Hybrid Mutual Funds See Slower Inflows but Investor Interest Surges

Hybrid mutual fund schemes witnessed a moderation in inflows during FY25, attracting Rs 1.19 lakh crore—an 18 percent decline from the previous fiscal. The slowdown was largely driven by market turbulence in the second half of the year, triggered by corporate earnings slowdown, geopolitical tensions, and election uncertainty.  

 

Despite the dip in inflows, investor participation in hybrid funds surged, with the number of folios reaching 1.56 crore in March 2025, up from 1.35 crore a year earlier. This reflects an addition of over 33 lakh investors, signaling strong confidence in hybrid offerings.  

 

Assets under management in the hybrid category grew by 22 percent, reaching Rs 8.83 lakh crore from Rs 7.23 lakh crore in FY24. Experts attribute this resilience to the drawdown protection offered by the debt component of hybrid funds, which helps investors stay invested without the stress of pure equity volatility.  

 

The decline in inflows was also influenced by a drop in new fund offers, with only 12 NFOs launched in FY25 compared to 21 in FY24. Analysts suggest that hybrid funds remain attractive for investors with moderate or low-risk profiles, as they provide stability while allowing participation in equity markets.  

 

Looking ahead to FY26, experts anticipate that investors will prioritize funds offering both growth and protection amid ongoing rate cycle uncertainty and global risk-off sentiment. Financial advisors recommend an 80:20 equity-to-debt strategy to navigate volatile markets while maintaining liquidity and stability.  

 

Sources: Economic Times, Business Standard, MSN News, Times of India, Rediff Money