credit rating changes and interest rate movements.
It is important for investors to study and understand the credit rating profile of the agg-hy category and avoid risky debt if they wish to. That said, the exposure to risky debt will typically be small and manageable in established funds with a healthy AUM.
Since agg-hy funds are anyway recommended only for long-term goals as a replacement for diversified equity funds, especially large cap, this credit rating risk is acceptably small.
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These articles explain the benefits of this category.
- Why Aggressive Hybrid (balanced) Mutual Funds score over diversified funds
- Balanced Advantage vs Aggressive Hybrid Funds: When to use what
- 11 aggressive hybrid (balanced) mutual funds that have beat Nifty 100!!
Portfolio summary of aggressive hybrid (agg-hy) funds
Agg-Hy Funds with BBB / BBB+ / BBB- rated bond exposure (%) (Sep 2019)
| Nippon India Equity Hybrid Fund | 11.51 |
| Baroda Hybrid Equity Fund | 0.89 |
| UTI Hybrid Equity Fund | 0.46 |
| Sundaram Equity Hybrid Fund | 0.45 |
| SBI Equity Hybrid Fund | 0.03 |
Agg-Hy Funds with AA / AA+ / AA- rated bond exposure (%) (Sep 2019)
| Franklin India Equity Hybrid Fund | 21.87(!!) |
| ICICI Pru Equity & Debt Fund | 16.45 |
| Baroda Hybrid Equity Fund | 10.43 |
| UTI Hybrid Equity Fund | 10.06 |
| Sundaram Equity Hybrid Fund | 9.96 |
| IDBI Hybrid Equity Fund | 8.99 |
| Tata Hybrid Equity Fund | 7.08 |
| Aditya Birla SL Equity Hybrid ’95 Fund | 6.96 |
| SBI Equity Hybrid Fund | 5.93 |
| DSP Equity & Bond Fund | 5.57 |
| LIC MF Equity Hybrid Fund | 5.47 |
| BNP Paribas Substantial Equity Hybrid Fund | 5.33 |
| L&T Hybrid Equity Fund | 3.08 |
| Principal Hybrid Equity Fund | 2.25 |
| Axis Equity Hybrid Fund | 2.16 |
| Nippon India Equity Hybrid Fund | 2.04 |
| HDFC Hybrid Equity Fund(Adjusted) | 1.93 |
| BOI AXA Mid & Small Cap Equity & Debt Fund | 1.66 |
| Kotak Equity Hybrid Fund | 1.4 |
| Mirae Asset Hybrid Equity Fund | 0.99 |
| IDFC Hybrid Equity Fund | 0.08 |
Agg-Hy Funds with the highest (top 10) cash and cash equivalent holdings(%) (Sep 2019)
| Edelweiss Aggressive Hybrid Fund | 30.91 |
| Mahindra Hybrid Equity Nivesh Yojana | 23.63 |
| Canara Rob Equity Hybrid Fund | 12.52 |
| PGIM India Hybrid Equity Fund | 9.13 |
| Shriram Hybrid Equity Fund | 9.02 |
| Mirae Asset Hybrid Equity Fund | 8.90 |
| BNP Paribas Substantial Equity Hybrid Fund | 7.56 |
| Nippon India Equity Hybrid Fund | 6.31 |
| Indiabulls Equity Hybrid Fund | 6.15 |
| UTI Hybrid Equity Fund | 5.86 |
Agg-hy funds with the highest (top 10) equity exposure(%) (Sep 2019)
| JM Equity Hybrid Fund | 86.52 |
| PGIM India Hybrid Equity Fund | 86.39 |
| Aditya Birla SL Equity Hybrid ’95 Fund | 80.80 |
| Motilal Oswal Equity Hybrid Fund | 80.62 |
| Kotak Equity Hybrid Fund | 79.83 |
| BOI AXA Mid & Small Cap Equity & Debt Fund | 79.64 |
| Tata Hybrid Equity Fund | 77.85 |
| BNP Paribas Substantial Equity Hybrid Fund | 76.37 |
| HSBC Equity Hybrid Fund | 76.21 |
| Baroda Hybrid Equity Fund | 75.90 |
Agg-hy funds with the highest (top 10) Gilt (Sov) holdings (%) (Sep 2019)
| Quant Absolute Fund | 24.95 |
| Motilal Oswal Equity Hybrid Fund | 13.59 |
| Mirae Asset Hybrid Equity Fund | 12.22 |
| HDFC Hybrid Equity Fund(Adjusted) | 8.54 |
| BOI AXA Mid & Small Cap Equity & Debt Fund | 8.40 |
| IDFC Hybrid Equity Fund | 8.14 |
| DSP Equity & Bond Fund | 7.93 |
| LIC MF Equity Hybrid Fund | 7.40 |
| Tata Hybrid Equity Fund | 6.57 |
| UTI Hybrid Equity Fund | 5.87 |
Agg-hy funds with only Sov holding (plus cash) for the debt component (%) Sep 2019
- Quant Absolute Fund
Agg-hy funds with only cash/cash equivalent holding for the debt component (%) Sep 2019
- Edelweiss Aggressive Hybrid Fund
FD is treated as a “cash equivalent”.
