Aggressive hybrid funds are designed to provide a balance between growth and stability. They allocate 65–80 per cent of their portfolio to equities and 20–35 per cent to debt instruments. This mix makes them an attractive option for investors who seek reasonable growth but prefer to keep their overall risk moderate.
Among funds in this category, the Edelweiss Aggressive Hybrid Fund (EAHF) stands apart due to its factor-based investment approach. While most peers rely on traditional stock-picking strategies, EAHF uses a factor-based strategy powered by quantitative models to manage its equity portfolio. This method is less common within the category, with only a few peers such as Quant Aggressive Hybrid Fund, following a similar approach.
According to bl.porfolio’s star track ratings, EAHF has been assigned a four-star rating, underlining its consistent performance. Over the past seven years, the fund has delivered a compounded annual growth rate (CAGR) of 13.4 per cent, outperforming the category average of 12 per cent.
Factor-approach
The fund typically maintains 70–75 per cent in equities and the remainder in debt. Within equities, the fund blends the growth, quality, and momentum factors to identify opportunities. Momentum identifies companies with sustained price trends, quality focuses on financially strong businesses with solid balance sheets and low debt, and growth targets firms with consistently rising revenues and earnings.
The investment universe begins with the top 500 companies by market capitalization, which are then divided into mega-cap, large-cap, mid-cap, and small-cap buckets. Within these buckets, the fund screens for companies with growth potential, solid fundamentals, and improving market sentiment. Companies with poor governance practices, high promoter pledging, or excessive leverage are filtered out.
The fund follows a multi-cap approach with roughly 70 per cent of the equity allocation invested in large-cap stocks, while the remaining 30 per cent is deployed in mid- and small-cap names. At present, the fund is overweight on defensive sectors, with notable exposure to domestic pharmaceuticals and healthcare companies. It has also built positions in capital goods, chemicals, defence, and non-banking financial companies (NBFCs). It remains underweight on technology, private banks, and oil & gas stocks. The fund’s average stock holding period is around two and a half years, with rebalancing carried out twice a quarter to align with changing growth and quality metrics.
Accrual strategy
The debt allocation is managed conservatively in line with short-duration fund principles. The portfolio focuses on high-quality corporate bonds and avoiding aggressive duration calls. Over the last five years, the fund has maintained a Macaulay Duration between 0.1 and 3.5 years, ensuring limited sensitivity to interest rate movements. It restricts itself to AAA-rated securities. Prominent names in its debt portfolio include Aditya Birla Finance, HDB Financial Services, NABARD, National Housing Bank, and SIDBI. Exposure to government securities has been cut down sharply and currently stands at less than one per cent.
Performance
A look at five-year rolling returns shows that the fund averaged 18 per cent annually, comfortably beating the category average of 16 per cent. The return range has spanned from 12 per cent to 25 per cent, demonstrating resilience during downturns and upside potential during rallies. The fund has also delivered on point-to-point return metrics. Over the last 3, 5, 7, and 10 years, it has generated 17, 19, 13, and 13 per cent respectively, while the category delivered 14, 17, 12, and 12 per cent.
From a cost front, the regular plan comes with an expense ratio of 1.9 per cent, slightly lower than the category average of 2 per cent. For investors opting for the direct plan, the expense ratio drops to 0.4 per cent, lower than the category average of 0.8 per cent. In the current elevated market, a systematic investment plan (SIP) is more advisable than a lump-sum investment.
Published on August 30, 2025
