Most of us enter the mutual fund space to earn good returns without taking the direct risks associated with investing in equities. In other words, we want high returns with low volatility. This is why hybrid funds have become the preferred choice for many investors.
Over the past ten years, two such categories have managed to attract investor attention: multi-asset funds, which spread their wealth across equities, gold, and debt; and aggressive hybrid funds, which offer the opportunity for faster returns by investing a larger portion in equities.
Both have the same goal: to deliver stable returns while minimising risk. However, their strategies, risk profiles, and performance patterns differ significantly. This makes them an interesting comparison.
Multi-asset funds: A balanced approach with safety and stability
Multi-asset funds have a different approach. These funds don’t rely solely on equities. They have a rule that they must invest in at least three asset classes—typically equity, debt, and gold. This diversification provides a built-in safety net:
-Equity provides growth opportunities
-Debt keeps the portfolio stable
-Gold acts as a cushion against market downturns
The advantage is that when markets crash, these funds’ declines are contained, as all three assets don’t fall at once. On the other hand, returns are also gradual but steady. This category is ideal for investors who want growth but not excessive volatility.
Aggressive hybrid funds: More equity, more growth opportunity
The focus of aggressive hybrid funds is clear: superior growth over the long term. Therefore, these funds invest 65–80% of their funds in equities. This means they perform similar to equity funds, with a small amount of debt to cushion the entire portfolio during downturns.
High equity means:
-Stronger returns in bullish markets, as stock prices rise rapidly.
-But also a sharper shock in downturns, as a larger portion of the portfolio is invested in equities.
-This means this category is ideal for investors who can tolerate some volatility and expect higher returns over the long term.
The 10-year battle: Who wins — aggressive hybrid or multi-asset funds?
Hybrid fund investors often wonder which category delivers better returns over the long term. Does an aggressive hybrid fund with more equity perform better, or a diversified multi-asset fund? Let’s look at 10-year data to find the answer to this question.
The first big clue: Which has the better 10-year category average return?
Multi-asset funds
10-year category average: 11.10% CAGR
Aggressive hybrid funds
10-year category average: 12.14% CAGR
So, based on average returns, aggressive hybrid funds have made modest gains over the past decade.
Now, let’s see which funds (multi asset Vs aggressive hybrid) have been star performers over the past 10 years.
Let’s take a look at the top 5 multi-asset funds’ 10-year annualised returns
Top 5 Multi-Asset Funds (Direct Plans)
Quant Multi Asset Allocation Fund – 18.51% CAGR
ICICI Prudential Multi Asset Fund – 17% CAGR
Axis Multi Asset Allocation Fund – 12.58% CAGR
SBI Multi Asset Allocation Fund – 12.57% CAGR
HDFC Multi Asset Fund – 12.45% CAGR
Top 5 aggressive hybrid funds (Direct Plans)
ICICI Prudential Equity & Debt Fund – 17.09% CAGR
Quant Aggressive Hybrid Fund – 16.86% CAGR
Kotak Aggressive Hybrid Fund – 14.86% CAGR
Mirae Asset Aggressive Hybrid Fund – 14.69% CAGR
Edelweiss Aggressive Hybrid Fund – 14.51% CAGR
Clearly, the top performers delivered returns well above the category average.
The result? The competition is fierce, but the story is interesting…
Aggressive hybrid funds lead the race for average returns.
Talking about the top performers, the Quant Fund in the multi-asset category outperforms all others.
This makes one thing clear:
There are excellent options in both categories—and choosing the right fund is the key to success.
Risk assessment: How do the two categories of risk differ?
Aggressive hybrid and multi-asset funds both carry the term “hybrid,” but their risk levels are not exactly the same.
Aggressive hybrid funds inherently have higher risk because they invest 65–80% of their portfolio in equities. This means these funds perform well in market upturns, but are more vulnerable to downturns. Their movements are tightly linked to the equity market—hence, short-term volatility is higher in these funds.
In comparison, the risk profile of multi-asset funds is considered relatively balanced. These funds invest in equity as well as debt and gold. Therefore, when equity markets fall, debt and gold often help cushion the impact. These three assets do not usually move down together. This reduces the overall volatility of the portfolio and limits downside risk.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.