The Securities and Exchange Board of India's decision to allow mutual fund houses to offer both aggressive hybrid and balanced hybrid funds is set to revive the balanced hybrid category. According to reports from Mint, ICICI Prudential Asset Management Co. Ltd has launched such a scheme under the revised rules, with more fund houses expected to follow. The market regulator eased its 2017 scheme categorization norms in February, removing the restriction that forced fund houses to choose between offering an aggressive hybrid fund and a balanced hybrid fund.
The balanced hybrid fund sits in the middle of the equity-debt spectrum, with both equity and debt capped at 40-60% of the portfolio. As reported by Mint, Amol Patel, lead-product specialist at ICICI Prudential AMC, explained that "conservative hybrid funds prioritize capital preservation, while aggressive hybrid funds focus on long-term wealth creation through higher equity exposure. Balanced hybrid funds seek to bridge this gap by offering a combination of downside protection through debt allocation and growth potential through equity exposure." The funds are designed to rebalance back to a 50:50 mix when market movement breaches either limit.
Roshan Chutkey, fund manager at ICICI Prudential AMC overseeing schemes worth ₹48,450 crore, believes India has entered what he calls a "moderate-return environment." According to The Economic Times, Chutkey explains that "while I remain constructive on equities, a balanced approach is likely to be an optimal path for investors. This is because I do not expect an exceptionally strong bull market over the next couple of years." The newly launched ICICI Prudential Balanced Hybrid Fund's NFO is open for subscription from July 14, with the fund designed to maintain meaningful exposure to both equity and debt.
As reported by Mint, Ranjit Bhatia, head of investment risk and product strategy at WhiteOak Capital, described the category as suitable for investors "willing to take on somewhat more risk than they would in a debt fund or an ultra-conservative hybrid fund, but who are not comfortable with the volatility that comes with portfolios having 75-100% equity exposure." A daily three-year rolling return analysis of the Crisil Hybrid 50:50 Index showed an average return of 12.3% with no negative returns during the analyzed period from December 2003 to April 2026. Chutkey recommends a minimum investment horizon of three years for first-time investors, noting that "a Balanced Hybrid Fund can be a starting point since new investors haven't experienced market corrections or bear markets."
