Aggressive funds are hybrid mutual funds that invest mainly in equities but also keep a part of the portfolio in debt. Under SEBI’s rules, an aggressive scheme must invest 65% to 80% of its assets in equity. The remaining 20% to 35% goes into debt and money market instruments.

By investing in this fund, you get a large share of equity for growth, along with some debt exposure for stability. This is what makes them different from pure equity funds. Aggressive funds are meant for investors who want growth but don’t want their entire investment exposed to equities.

The value of aggressive funds can still be affected sharply when the stock market falls, but the debt portion can reduce some of the impact.

You can consider aggressive mutual funds as an investment option if:

• You want to start with equity without going all in: The fund puts most of your money into equity, but 20% to 35% is kept in debt instruments. This can be a simpler starting point than choosing separate equity and debt funds yourself.
• You have a long-term financial goal: These funds can see big short-term movements because of their equity exposure. They are better suited to goals where you have enough time to stay invested through market ups and downs.
• You want one fund to handle the mix: You don’t have to decide every month how much to keep in stocks and how much in debt. The fund manager manages the holdings within the category’s allocation limits.
• You have a higher risk appetite: Don’t mistake the word ‘hybrid’ for low risk. Aggressive funds still have a large equity allocation. If you want more debt exposure and less equity, you can also check conservative funds.

When you invest in an aggressive mutual fund scheme, a large part of it goes into equity shares. This is what can drive long-term growth. The other part goes into debt.

For instance, suppose you invest ₹10,000 in this fund. If the fund has 70% in equity and 30% in debt, roughly ₹7,000 of your investment is exposed to equity and ₹3,000 to debt.

Now imagine the equity portion rises by 10%, while the debt portion rises by 4%. Your ₹7,000 equity portion becomes ₹7,700, and your ₹3,000 debt portion becomes ₹3,120. Your investment would then be worth about ₹10,820.

This is only an illustration. Actual fund returns can vary widely because of expenses and other factors. The fund’s allocation may also change over time. The manager may rebalance the portfolio while maintaining it within the range.

When you’re looking for aggressive funds to invest in India, you may come across two distinct types:

• Aggressive Hybrid Funds: These funds invest 65% to 80% in equity and 20% to 35% in debt securities. These are the standard aggressive funds you can invest in.
• Aggressive Growth Funds: These are aggressive funds with a strong focus on growth assets. They mainly invest in equity with minimal debt exposure.

If you want a more flexible equity allocation, you can also consider flexi cap funds. For a broader mix of asset classes, multi asset allocation funds are another option.

• Two asset classes in one fund: The portfolio combines equity and debt. This saves you from managing two separate investments just to create a basic equity-debt mix.
• Equity gives the portfolio room to grow: Since at least 65% goes into equity, the fund has solid exposure to the stock market. This gives it higher growth potential than debt-heavy schemes like conservative funds.
• Debt can soften some market shocks: Debt doesn’t make the fund immune to losses but can reduce the impact of a fall in stocks compared to a fully equity-oriented portfolio.
• No need to rebalance the portfolio yourself: If you have separate equity and debt investments, you may have to review the allocation and rebalance it. An aggressive fund handles this within the scheme.

• Stock market corrections can affect your investment: Since the major investment is in equity, the NAV can fall when stock prices fall. The debt portion cannot prevent losses.
• Returns are not fixed: There is no guaranteed return. A strong market can help the fund, while a weak market can pull its value down.
• The debt portion has risks too: Debt securities can face interest rate and credit-related risks. So the debt allocation is not the same as keeping money in a bank deposit.
• A fund manager can make wrong calls: Active management doesn’t guarantee better performance. Security selection and portfolio decisions can affect the fund’s results.

If you want lower equity exposure, conservative funds may be more suitable. If you want a passive equity approach, you can also explore Nifty 50 funds or other index funds.

All three are hybrid fund categories, but their equity and debt mix differs significantly. Here’s a quick comparison:

The options don’t stop with these three. Depending on your goal, you can also explore equity savings funds, arbitrage funds or index funds.

There are various factors that you should look for while shortlisting the best aggressive mutual funds for you, such as:

• Rolling returns: Rolling returns show performance across many overlapping periods. They can give you a better idea of consistency than looking at one fixed period.
• Expense ratio: This is a cost charged by the fund. When two similar funds perform similarly, costs can make a difference to what you finally earn.
• Riskometer: Every scheme has a SEBI-mandated Risk-o-meter. Use it along with the portfolio and your own risk tolerance to know where the scheme stands.
• Exit load rules: Some schemes charge an exit load when you redeem within a specified period. Check this before investing.
• Fund manager’s strategy: Understand how the fund is managed and whether its approach has remained consistent. 

Don’t choose a fund only because some finfluencer calls it one of the best aggressive funds. Your investment goal, time horizon and ability to handle volatility should be prioritised.

Once you’re ready, you can set up an aggressive mutual fund SIP in a few minutes with Millions. All you have to do is:

• Download the Millions app from the iOS App Store or Google Play Store. 
• Create a free account by completing the KYC process.
• Log in, go to the mutual funds section, and search for the aggressive mutual fund you’d like to invest in.
• Tap on ‘SIP’ and choose how often you want to invest (monthly, daily or weekly).
• Enter your investment amount, pick your SIP date and complete the payment.

Your SIP is set! It is completely fine to start small. What matters more is knowing what you’re getting into. Aggressive funds put a good amount of money in stocks, so they can be a little volatile at times. If that’s not your cup of tea, you can also explore other schemes on the Millions app, such as arbitrage funds, equity savings funds or index schemes like Sensex funds or Nifty Bank funds.