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What Is a Balanced Fund In Mutual Funds?
The concept of mutual fund investment is steadily evolving in India as its awareness increases. Mutual funds bring good returns on periodic investments when held for a decent period. However, they are subject to market risks. Creating a balanced mutual fund portfolio can prove to be a great source of income for people who fear the risks of market fluctuations.
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- What Is a Balanced Fund In Mutual Funds?
Best SIP Funds
Payment Mode
Invest
₹ 10,000
Invest for
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Opportunities Fund
AUM (Cr)
₹35,672
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 25.73 %
Instant tax receipt
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,410
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 24.15 %
Instant tax receipt
Diversified Equity Fund
AUM (Cr)
₹3,524
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.02 %
Instant tax receipt
Frontline Equity Fund
AUM (Cr)
₹4,206
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 24.13 %
Instant tax receipt
Grow Money Plus Fund
AUM (Cr)
₹434
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.74 %
Instant tax receipt
Instant tax receipt
Instant tax receipt
Instant tax receipt
Diversified Equity Fund
AUM (Cr)
₹3,524
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.02 %
Frontline Equity Fund
AUM (Cr)
₹4,206
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 24.13 %
Grow Money Plus Fund
AUM (Cr)
₹434
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.74 %
Growth Super Fund
AUM (Cr)
₹13,305
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.11 %
Opportunities Fund
AUM (Cr)
₹35,672
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 25.73 %
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,410
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 24.15 %
Growth Opportunities Plus Fund
AUM (Cr)
₹969
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 23.22 %
Classic Opportunities Fund
AUM (Cr)
₹13,357
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.83 %
Opportunities Fund
AUM (Cr)
₹3,245
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 22.95 %
Equity Top 250 Fund
AUM (Cr)
₹535
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.13 %
Whole Life Income Fund
AUM (Cr)
₹872
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 6.22 %
Whole Life Aggressive Growth Fund
AUM (Cr)
₹849
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 22.92 %
Save N Grow Money Fund
AUM (Cr)
₹63
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 11.95 %
Asset Allocation Fund II
AUM (Cr)
₹297
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 13.85 %
Multi Cap Balanced Fund
AUM (Cr)
₹2,007
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 14.34 %
Super Select Equity Fund
AUM (Cr)
₹1,239
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.56 %
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A balanced mutual fund is a low-risk investment option in which the funding companies put their money on both equity and debt assets. Where equity assets provide you good returns, debt assets ensure you with risk protection.
- Insurance Companies
- Mutual Funds
| Returns | ||||
|---|---|---|---|---|
| Fund Name | 5 Years | 7 Years | 10 Years | |
| High Growth Fund Max Life | 27.23% | 21.27% |
18.4%
View Plan
|
|
| Top 200 Fund Tata AIA | 31.36% | 21.73% |
17.46%
View Plan
|
|
| Accelerator Mid-Cap Fund II Bajaj Allianz | 24.15% | 12.92% |
14.99%
View Plan
|
|
| Opportunities Fund HDFC Standard | 25.73% | 14.99% |
15.14%
View Plan
|
|
| Equity II Fund Canara HSBC Oriental Bank | 19.44% | 10.32% |
10.53%
View Plan
|
|
| Grow Money Plus Fund Bharti AXA | 20.74% | 13.95% |
14.2%
View Plan
|
|
| Multiplier Birla Sun Life | 26.67% | 14.27% |
15.83%
View Plan
|
|
| Equity Top 250 Fund Edelwiess Tokio | 20.13% | 12.14% |
11.86%
View Plan
|
|
| Opportunities Fund ICICI Prudential | 22.95% | 13.36% |
12.55%
View Plan
|
|
| Flexi Growth Fund LIC | - | - |
-
View Plan
|
|
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| Returns | ||||
|---|---|---|---|---|
| Fund Name | 3 Years | 5 Years | 10 Years | |
| Active Fund QUANT | 23.92% | 31.48% |
21.87%
|
|
