Bank of India Aggressive Hybrid Fund: A top performing hybrid fund with potential of creating alphas

Oct 23, 2026 / Dwaipayan Bose | 1 Downloaded | 471 Viewed | |

Picture courtesy - Magnific

Bank of India Aggressive Hybrid Fund is one of the top performing aggressive hybrid funds. As per SEBI's mandate aggressive hybrid funds should invest 65% (minimum) to 80% (maximum) in equities and 20% (minimum) to 35% (maximum) in debt. While the equity allocations of most aggressive hybrid funds are large cap oriented, Bank of India Aggressive Hybrid Fund is a uniquely positioned as the only hybrid fund which predominantly invests in mid and small cap stocks in the equity portion of its portfolio. The unique asset allocation of the fund has helped the find outperform its peers. In this article, we will review Bank of India Aggressive Hybrid Fund.

Small & Midcap - Risk versus Return

The chart below shows the 3 year rolling returns of Small & Midcap (represented by Nifty Midsmallcap 400 TRI) index versus the large cap index (Nifty 100 TRI) over the last 20 years. You can see that the Small & Midcap outperformed out large cap in most periods.

The chart below shows the 3 year rolling returns of Small & Midcap (represented by Nifty Midsmallcap 400 TRI) index versus the large cap index (Nifty 100 TRI) over the last 20 years

Source: Advisorkhoj Research, NSE, as on 16^th October 2026

The table shows the rolling returns statistics of Small & Midcap versus large cap indices for different investment tenures over the last 20 years. You can see that despite giving higher returns, small and midcaps has bigger drawdowns / lower minimum returns compared to large caps. Small and midcaps have the potential of giving higher returns, but you should be prepared for higher volatility.

You can see that despite giving higher returns, small and midcaps has bigger drawdowns / lower minimum returns compared to large caps

Source: Advisorkhoj Research, NSE, as on 16^th October 2026. Large cap is represented by Nifty 100 TRI, Midcap by Nifty Midcap 150 TRI and Small Cap by Nifty Small Midcap 150 TRI

Volatility reduces over long term

The table below shows the rolling returns distribution of Small & Midcap versus large cap indices for different investment tenures over the last 20 years. You can percentage instances of negative return reduces over longer investment tenures. If you have long investment horizons for mid and small caps, then you will be rewarded with higher returns.

The table below shows the rolling returns distribution of Small & Midcap versus large cap indices for different investment tenures over the last 20 years

Source: Advisorkhoj Research, NSE, as on 16^th October 2026. Large cap is represented by Nifty 100 TRI, Small and Midcaps are represented by Nifty Midsmallcap 400 TRI

Debt in asset allocation reduces volatility

While large caps are relatively less volatile than small and midcaps, debt has even lower volatility. The chart below shows the 1 year rolling returns of the mid/small cap index and the Nifty 10 year Benchmark G-Sec Index (representing debt). You can see debt is much less volatile and has low correlation with equity returns. The fixed income allocation of aggressive hybrid funds act as a cushion in volatile market conditions.

The chart below shows the 1 year rolling returns of the mid/small cap index and the Nifty 10 year Benchmark G-Sec Index (representing debt)

Source: Advisorkhoj Research, NSE, as on 16^th October 2026

Bank of India Aggressive Hybrid Fund outperformed the broad market index

The chart below shows the growth of Rs 1 lakh investment in Bank of India Aggressive Hybrid Fund versus the broad market index, Nifty 50 TRI since the inception of the fund. You can see the fund was able to outperform broad market index despite its debt in its asset allocation due to small and midcap stocks.

You can see the fund was able to outperform broad market index despite its debt in its asset allocation due to small and midcap stocks

Source: Advisorkhoj Research, NSE, as on 16^th October 2026

Limited downside risks for investors

The asset allocation of the fund limited downside risks for investors in volatile markets compared to the small & midcap benchmark (see the chart below).

Source: Advisorkhoj Research, NSE, as on 16^th October 2026

Bank of India Aggressive Hybrid Fund outperformed peers over long investment tenures

The chart below shows the 5 year rolling returns of the fund versus the category average rolling returns of hybrid aggressive funds. You can see that the fund outperformed the category average across periods / market conditions.

The chart below shows the 5 year rolling returns of the fund versus the category average rolling returns of hybrid aggressive funds

Source: Advisorkhoj Research, as on 16^th October 2026

The fund was able to provide better risk return trade off to investors compared to the category average (see the table below).

Source: Advisorkhoj Research, as on 16^th October 2026

Strong consistency in quartile rankings

Bank of India Aggressive Hybrid Fund ranked in the top quartiles, 6 times in the last 10 years (see the graphic below)

Source: Advisorkhoj Research, as on 30^th September 2025

Asset allocation / market cap trend - True to label

The chart below shows the asset allocation (including market cap composition) trend of Bank of India Aggressive Hybrid Fund over the last 12 months. You can see that the true to its label as a mid and small cap oriented aggressive hybrid fund, the scheme did not have any large cap allocations during this period.

You can see that the true to its label as a mid and small cap oriented aggressive hybrid fund, the scheme did not have any large cap allocations during this period

Source: Bank of India MF, as on 30^th September 2026

Current Portfolio Positioning

Source: Bank of India MF, as on 30^th September 2026

Wrapping up - Why invest in Bank of India Aggressive Hybrid Fund?

Why invest in Bank of India Aggressive Hybrid Fund?

Who can invest in Bank of India Aggressive Hybrid Fund?

Investors saving for long term financial goals like retirement, children's education or house purchase

Investors who want to benefit from equity upside and debt protection during market swings

Suitable for investors who want high returns of midcaps and small caps but are afraid to enter due to volatility

Mid aged investors looking for growth with stability.

Investors should consult with their financial advisors or mutual fund distributors if Bank of India Aggressive Hybrid Fund is suitable for their investment needs.

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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