Agg-hy funds with only A1,A1+,A1-,AAA and Sov holdings (plus cash) for the debt component (%) (Sep 2019)
| Quant Absolute Fund |
| Motilal Oswal Equity Hybrid Fund |
| Mahindra Hybrid Equity Nivesh Yojana |
| Indiabulls Equity Hybrid Fund |
| Canara Rob Equity Hybrid Fund |
| Shriram Hybrid Equity Fund |
| HSBC Equity Hybrid Fund |
| PGIM India Hybrid Equity Fund |
| JM Equity Hybrid Fund |
| Essel Equity Hybrid Fund |
| Invesco India Equity & Bond Fund |
| Edelweiss Aggressive Hybrid Fund |
Performance analysis of aggressive hybrid funds
Agg-hy vs benchmarks
Over the last one year (as on 25th Oct 2019), the standard category benchmark, CRISIL Hybrid 35+65 – Aggressive Index returned 13.3%. The following 14 funds (out of 31) fared better.
The Nifty 50 returned 14.94%. The top 11 funds in this list outperformed the Nifty (the last three which did not is marked red). The S& P BSE 200 returned 11.6%.
| BNP Paribas Substantial Equity Hybrid Fund(G)-Direct Plan | 22.73 |
| Motilal Oswal Equity Hybrid Fund(G)-Direct Plan | 22.35 |
| DSP Equity & Bond Fund(G)-Direct Plan | 21.69 |
| Axis Equity Hybrid Fund(G)-Direct Plan | 20.67 |
| LIC MF Equity Hybrid Fund(G)-Direct Plan | 17.97 |
| SBI Equity Hybrid Fund(D)-Direct Plan | 17.83 |
| Kotak Equity Hybrid Fund(D)-Direct Plan | 17.03 |
| Canara Rob Equity Hybrid Fund(G)-Direct Plan | 16.75 |
| Invesco India Equity & Bond Fund(G)-Direct Plan | 15.72 |
| Sundaram Equity Hybrid Fund(G)-Direct Plan | 15.41 |
| Essel Equity Hybrid Fund(G)-Direct Plan | 15.02 |
| Quant Absolute Fund(G)-Direct Plan | 14.58 |
| Mirae Asset Hybrid Equity Fund(G)-Direct Plan | 14.15 |
| Shriram Hybrid Equity Fund(G)-Direct Plan | 13.72 |
Agg-hy vs Large and Mid cap funds
The median return of the large and mid cap category is 14.1%. This means about half the funds in this category (11/23) have a better return than the median. These are the funds. Ten out of 31 Agg-hy funds have a return above the large and mid cap median.
