From February 2025, Benchmark Indices such as the Sesex and Nifty 50 have fallen by 10-11% compared to their highlights, which means that they have lost the most profit they have achieved in the last three months of 2024. The segments in the middle of the cap and small cap have fallen even more, 15% of the recent highlights. This shows how quickly the sentiment has changed into less liquid parts of the market.
The main cause is not only in the US. Donald Trump, the president of the United States, is again insisting on rates. For example, he wants an import obligation of 25% on Canada and Mexico and 10% on China. This has caused a wrinkle effect. India’s Volatility Index (VIX) shot up immediately after he won the elections, which shows how changes in the policy from outside the country can still cause instability in the country.
But rates are only part of the photo
At the same time, China has released Deepseek, an AI model that can change the way the world speaks about technology. At the same time, tensions between countries are rising, the production data is still slow and the business profits have fallen since the second quarter of FY25. Concern about rising prices and inflation linked to climate change and raw material prices make the market even more complicated and uncomfortable.
FIIs leave, domestic flows that remain strong, in January 2025, saw a sharp sale of £ 78,000 crore by foreign institutional investors (FIIs), which made the pressure worse. Part of the sale has been taken over by domestic investors, but the imbalance is clear, especially in the broader market, where the liquidity is lower and the stories quickly change.
Retail portfolios, especially those that are heavily invested in aggressive equity investment funds, have been hit hard. The values of all shares have fallen and the decrease in the mid and small CAP shares has been much worse than what the headline indices show.
Why people pay more attention to hybrid investment funds
People look at hybrid investment funds that combine shares and bonds in a different way in this market. Not because they are “safe” or “conservative”, but because they show that you can adapt to a market that changes quickly. Hybrid funds have been around for a while. People no longer see them as a fallback, but as a way to stay invested without being fully exposed to one direction of the market.
Hybrid funds can tend to grow more towards growth or stability, depending on the type:
Aggressive hybrid funds, which invest 65-80% of their money in shares, let capital grow but also take some of the shocks that pure stock funds cannot avoid.
Multi-asset allocation funds, which invest in gold or other asset classes, do well when shares are under stress because they do not move in the same direction.
Conservative hybrids, on the other hand, focus on debts and only have a small amount of exposure to equity. This is useful if stability is more important.
Not immune, but able to record crises
Hybrid funds have included in bear markets from the past, but they have treated them better.
During the sale led by COVID in early 2020, for example, aggressive and multi-asset hybrid funds fell less than pure stock funds. The reason is that assets are automatically restored and distributed. When shares fall, the debt part (and sometimes gold) helps to make up for part of the loss.
The same mechanism is still important today, when News Intraday swings and headlines can cause from outside the market, the assessments of entire sectors can change at night.
Volatility is no longer an out of bit; It is built in
Markets have not only been volatile since 2024, but that volatility has also become part of the structure. Delivery chains, energy prices and geopolitical alignments all change, which means that risk is no longer a one -off thing; It is built into the market.
It is easy to see why a product that would change his Activamix in this situation, both in terms of return and risk management. Especially if investors do not want to be completely wrong or completely right.
Not a “safe haven”, but a market buffer
It is important to know that hybrid funds can still lose money. They still have market risk, especially those who invest a lot in shares. But what they give you is time and space: time to move things and space to deal with corrections without losing all your money.
Their interest does not grow in the bull markets; It grows in transitions, where we are now.
Conclusion
People again pay more attention to hybrid investment funds, but it is not because they want to earn money or avoid risks. It is about realizing that the market has changed permanently, not just for a short time.
As the things are broken down more volatile and correlations, the allocation of assets itself becomes the product. In that sense, hybrid funds are not a compromise; They are a sign of how difficult it is for investors to navigate through the market now.
(The author of the article is Chakravarthy V, co -founder and executive director, Prime Wealth Finn PVT Ltd.)
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