| Flexi Cap Fund PARAG PARIKH | 20.69% | 26.41% |
19.28%
|
|
| Large and Mid-Cap Fund EDELWEISS | 22.34% | 24.29% |
17.94%
|
|
| Equity Opportunities Fund KOTAK | 24.64% | 25.01% |
19.45%
|
|
| Large and Midcap Fund MIRAE ASSET | 19.74% | 24.32% |
22.50%
|
|
| Flexi Cap Fund PGIM INDIA | 14.75% | 23.39% |
-
|
|
| Flexi Cap Fund DSP | 18.41% | 22.33% |
16.91%
|
|
| Emerging Equities Fund CANARA ROBECO | 20.05% | 21.80% |
15.92%
|
|
| Focused fund SUNDARAM | 18.27% | 18.22% |
16.55%
|
|
Last updated: May 2025
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Balanced Fund Explained
Balanced mutual funds are economic contraptions that put money into a combination of each equity and debt asset in unique ratios. Also called hybrid funds, balanced mutual funds permit investors to diversify their mutual fund-based portfolios. Since balanced mutual funds preserve stability among each debt and equity segment, they offer great threat-praise stability and assist in maximizing the returns on funding.
Balanced mutual funds are on the whole equity-oriented and soak up approximately 40-60% of the fund's portfolio. The major gains of investing in such funds are that they make particular capital appreciation and offer protection in opposition to capability risks.
Balanced mutual funds are, on the whole, orientated closer to buyers searching for a combination of capital appreciation, earnings in addition to low-stake funding options.
Features of Balanced Funds
Major features of balanced mutual funds are as follows:
-
Risk is quite lower in a balanced mutual fund compared to that of a whole equity-oriented fund.
-
Balanced mutual funds spend money on equity and debt assets in a formulated ratio. Thereby the risk of returns getting diminished gets minimized.
-
Balanced mutual funds are formulated to mechanically re-stable an investor's portfolio withinside the occasion of excessive marketplace instabilities. Re-proportion permits fund managers to promote equity mutual funds to preserve the fund's overall performance and vice versa.
-
Investing in balanced mutual funds gives traders or investors the prospect to diversify their portfolios as balanced funds spend money on several instruments throughout equity and debt assets.
What is the Purpose of Balanced Funds?
We can understand the purpose of the balanced fund by two aspects of it - the equity and the debt segment. The equity part of a balanced mutual fund benefits in preventing the attrition of the fund purchasing leverage of the investor. Such investors require reasonably slighter quantum equity investment as most of their investments are in stocks only.
The price of an equity fund majorly depends on the Net Asset Value (NAV) of the fund minus its liabilities. Most often, the equity part of the balanced mutual funds bends towards the big premium paying firms.
The equity part of the balanced mutual funds undoubtedly brings investment risk. To counter this, remaining funds are invested into debt acquainted strategies.
The debt part of balanced mutual funds comprises investing in contracts and debt immunities. Although equity funds benefit from greater returns than the debt segment, debt segment investing also fulfils two major advantages.
The very first advantage is that it helps in creating a constant income commotion. Second, it helps in balancing the volatility of the portfolio of an investor. In addition, since investing in a debt segment is secure, it benefits from minimizing the equity segment's risk.
Investors with low-risk leniency who seek investment in mutual funds that make up for increasing outpace inflation and want to generate income are ideal investors for balanced mutual funds.
Significant Advantages of Balanced Funds
The balanced funds present several advantages for investors. For instance:
-
Inflation risk stability
Balanced mutual funds act as an inflation hedge due to the inclusion of debt assets. Particularly if the investment funding consists of global bonds, they could assist in defending buyers from inflation by giving them passage to international locations which have now no longer been stricken by inflation. Accordingly, the extent in the portfolio makes for a protector in opposition to the sustained upward thrust in marketplace prices.
