Hybrid mutual fund schemes attracted ₹1.55 trillion in inflows during FY26, representing a 29% increase over the preceding fiscal year, according to reports from Business Standard and PTI. The category witnessed strong traction despite heightened geopolitical tensions, including the conflict in West Asia, as investors sought balanced investment solutions that could cushion market volatility. As reported by PTI, Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, noted that hybrid funds have increasingly become a core allocation for investors seeking participation in equities with relatively moderated risk. The number of hybrid fund folios rose to 1.9 crore in March 2026 from 1.56 crore a year earlier, adding 34 lakh investor accounts, as confirmed by AMFI data.
Assets under management (AUM) of hybrid schemes increased to ₹10.35 trillion in March 2026 from ₹8.83 trillion in March 2025, registering a growth of 17%, as reported by Business Standard and PTI. According to Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, the growth reflects rising investor preference for diversified portfolios and asset allocation-led investing. She noted that hybrid funds have increasingly become a core allocation for investors seeking participation in equities with relatively moderated risk. Feroze Azeez, Joint CEO of Anand Rathi Wealth Ltd, explained that this trend suggests investors are increasingly looking at diversification within the market rather than avoiding it altogether as a way to navigate uncertain periods. Rajesh Singla, CEO and Fund Manager at Alpha AMC, emphasized that the jump from ₹1.2 lakh crore in FY25 to ₹1.55 lakh crore in FY26 was deliberate investor behavior during volatile times.
Equity markets remained volatile during FY26 due to global uncertainties, including tariff concerns under US President Donald Trump, the ongoing Russia-Ukraine conflict and rising geopolitical tensions in West Asia, according to Business Standard and PTI. During the same period, gold outperformed equities in the short-term, benefiting hybrid categories that maintained exposure to the precious metal. As reported by PTI, many hybrid funds were able to deliver relatively stable and higher near-term risk-adjusted performance compared to pure equity funds, creating recent bias in investors across this category. Rajesh Singla from Alpha AMC highlighted that hybrid funds offer downside protection through debt investments, providing a built-in cushion when geopolitical uncertainty drives oil above USD 100 and equity markets swing 2-3% in single sessions. He noted that when geopolitical uncertainty drives oil above $100 and equity markets start swinging 2-3% in a single session, pure equity funds feel uncomfortable while hybrid funds offer something that pure equity cannot - a built-in cushion.
Multi-asset allocation funds gained particular popularity due to their ability to deliver relatively stable performance across market cycles, as noted by PTI. According to Varun Gupta, CEO of Groww Mutual Fund, between April 2025 and April 2026, the AUM of the broader hybrid category grew about 21% while multi-asset funds within the category witnessed growth of over 65%. Arbitrage funds also attracted significant flows due to their low-risk and tax-efficient nature, as reported by Business Standard. Rajesh Singla from Alpha AMC highlighted that multi-asset allocation funds were a key driver of growth, while arbitrage funds also benefited from their attractive characteristics. This trend suggests that investors are increasingly looking at diversification within the market, rather than avoiding the market altogether, as a way to navigate uncertain periods.
During FY26, 17 hybrid fund new fund offers (NFOs) were launched compared with 12 in the previous fiscal year, according to Business Standard and PTI. However, cumulative inflows through these NFOs moderated to around ₹4,106 crore from nearly ₹4,792 crore in FY25. As reported by PTI, this indicates that while AMCs were aggressive in expanding new offerings, investors largely continued to prefer established hybrid funds with proven track records over newly launched schemes. On the outlook for the current financial year, investor interest is likely to remain strong, with categories like arbitrage, equity savings, balanced advantage, aggressive hybrid, and multi-asset allocation funds well-suited for volatile market environments. Edelweiss MF's Gupta noted that the outlook for hybrid funds remains positive as these categories are well-suited for volatile market environments like the one currently being witnessed.
