All investors want healthy returns from their investments. All investors also want their investments to be safe.
Usually, they come to a compromise and invest in either equity funds(better returns) or debt funds (relatively safer).But what if we told you that can invest in a mix of both? What if we told you that you can have the best of both worlds?
Here’s where Balanced funds come to the picture. Balanced funds are a type of funds that are designed in such a way that they invest in both equity and debt.
|SBI Equity Hybrid Fund - Direct - Growth||0.02%||10.29%||17.12%||Hybrid
|Reliance Equity Hybrid Fund - Direct - Growth||-2.3%||10.93%||17.68%||Hybrid
|Aditya Birla Sun Life Balanced 95 Fund - Direct - Growth||-3.17%||10.78%||16.77%||Hybrid
|Aditya Birla Sun Life Corporate Bond Fund - Direct - Growth||5.57%||7.75%||8.78%||Debt
|Franklin India Ultra Short Bond Fund - Direct - Growth||7.87%||8.81%||9.31%||Debt
(Ultra Short Duration)
In this article
- Benefits of Balanced Funds:
- Equity-Oriented Balanced Funds
- Debt-Oriented Balanced Funds
Benefits of Balanced Funds:
1.Moderates the Risk
Let’s say you have a healthy risk appetite, but as an investor, you wouldn’t want to lose money either.
Balanced funds provide you an opportunity to park your money in a way that the funds are invested 60% in equity funds and 40% in debt funds or vice versa.
Withing balanced funds, there are broad schemes that can cadre to the risk concerns of an investor. For example: If an investor invests wants more returns an is willing to take a higher risk, he/she can invest in an equity-oriented balanced fund (60%- equity, 40% -debt).
Similarly, if an investor wants a relatively safer bet, he/she can invest in debt-oriented mutual funds (60%- debt, 40%- equity). Naturally, equity-oriented funds have proven to give higher returns but are riskier in nature.
As mentioned above, there are two broad categories of balanced funds.
- Equity Oriented
- Debt Oriented
We will now talk about three of the best mutual funds from each sub-category.
Equity-Oriented Balanced Funds
SBI Equity Hybrid Fund was launched on January 1st, 2013 and has a 4-star rating by Groww. This fund has an expense ratio of 1.25, which is relatively low. The minimum investment for SIP is ₹500 and its returns since launch is 16.39%
Details of SBI Equity Hybrid Fund
1.The AUM of the fund is ₹17955 Crores
2.The top portfolio holdings of this fund are in CBLO, HDFC Bank, State Bank and Kotak Mahindra.
3.The maximum weightage is given to the financial sector, followed by the sovereign.
Reliance Equity Hybrid Fund was launched on 1st January 2013. This fund has been consistent and has been given a 5-star rating by Groww. It has an expense ratio of 0.72, which is brilliant and its returns since launch is 13.97%
Details of Reliance Equity Hybrid Fund
1.The AUM of this fund is ₹11334 Crores
2.Top portfolio holdings are HDFC Bank, Yes Bank, Grasim industries and Infosys
3. It gives maximum weightage to the financial sector, followed by construction.
4.The SIP amount for investment is ₹100
This fund was launched on 1st, 2013. It has a 4-star rating by Groww, with an expense ratio of 0.97%. Its returns since launch is 9.17%. which is overall a decent statistic.
1.The AUM for this fund is 7.97% + Its top portfolio holdings are in HDFC Bank, ICICI Bank, Derivative and Infosys Ltd.
2.This fund also gives maximum investment weightage to the financial sector followed by the automobile and IT sector.
3.The minimum SIP amount for investment is ₹1000
Debt-Oriented Balanced Funds
This fund was launched on January 1st 2013. It has been rated as a 5-star fund by Groww and harbors an expense ratio of 0.23%. This fund has given a return of 8.67% since launch%
1. The AUM of the fund is ₹ 19445 Crores
2.Top portfolio holdings are in ONGC, Petro Additions, Jio Infocomm Ltd., and Housing Development Finance Corporation
3. This fund spreads out its investments across the financial, telecom and current asset sectors
4.The minimum SIP amount for investment is ₹1000
This fund was launched on 1st January 2013 and this fund also has a 5-star rating by Groww. This fund has an expense ratio of 0.34% which is considered
1. This fund has an AUM of Rs.13,100
2.The top portfolio holdings are in 9.6 Renew Power Ventures Pvt. Ltd, ATC Telecom Infrastructure Ltd and Edelweiss Commodities Services Ltd
3.The fund has the most amount of investment in the financial sector, followed by construction and energy
4.The minimum SIP amount for investment is Rs.1000
Hybrid funds are amazing for investors who have a moderate risk appetite and they are very popular because of the same reason.
Finally, here are certain things to remember before you invest in any mutual fund:
Don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.
Following the 3 things you should always remember before investing in Mutual Funds :
- Higher rates : don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
- Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
- Review your investment from time to time but not too often. Once a few weeks is good enough.
Read More: 10 Tips on investing in Mutual Funds
To ensure that the fund is in good hands, choose a fund house having fund manager with good amount of experience managing small/mid cap funds and associated with these funds for some good numbers of years.
To look at some of the best performing funds from every category of mutual funds, check out: Best mutual funds to invest in 2019
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.