-
Low risk investing
It is extraordinarily risky to invest in the equity price range entirely. For example, there was a 50% decrease withinside the NIFTY index from 6000 to 2500 range in 2008, main equity fund buyers to incur tremendous losses. In the case of balanced mutual funds, the debt contraptions assist in stabilizing the risks offered by the price equity range.
-
Fund rebalancing
Often, the equity marketplace is puffed up in contrast to the debt marketplace, and the inverse can also happen. However, the investors of balanced mutual funds can easily avoid both types of risks.
-
Tax relief
In balanced mutual funding, fund executives have the choice to emigrate among equity without providing prospects with any tax liability. Taxation under capital growth is charged if buyers or prospects want to haul among the price range by themselves. This can lead to an excessive taxation quantity of approximately 30% if the buyers or investors haul out from the debt price range within 36 months of investing in it.
-
Portfolio diversification
Balanced mutual fund budgets are notable alternatives on the subject of modifying funding portfolios. Since balanced mutual fund budgets assist in maximizing returns and also offer a protection cover towards market-associated risks, they give traders an appropriate choice to restrict their funding liabilities.
Disadvantages of Balanced Mutual Funds
The feature issuance of a balanced fund—typically 60% equities, 40% debt bonds - do not always shape an investor's economic dreams because desires and choices can extrude over time. Moreover, some balanced mutual funds manipulate it to be too protected, fending off global or outside-the-mainstream markets, which could hobble their returns.
The balanced mutual fund controls the asset allocation and not the investor. This sometimes won't fit an investor's tax-saving strategies. For instance, many traders favour holding income-generating securities in tax-advantaged debts and increase shares in taxable ones. However, you cannot separate the two prospects in a balanced mutual fund. Traders cannot use a bond laddering strategy in a balanced mutual fund.
In Conclusion
In a balanced mutual fund, investing is done in a formulated way into both equity and debt assets that help the investors to minimize the risk of market fluctuation. It also provides the investors with many other benefits such as tax relaxation, diversification of portfolios, and fund rebalancing. Balanced mutual fund portfolio is apt, especially for a new user.
FAQ's
-
Q1. Where will balanced debt funds invest my money?
Ans: Balanced debt funds make investments in the cash pooled from buyers in bonds issued with the aid of banks, corporates, PSUs, PFIs (Public Financial Institutions), and the Government. These bonds typically range from a normal to a lengthy tenure. When a mutual fund invests in these debt bonds, it earns periodic dividends from those bonds contributing to general funds over time. -
Q2. Can debt funds offer normal income?
Ans: Debt funds make investments in their investors' cash in interest-bearing securities like bonds, company deposits, G-secs, and cash marketplace instruments. These bonds are like a certificate that delivers a responsibility on the part of the bond provider to pay normal interests (coupons) to the bond investors and hence offering regular income. -
Q3. Are balanced mutual funds safe to invest in?
Ans: Balanced finances are intended for those investors who compel a mixture of earnings, insurance, and mild capital risk. In the long term, the fund can generate better returns because of the equity assets. Nevertheless, for the short-term duration, the debt aspect gives protection to save you from the risk of fund returns deteriorating. -
Q4. Is it necessary to invest a large amount of money in balanced mutual funds?
Ans: It is a major misconception that only wealthy people with a large amount of money should invest in mutual funds. You can invest in mutual funds from as low as Rs 500 to as high as you want based on your wealth and the fund you choose to invest in. -
Q5. Are balanced mutual funds completely risk-free?
Ans: Although a certain percentage or part of balanced funds is allotted to debt assets, it is righteous to say that balanced funds are not completely risk-free. The equity aspect of the balanced fund makes the fund prone to marketplace risks. Market threat reasons the fund cost to differ as consistent with the moves of the underlying benchmark. -
Q6. What is meant by bond laddering?
Ans: Bond laddering means an individual investing in several mutual funds with varying maturity periods. This is done for multiplying capital and for maintaining cash flow. The returns earned from one fund can be used for investing in another fund with a different maturity period.
*All savings are provided by the insurer as per the IRDAI approved insurance
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*Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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