| Sundaram Large and Mid Cap Fund(G)-Direct Plan | 19.9 |
| Tata Large & Mid Cap Fund(G)-Direct Plan | 19.8 |
| Mirae Asset Emerging Bluechip(G)-Direct Plan | 18.1 |
| Kotak Equity Opp Fund(G)-Direct Plan | 17.9 |
| DSP Equity Opportunities Fund(G)-Direct Plan | 17.8 |
| Invesco India Growth Opp Fund(G)-Direct Plan | 17.8 |
| Axis Growth Opp Fund(G)-Direct Plan | 17.6 |
| Edelweiss Large & Mid Cap Fund(G)-Direct Plan | 16.9 |
| LIC MF Large & Midcap Fund-(G)-Direct Plan | 16.9 |
| Essel Large & Midcap Fund(G)-Direct Plan | 16.8 |
| BOI AXA Large & Mid Cap Equity Fund(G)-Direct Plan | 15.1 |
Agg-hy vs Multicap funds
There are 34 funds in the multicap category. Out of which, these 19 funds did better than the category median of 13.7%. This median is a bit lower than the large and mid cap category and 14/31 agg-hy funds have fared better than this number.
| Axis Multicap Fund(G)-Direct Plan | 26.43 |
| DSP Equity Fund(D)-Direct Plan | 25.26 |
| JM Multicap Fund(G)-Direct Plan | 24.64 |
| Canara Rob Equity Diver Fund(G)-Direct Plan | 18.76 |
| Essel Multi-Cap Fund(G)-Direct Plan | 18.32 |
| LIC MF Multi-Cap Fund(G)-Direct Plan | 18.15 |
| Kotak Standard Multicap Fund(G)-Direct Plan | 18.12 |
| SBI Magnum Multicap Fund(G)-Direct Plan | 17.59 |
| Mahindra MF Badhat Yojana(G)-Direct Plan | 17.07 |
| PGIM India Diversified Equity Fund(G)-Direct Plan | 16.82 |
| Motilal Oswal Multicap 35 Fund(G)-Direct Plan | 16.69 |
| BNP Paribas Multi Cap Fund(G)-Direct Plan | 16.20 |
| Tata Multicap Fund(G)-Direct Plan | 15.76 |
| Edelweiss Multi-Cap Fund(G)-Direct Plan | 15.23 |
| IDBI Diversified Equity Fund(G)-Direct Plan | 14.29 |
| Parag Parikh Long Term Equity Fund(G)-Direct Plan | 13.93 |
| Union Multi-Cap Fund(G)-Direct Plan | 13.83 |
| Baroda Multi-Cap Fund(G)-Direct Plan | 13.53 |
| UTI Equity Fund(D)-Direct Plan | 13.52 |
Agg-hy vs Large cap funds
There are 32 funds here and these 16/32 have a greater return than the median of 15.7%. Only 9 of the 31 agg-hy funds have done better than the median.
| Axis Bluechip Fund(G)-Direct Plan | 26.94 |
| BNP Paribas Large Cap Fund(G)-Direct Plan | 24.14 |
| LIC MF Large Cap Fund(G)-Direct Plan | 21.61 |
| Canara Rob Bluechip Equity Fund(G)-Direct Plan | 21.39 |
| IDBI India Top 100 Equity Fund(G)-Direct Plan | 20.78 |
| DSP Top 100 Equity Fund(G)-Direct Plan | 19.80 |
| Sahara Growth Fund(G)-Direct Plan | 18.00 |
| Kotak Bluechip Fund(D)-Direct Plan | 17.89 |
| L&T India Large Cap Fund(G)-Direct Plan | 17.85 |
| Indiabulls Blue Chip Fund(G)-Direct Plan | 17.65 |
| SBI BlueChip Fund(G)-Direct Plan | 17.18 |
| Tata Large Cap Fund(G)-Direct Plan | 16.81 |
| HSBC Large Cap Equity Fund(G)-Direct Plan | 16.59 |
| Baroda Large Cap Fund(G)-Direct Plan | 16.34 |
| Edelweiss Large Cap Fund(G)-Direct Plan | 16.12 |
| Essel Large Cap Equity Fund(G)-Direct Plan | 15.92 |
Summary
The effect of Sensex and Nifty deviating from other indices due to the performance of a handful of stocks is seen in the performance of agg-hy funds too in the last year. While they have done reasonably well against benchmarks and multi-cap funds, they have failed to shine against large cap and large and midcap funds.
This is not surprising and agg-hy funds should not fret over this. When the market normalises, agg-hy fund performance is likely to pick up. Their long-term record is impressive – Why Aggressive Hybrid (balanced) Mutual Funds score over diversified funds – and there is no reason to doubt them on the basis of this short duration.
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