Hybrid offerings perform well on risk-adjusted basis, say experts

When selecting a fund from these categories, investors should be wary of those that take credit risk on the debt side of the portfolio

With equity markets seeing a phenomenal rise in the past two years, returns generated by hybrid schemes have lagged pure-play equity schemes. Such funds invest in a mix of equity and debt and change the allocation dynamically as they look to align themselves with market conditions.

Though there are over half-a-dozen categories of hybrid funds, two are popular. One is the balanced advantage or BAF (also called dynamic asset allocation) category, whose March 2022 average asset under management (AUM) stood at Rs 1.76 trillion. The other is the aggressive hybrid category, which has an average AUM of Rs 1.45 trillion. Together,