What are Balanced Funds?
Balanced funds invest in both equity and debt. In balanced funds 65% of the funds are invested in equities and rest 35% in debt.
Advantages of investing in Balanced funds
- They get equity tax treatment and the returns from debt component are also taxed at equity tax rates
- Less volatile
- Downside risk is reduced as compared to pure equity funds
Let’s see why Balanced Funds are good investment options in volatile markets
For example – Rs 100 is invested in a Balance Fund; Rs 65 is invested in equities and Rs 35 in debt.
In a bull market scenario, Rs 65 in equities will give a return of 15% plus Rs 35 in debt would fetch you 8% return.
The total return in Bull market is 12.55%.
In a bear market scenario Rs 65 in equities will get a return of 4% Plus Rs 35 in debt would still fetch you 8% return.
The total return in bear market is 5.4%.
Who should invest?
Balanced funds are a great investment option for new investors looking to start investing in stock markets as they are less volatile.
Also, risk averse investors who are close to reaching their investment goals and want less fluctuation in their corpus should definitely consider investing in balanced funds
Best Balanced Funds to Invest in 2018 handpicked by EzeeHouse
- ICICI Balanced Fund
- HDFC Balanced Fund
- DSP Blackrock Balanced Fund
To start investing in Best Balanced Funds, please download the EzeeHouse app.