Balanced Mutual Funds - Presenting Mix Benefits of Equities & Debts
With the mix of different instruments, the balanced funds tend to provide the benefits of capital growth and financial stability on a simultaneous basis. A Balanced Mutual Funds is one of the three major categories of mutual funds in India which has the asset allocation of funds in the mix of equity and debt mutual fund. The best Balanced Funds are considered to be the safe investments for SIP or lump sum investing plans. With the proper allocation of funds in the schemes of the aggressive hybrid mutual funds they offer higher returns to the investors with moderate risk factors. With the diversification of the invested capital in different securities, the best balanced mutual funds provides excellent profits with minimised risk.
Balanced Funds Meaning
The balanced mutual funds are geared towards those investors who are looking for a mixture of safety, income stability, and modest capital appreciation on a simultaneous basis. They combine the stock and bond components together to build a portfolio which tends to offer consistent returns to the investors. The schemes of top balanced funds are classified into:
- Equity-oriented funds : This plan includes the funds which have major investments, i.e., around 65% of the total assets in the equity stocks or securities, while the remaining are being put in the debt instruments.
- Debt-oriented funds : The plans in best balanced mutual funds category are those who have the majority of the asset allocation in the debt instruments while the remaining is being parked in the equity stocks.
Why Balanced Aggressive Hybrid Funds is the Best Investment Option?
As we know that Balanced Funds are the most convenient investing programme for the investors who want to gain good earnings on mutual funds, but do not wish to take the risk of stock market fluctuations. By making investments in the equities and debts, they provide the benefits of both the worlds. The equity-oriented top balanced fund offer capital growth in the medium to long run, while the debt-oriented fund aims to generate steady returns. Thus, the investors can gain substantial income on their investments. The reasons for selecting the best balanced funds schemes include the following:
1. Inflation : In the balanced fund, the equities provide the benefits of shielding the battle of inflation which if not managed can erode the purchasing power in the later years.
2. Income Tax : As per the Income Tax provisions in India, the investor is required to pay taxes on the earnings from debt instruments. But in the case of balanced mutual funds where major investments are in equity securities, the investors gain the substantial benefit of tax savings as well, because the income for equities in India is tax-free.
3. Asset Allocation and Volatility : The equity market faces many swings as things are never certain in the stock exchange market and investors wish to invest in the funds which provide greater benefits. The top balanced funds provides an advantage of asset allocation as per the market conditions. When the market performs poor, the fund manager shifts the asset allotment in the debt instruments, and when the market is expected to raise, funds are parked in the equity stocks. This way, the returns are balanced, and investors don’t face the fluctuations in their earnings.
For whom Balanced Mutual Funds are most suitable?
"As the exposure of best Aggressive Hybrid Funds fund to equities is more than 65%, they get treated at par with equity funds despite having some debt exposure," says Rajalakshmi Rajesh, CFP and Director of Trichy-based Banconus Financial Solutions. Thus, best balanced funds perfromance extends its maximum benefit to those who have moderate expectations from the market. The clients who are not very aggressive in their investment and give priority to the security aspect compromising on the capital gain.
Advantages of Balanced Funds
There are a lot of advantages of investing in the top Balanced Funds. The key points amongst them are:
1. Major portion invested in equity: Balanced Mutual Funds invests a major portion in the equity hence, providing a good return to its clients. The optimum ratio of a best Balanced Funds hovers around 60:40, implying that 60 percent investment in the equity market and 40 percent in money market instruments. So, with not much compromise on the balanced fund returns provides relatively, high rate of return to its investors.
2. Security of investment: With a ratio of 40 percent invested in the money market instruments, top balanced mutual funds provides an option of fixed income. Sharing a benefit of security with the risks of equity, balanced aggressive hybrid fund is quite popular among the clients who are very cautious about the security of their investment. Giving a dual benefit, balanced fund in India is always on the priority list of clients those who have a fairly moderate income and who intend to invest their money up to an optimum level.
3. Surety of returns: top Balanced Funds invest money into bonds, treasury bills, etc. These money market instruments ensure a fixed amount of return to the investors. The return is a little low, but it is definitely higher than keeping your money in the saving bank account.
Top 5 Balanced Mutual Funds
Here is the list of the best balanced Mutual Funds in India -
- HDFC Balanced Advantage Fund
- L&T Hybrid Equity Fund
- ICICI Prudential Equity & Debt Fund
- SBI Equity Hybrid Fund
- ICICI Prudential Balanced Advantage Fund
- HDFC Hybrid Equity Fund
How to Select the Best Balanced Funds in India?
When you are thinking to park your money in the top balanced funds scheme, then you must keep some major points in mind while making the right selection.
- Mode of Investing: You must know which mode of investing is better for you. Whether you want to go with the SIP investment plan, or you wish to buy a one-time lump sum plan. Once you choose the mode of investing, you will have to make the choice and decide which fund has performed the best in its category as per your requirement.
- The Goal of Investing: This is of prime importance that you need to associate your investment with an objective. Whether you want to earn capital growth, or you wish to make regular earnings will let you decide which fund is the best suited to you.
- Tenure of Investing: If you have medium- to long-term investment requirement and wish to gain enough capital for goals like retirement, then the best balanced mutual funds must be considered. You can also calculate the return through SIP calculator.
Through our site you can find the best balanced funds schemes and performance. Our experts will provide you the much needed guidance and will help you to optimize your investment in various schemes of top performing mutual funds. Funds like Kotak Equity Savings Fund, ICICI Prudential Balanced Fund, Reliance Equity Hybrid Fund, SBI Magnum Balanced Fund etc. are the chart-buster funds of our site.