ICICI Pru Equity and Debt Fund Review

Hybrid aggressive funds invest 65-80% of their assets in equities and the remaining 20-35% in debt and money market instruments. Due to the addition of debt component, they are less volatile than pure equity funds, have lower drawdowns which also means their returns would be less than pure equity funds. Due to the higher equity allocation, gains from the fund also get taxed as equity funds. Here we review one fund within the category i.e. ICICI Equity and Debt fund that has performed exceptionally well within the category.

The fund is more than 25 years old and as of October 2025 has an AUM of over INR 46,000 crore. It is the second largest fund in the category behind SBI and ahead of HDFC.

CAGR -->	1 Year	3 Year	5 Year	10 Year
ICICI Equity & Debt Fund	9.17%	20.04%	26.13%	15.96%
Category Average	4.89%	15.2%	17.25%	11.85%

Source: www.advisorkhoj.com

The fund is clearly beating the average returns of the category by a good margin. However; what is interesting is that it is also beating SBI and HDFC (the first and third largest in the category) by a good 3% points over a 10-year period and almost 9% over the last 5-year period. Now maybe, the higher returns are being generated through being riskier and more volatile.

If we look at the standard deviation of the top 5 funds in the category, they all are very close at 9. This means ICICI is being able to generate the additional returns without being more volatile as well. On comparing the maximum drawdowns year on year with HDFC, ICICI in fact has lower drawdowns as well. On a rolling return basis for the past 11 years, ICICI beats HDFC 92% of times on a 3-year rolling return basis and 97% time on a 5-year rolling return basis.

All these numbers indicate ICICI Equity and Debt fund is truly providing higher returns within its category without creating the additional risk and volatility. The fund albeit has a higher tilt toward equity which is assisting in providing higher returns, while to reduce volatility the fund invests more in value based stocks.

Now let us compare its performance against NIFTY 50 and NIFTY Next 50:

CAGR -->	1 Year	3 Year	5 Year	10 Year	Std. Dev
ICICI Equity & Debt	9.17%	20.04%	26.13%	15.96%	9.4
UTI Nifty 50	6.84%	14.64%	17.78%	13.07%	13.04
ICICI Next 50	-1.77%	18.64%	20.74%	13.81%	14.74

Source: www.advisorkhoj.com 

This came as a real surprise, that even with a debt component of over 20%, ICICI Equity and Debt fund is beating both the Nifty 50 and Nifty Next 50 that too with taking a lower risk. Had you started SIP in all three funds in January 2013, ICICI Equity and Debt would have given returns of 17.9%, UTI Nifty 50 - 13.4% and ICICI Next 50 - 14.7% upto September 2025. Over the entire course of this period (Jan 2013 to Sep 2025), ICICI Equity and Debt fund would have yielded higher returns 94% of time over UTI Nifty 50 and 72% of time over ICICI Next 50.

Investment in this category is recommended for investors who want lower drawdowns than pure equity funds and lesser volatility. The ICICI Equity and Debt fund has not only beaten funds in its category fair and square, it has performed better than the all-weather Nifty 50 as well. While past performance is no guarantee for future performance, investors can look at this fund not just for downside protection but also as a fund to provide equity returns along with having debt allocation in their portfolio.

Note:

1. Source of data is AMFI, www.advisorkhoj.com and data analysis by Shwealth

2. The funds and indices discussed here are in no way are recommendation for investment