The passive hybrid test

Summary: Lower volatility than the Nifty 100. Better returns than the Nifty 100. And 30 per cent sitting in government bonds. India's first hybrid index fund does something that shouldn't work on paper. And 15 years of data says it does.

Summary: Lower volatility than the Nifty 100. Better returns than the Nifty 100. And 30 per cent sitting in government bonds. India's first hybrid index fund does something that shouldn't work on paper. And 15 years of data says it does. Hybrid funds have long been active managers’ turf. That is now changing. India’s first hybrid index fund was launched recently and more can follow soon. This first offering tracks the Nifty LargeMidcap250 plus 8-13 year G-Sec 70:30 index, which combines equity with long-term government bonds. Let us start with understanding how it is built and then examine its past performance. 70 per cent of the index sits in equity through the Nifty LargeMidcap 250, split equally between the Nifty 100 and the Nifty Midcap 150. 30 per cent sits in long-term government bonds via the Nifty 8-13 year G-Sec index that tracks the three most liquid sovereign bonds with maturity of eight to 13 years. As a hybrid offering, the index pitches a simple promise: offer equity’s growth with debt’s stability. The recipe sounds sensible. But the proof is found in the pudding. So we put it to the test. Performance that beats even pure equity We put a simple question to 15 years of data: if you had invested in the hybrid index, or in the plain-equity Nifty 100, in any month since 2011 and held for five years, which would have given you better returns? In other words, we look

This article was originally published on April 20, 2026.