A Balanced Mutual Fund is a mutual fund that invests in bonds (debt) or fixed-income securities and equity (shares) with the motive of gaining returns. It is for individuals who want moderate risk and gradual growth and hence is a suitable investment for those seeking higher returns than the plain debt funds but lower risk than the pure equity funds.
Key Features:
- Diversified Portfolio – It invests in stocks and bonds for minimising the risk but providing consistent returns.
- Risk-Return Balance – Debt side provides returns and stability, whereas the equity side provides returns in the form of appreciation.
- Percentage Allocation – Such funds invest a certain percentage in debt and equity, for example, 60% equity and 40% debt, depending on market conditions and the fund’s objective.
- Appropriate for Moderate Risk Investors – Most appropriate for such investors who want wealth appreciation without encountering a high level of market volatility.
- Tax Efficiency – Balanced funds with 65% or more enjoy the same tax benefits as pure equity funds.
Why Invest in a Balanced Mutual Fund?
Balanced funds provide an equally balanced investment plan by reducing risks related to market volatility. Balanced funds are ideal for long-term investors who seek even growth without any involvement of massive market volatility. Equipped with a flawless combination of debt and equity, these funds guarantee capital growth with fiscal security.
These investments can be selected by the investors in a way that they earn money without losing much, and thus are a better option for conservative as well as growth portfolios.
Conclusion
A balanced mutual fund offers growth, stability, and risk diversification and is therefore appropriate for moderate-risk investors. It offers the benefit of both equity and debt with consistent returns and controlled risk.
