Hybrid mutual funds see surge in AUM; arbitrage and multi asset allocation lead growth: Ventura

Synopsis

Arbitrage and multi-asset allocation funds are gaining traction among Indian investors, showcasing substantial AUM growth of 22.2% and 15.4% respectively in the June 2025 quarter. Investors are increasingly favoring low-risk, diversified hybrid schemes. Private banks and IT sectors dominate equity holdings, while government securities lead in debt, despite a slight dip. Refineries saw significant growth, reflecting renewed market interest.

The open-ended hybrid schemes have witnessed a notable shift in investor preferences, with arbitrage funds and multi asset allocation funds emerging as the top gainers in terms of Asset Under Management (AUM) expansion, according to a study by Ventura in the quarter ended on June 2025,

Arbitrage funds shown 22.2% increase in AUM in quarter ended on June 2025 from previous quarter i.e. March 2025, followed by Multi Asset Allocation funds, which showed a 15.4% surge in June Quarter. This substantial growth shows that investors clearly want to use low-risk and diversified investment strategies.

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Balanced Hybrid/Aggressive Hybrid funds also showed a healthy growth of 8.9%, while Equity Savings and Dynamic Asset Allocation/Balanced Advantage funds grew by 8.2% and 8.1%, respectively. In contrast, Conservative Hybrid funds saw the lowest growth among the categories, with a modest 3.4% increase

This trend shows that more and more investors prefer hybrid schemes that offer a mix between stability and returns, especially in a volatile market condition. The performance of Arbitrage and Multi Asset Allocation funds shows that they are good alternative option to protect money while still making a decent return

The study shows that sectoral allocations by mutual funds offer a clear snapshot of investor sentiment across both equity and debt markets. The top 10 sector holdings reveal a continuation of prior trends, with some sectors recording notable growth or decline in allocations.

In the quarter ended in June 2025, private banks maintained their dominant position with holdings worth Rs 94,029 crore, significantly ahead of the next sector, IT - Software, which stood at Rs 41,397 crore. In the equity segment, the top five sectors were Private Banks, IT, Refineries, Pharmaceuticals, and Telecom which remained unchanged in ranking, signaling continued investor confidence in these core areas

Among the top ten, Refineries stood out by recording the highest market value growth at 15%, showing renewed interest in energy and commodity-driven sectors. Engineering - Construction also moved up, climbing in rank, reflecting increasing allocations possibly tied to infrastructure spending and capital expenditure cycles. Meanwhile, Power Generation & Distribution experienced a 3% decline in market value and dropped in ranking from 6 to 8, hinting at moderated investor sentiment in the sector

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Despite remaining at the lower end of the top 10 list, Finance – NBFCs held their position, reflecting stable interest even amid ongoing regulatory oversight and rising cost of capital concerns. Similarly, Automobiles – Passenger Cars remained a constant in the top 10, likely supported by recovery in consumption and demand

On the debt side, Government Securities (G-Secs) continued to hold the top spot with Rs 57,312 crore in holdings, despite recording an 11% decline in market value. This suggests that while G-Secs remain a cornerstone of fixed-income portfolios, fund managers may be selectively reducing exposure amid shifting interest rate expectations.