Balanced Mutual Fund – Best of both worlds

By | September 23, 2016

If you are looking at a portfolio which contains both equity and debt this is for you. A Balanced Mutual Fund has an investment philosophy of investing in both. Typical allocation in equity is about 65% to 80%. Rest is invested in Debt.  Equity adds to the risk but gives high return also. The debt part of it gives stability.

A balanced mutual fund gives in the order of 10-28 % growth on a long term. This is decent return compared to any other equity funds. The large spread depends upon the Fund Manager also. You can pick up some good funds from the market to earn decent returns.

You need to complete the search in the market for picking up a good fund. Large fund houses like HDFC Mutual or ICICI Prudential have their Balanced funds on top of the ranks. The 3 Yr returns of HDFC Balanced fund is 28% as on 23-Sep-16. A fairly good return.

Balanced funds are tax efficient compared to debt funds. They are treated on par with equity funds in terms of taxation. Benefit of LTCG and Indexation are available after one year of investment. Dividends are completely tax free in the hands of investor.

Fund Management costs can be reduced if you choose to invest directly. Direct plans are more efficient in the long run. Regular plans have to pay the brokerage to the agents. Direct Plans score over the regular plans on this front.

Options are available to choose between Regular, Dividend & periodic dividends. Balanced mutual fund market is crowded with every fund house having one scheme in its kitty. It is best to go with the large fund houses with decent returns.

Top 3 Balanced Funds

HDFC Balanced fund –

Type – Equity Oriented

Minimum Investment – 5000

Launch date – Jan 01, 2013 (Direct)

Options available – Direct Growth, Direct Dividend, Regular Growth, Regular Dividend

 

ICICI Prudential Balanced Advantage Fund

Type – Equity Oriented

Minimum Investment – 5000

Launch date – Jan 01, 2013 (Direct)

Options available – Direct – Growth, Direct – Dividend, Direct – Monthly Dividend,  Direct – Quarterly Dividend, Regular- Growth, Regular -Dividend, Regular – Monthly Dividend,  Regular – Quarterly Dividend

Reliance Regular Savings Fund

Type – Equity Oriented

Minimum Investment – 500

Launch date – Jan 01, 2013 (Direct)

Options available – Direct – Growth, Direct – Dividend, Regular- Growth, Regular -Dividend