An Insight Into Balanced Funds - What They Actually Are!

Mutual Fund investment market has grown to become a huge part of the financial industry with a number of Asset Management Companies that have launched a number of schemes in the market for different kind of investors. There are a number of categories under which schemes have been launched such as Equity, Debt, Hybrid/Balanced, Solution Oriented, and others. In this article we are going to discuss about Balanced Fund.

What is Balanced Fund?

Balanced Mutual Fund is an investment option for investors who are looking for an investment portfolio that invests in equity and equity related instruments along with debt and money market instruments. They are often known as hybrid funds. Schemes under this category helps an investor enjoy capital growth as well as stability in the form of consistent income.

According to SEBI, the aim of balanced/hybrid scheme is to yield growth and regular income through investment in equity and fixed income securities in the proportion mentioned in the scheme’s offer documents. These schemes are for those investors who are looking for moderate growth. In equity and debt, their general investment is in 40-60 ratio and are considered to get affected by the market fluctuations. However, the net asset value of such schemes are considered to less volatile compared to pure equity schemes.

Types of Balanced or Hybrid Schemes

According to SEBI, this category is further divided into following types:

1. Conservative Hybrid Fund - It is an open-ended scheme that invests predominantly in debt instruments ranging from 75% to 90% and 10% to 25% in equity.
2. Balanced Hybrid Fund - It is an open-ended hybrid scheme that invests in 40 to 60 percent in equity and 40 to 60 percent in debt securities.
3. Aggressive Hybrid Fund - This open-ended scheme invests predominantly in equity and equity related instruments. Under such schemes, the investment made in equity and equity related instruments in 65 to 80 percent. It invests in debt instruments between 20 to 35 percent of the total assets.
4. Dynamic Asset Allocation or Balanced Advantage - It is an open-ended dynamic asset allocation fund that invests in equity as well as debt which are managed dynamically.
5. Multi-Asset Allocation - This scheme invests in at least three asset classes with a minimum of 10% investment in each class.
6. Arbitrage Fund - It is an open-ended scheme that invests in arbitrage opportunities. It makes a minimum investment of 65% in equity and equity related instruments.
7. Equity Savings - It is an open-ended scheme that invests in equity, debt and arbitrage opportunities. The investment made in such schemes is a minimum of 65 percent in equity and equity related instruments and a minimum of 10% in debt instruments of the total assets.

Best Balanced Funds

As there are a number of balanced mutual funds available in the market, selecting the best one can give hard time to an investor but no more! There is a list available in the mutual fund market that provides the best schemes available, in the form of top performing list. Currently, the top performing balanced funds are Aditya Birla Sun Life Balanced Advantage Fund, Reliance Equity Hybrid Fund, Axis Regular Saver Fund.

To invest in these schemes simply log on to MySIPonline, a user-friendly platform just for you!