Balanced funds – a good tool to grow and safeguard your investment
Last Updated : May 27, 2016, 6:33 a.m.
Hunting for a mutual fund that can not only grow your money but also safeguard it? Then, your search ends with balanced funds that invest your money in equity and debt instruments in good proportion. As a result, these funds are able to lower the risk and increase the returns of investors. Equity funds are called high-risk, high-return proposition, while debt counterparts offer you stable return. But, balanced funds aim to provide more returns and reduce the risk as well. The risk element simply goes away in the long-term . So, it offers a perfect mean for investors to park their hard earned money.
Types of balanced fund
Equity Balanced Fund
The asset allocation in this type of fund is predominantly towards equity, in the range of 70%-75%. The rest of the investment is efficiently allocated within the debt instruments. With the equity balanced fund, you enjoy the higher returns of equity and also get compensated for any shortfall in the earning through the regular flow of income emanating from debt instruments.
Debt Balanced Fund
Debt balanced fund ensures investment safety as well as offers returns from the capital market.
Advantages
- With balanced fund, you get higher returns from equity and the stability factor of debt
- Returns from balanced funds can be risk-adjusted if asset allocation is efficiently done by the fund manager. Choosing mid cap and small cap stocks for investment can offer higher returns, which will get safeguarded by the stable flow of income from debt instrument.
- If you have set yourself to invest in balanced fund, which is equity focussed, for a long-term, then you can receive capital gain tax exemption on majority of the investment as well as indexation benefit of debt component for holding the investments above a year.
| Top-Performing Schemes | Riskometer | NAV | 1-Year Return | 3-Year Return | 5-Year Return | AUM | Asset Allocation |
|---|---|---|---|---|---|---|---|
| HDFC Balanced Fund | Moderately High | Rs. 123.09 | 13.15% | 24.75 % | 17.27% | Rs. 7,391 Cr | Equity-69.40% Debt-27.65% Others-2.95% |
| ICICI Prudential Balanced Fund | Moderately High | Rs. 105.27 | 14.71% | 21.91% | 18.28% | Rs. 3,719 Cr | Equity-70.10% Debt-19.28% Cash/Call-9.39% Others-1.27% |
| HDFC Prudence Fund | Moderately High | Rs. 419.96 | 11.72% | 23.71% | 15.48% | Rs. 12,905 Cr | Equity-72.92% Debt-24.44% Others-2.64% |
| Tata Balanced Fund | Moderately High | Rs. 186.52 | 9.79% | 22.65% | 18.48% | Rs. 6,710 Cr | Equity-71.91% Debt-20.20% Others-7.89% |
| Birla Sun Life 95 Fund | Moderately High | Rs. 644.84 | 14.49% | 22.45% | 16.79% | Rs. 4,237 Cr | Equity-66.05% Debt-26.78% Cash/Call-6.51% |
So, it is worth investing in balanced funds that not only let your money grow but also safeguard it. When it comes to choosing the type of balanced funds ffor investment, make sure you are aware of risk profile and invest accordingly.