Best Hybrid Mutual Funds In 2026: Top 5 Schemes With Strong 3-Year Returns

Hybrid mutual funds combine equity and debt investments to balance growth and stability, making them a popular choice for investors seeking lower volatility.

Here are the top five hybrid mutual funds based on their annualised returns over the past three years and the factors to consider before investing.

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Key points generated by AI, verified by newsroom

• Hybrid funds blend growth, stability using diversified asset classes.
• They provide diversification, lower volatility, and professional portfolio management.
• Top hybrid funds showed strong 3-year returns; evaluate other factors.

Hybrid mutual funds have become a popular choice among investors looking for a balance between growth and stability. Unlike pure equity or Debt Funds, Hybrid Funds invest across multiple asset classes, primarily equities and fixed-income securities. Some schemes also allocate a portion of their portfolio to gold or other assets to improve diversification.

The objective is to generate long-term capital appreciation while reducing the overall volatility of the portfolio. Because of this balanced approach, hybrid funds are often considered suitable for investors who want equity exposure but are not comfortable with the higher risks associated with pure Equity Funds.

Why Do Investors Choose Hybrid Mutual Funds?

Hybrid mutual funds offer several advantages that make them suitable for a wide range of investors.

Diversification: Investments are spread across equity, debt and, in some cases, other asset classes, helping reduce concentration risk.

Lower volatility: The debt component can cushion the portfolio during periods of market weakness.

Growth potential: Equity investments provide an opportunity for long-term wealth creation.

Professional portfolio management: Fund managers actively rebalance asset allocation based on market conditions and the fund's investment strategy.

Convenience: Investors gain exposure to multiple asset classes through a single investment.

Top Performing Hybrid Mutual Funds Based on 3-Year Returns

The following hybrid mutual funds have delivered the highest annualised returns over the past three years.

Rank Mutual Fund Expense Ratio 3-Year Annualised Return

1 Quant Multi Asset Allocation Fund 2.38 per cent 21.15 per cent

2 Nippon India Multi Asset Allocation Fund 1.44 per cent 17.64 per cent

3 Bank of India Mid & Small Cap Equity & Debt Fund 2.26 per cent 17.41 per cent

4 ICICI Prudential Retirement Fund - Hybrid Aggressive Plan 2.53 per cent 17.05 per cent

5 Nippon India Multi-Asset Omni FoF 1.08 per cent 16.46 per cent

Past Returns Should Not Be the Only Criterion

While historical performance offers useful insights into how a fund has performed across different market cycles, it should not be the sole factor driving an investment decision. Returns generated over the past three years may not be replicated in the future.

Before investing, investors should evaluate factors such as the fund's investment objective, asset allocation strategy, risk profile, expense ratio, consistency of performance, portfolio quality and whether the scheme aligns with their financial goals and investment horizon. A well-informed decision should be based on a combination of these factors rather than past returns alone. 

(“Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.”)