Balanced Funds are the ones which invest in both debt and equity component of the market, which in turn helps in reducing the volatility of the portfolio.

It not only protects the investor from inflation but also helps them achieve better post-tax returns. Balanced funds are classified as equity funds for the purpose of taxation since they invest at least 65% of the money in shares.

This ensures that there is no capital gain tax if investor remains invested for at least one year. Although they are in the “asset allocation” family, balanced fund portfolios do not materially change their asset mix.

A balanced fund is only mutual fund scheme wherein even the debt component is taxed as equity. Dividends too are tax-free and due to these multiple advantages, it is suggested to be the best investment by experts.

Investors who have a dual interest in investments of getting a good exposure of equities and at the same time saving oneself from inflation times tend to invest in balanced funds.

So here the logic goes, as age advances the risk appetite of investor lowers but at the same time he/she wants to remain invested in equities to get better amount of returns.

That is the reason balanced funds which provide the good mix of both debt and equity is a very lucrative option.

1. ICICI Prudential Balanced Advantage Fund

Returns: for 1 year- 21.95%; for 3 years- 11.24%;for 5 years-14.36%

Risk: Moderate

Minimum SIP amount: INR 1000

Holdings: For investing into a mutual fund , it is very important to know its holdings to understand the fund’s performance and holdings of mutual funds help us understand what returns can be expected based on market conditions.

Holdings for this fund are as follows:

It invests 71.2% in large cap categories, 28.6% in mid cap categories and 0.3% in small cap categories

The top 10 holdings of the firm (in the highest to lowest order is as shown below)

Company name Sector
CBLO(CCIL) Current Assets(Money Market)
Current Assets Current Assets
HDFC Bank Ltd. Financial Services
Motherson Sumi Systems Ltd. Automobile
8.85 HDFC Bank Ltd. Financial Services
Hindustan Unilever Ltd. Consumer Goods
Infosys Ltd IT
Axis Bank Ltd. Financial Services
ICICI Prudential Mutual Fund Mutual Fund

Performance: The Performance as compared to the benchmark of Nifty 50 is as shown below: (It will help you compare the returns as expected in the market)

One year performance: ICICI Prudential Balanced Advantage Fund 1 year performance

Three year performance: ICICI Prudential Balanced Advantage Fund 3 year performance

Five year performance: ICICI Prudential Balanced Advantage Fund 5 year performance

2. Tata Retirement Savings Fund Moderate Plan

Returns: for 1 year- 42.9%; for 3 years- 17.45%;for 5 years-20.65%

Risk: Moderately high

Minimum SIP amount: INR 500

Holdings: It invests 54.3% in large cap categories, 42.8% in mid cap categories and 2.8% in small cap categories.

Its top 10 holdings include:

Company name Sector
CBLO(CCIL) Current Assets(Money Market)
YES Bank Ltd. Financial Services
Larsen & Toubro Ltd. Construction
Future Retail Ltd. Consumer goods
 Tata Global Beverages Ltd  Consumer goods
Power Grid Corporation of India Ltd. Energy
Hindustan Unilever Ltd. Consumer Goods
HDFC Bank Ltd. Financial Services
Voltas Ltd. Construction
Finolex Cables Ltd. Industrial Manufacturing
Raymond Ltd. Textiles
 Maruti Suzuki India Ltd.  Automobile

Performance:

One year performance: Tata Retirement Savings fund balanced 1 year performance

Three year performance: Tata Retirement Savings fund balanced 3 year performance

Five year performance: Tata Retirement Savings Fund Balanced 5 year performance

3. Aditya Birla SunLife Balanced 95

Returns: for 1 year- 29.06 %; for 3 years- 12.86%;for 5 years- 17.52%

Risk: Moderately high

Minimum SIP amount: INR 1000

Holdings: It invests 66.8% in large cap categories, 32.0% in mid cap categories and 1.2% in small cap categories

Its top 10 holdings include:

Company name Sector
HDFC Bank Ltd. Financial Services
CBLO(CCIL) Current Assets
ICICI Bank Ltd. Financial Services
6.79 GOI May 15 2027 Sovereign
8.13 GOI Jun 22 2045 Sovereign
Infosys Ltd. IT
Eris Lifesciences Ltd. Pharma
ITC Ltd. Consumer Goods
IndusInd Bank Ltd. Financial Services
State Bank of India Financial Services

Performance:

One year performance: Aditya Birla Sunlife Balanced 95 1 year performance

Three year performance: Aditya Birla Sunlife Balanced 95 3 year performance

Five year performance: Aditya Birla Sunlife Balanced 95 5 year performance

4. Reliance Regular Savings Fund Balanced

Returns: for 1 year-33.23 %; for 3 years- 14.14%;for 5 years- 16.89%

Risk: Moderately high

Minimum SIP amount: INR 500

Holdings: It invests 81.1% in large cap categories, 16.7% in mid cap categories and 2.2% in small cap categories

Company name Sector
HDFC Bank Ltd. Financial Services
Yes Bank Ltd. Financial Services
Grasim Industries Ltd. Cement & Cement Production
Reliance Industries Ltd. Dec 24 2020 Energy
ICICI Bank Ltd. Financial Services
Infosys Ltd. IT
Larsen & Toubro Ltd. Construction
Housing Development Finance Corporation Ltd. Financial Services
Reliance Industries Ltd. Energy
Maruti Suzuki India Ltd. Automobile

Performance:

One year Performance:Reliance Tax Saving funds balanced 1 year performance

Three year performance: Reliance Tax Saving funds balanced 3 year performance

Five year performance: Reliance Tax Saving funds balanced 5 year performance

As it can be seen from the above performance graphs, all the top 4 balanced funds have performed above the benchmark Groww Equity Hybrid returns.

This itself indicates the advantage of investing in these balanced funds and as discussed above it is best suited for the ones who want good exposure to equity and at the same time want to remain invested in debt sector to get fixed/good amount of returns.

Groww 30: Top funds in every mutual fund category. 

Best Balanced Funds 2018: Bonus List

If the above funds are not enough, here are some other top rated balanced funds.

5. L&T India Prudence Fund 

l&t india prudence fund

This is another 5 star rated balanced fund on Groww. It gave a return of 28.25% in the last 1 year and 18.37% in the last 5 years.

6. Principal Balanced Fund

principal balanced fund

Another 5 star rated balanced fund on Groww, it has given a stellar return of 37.33% in the last 1 year and 17.73% in the last 5 years.

7. SBI Magnum Balanced Fund

sbi magnum balanced fund

SBI’s balanced fund – SBI Magnum Balanced Fund is also a good option to invest in. It has returned a very high 27.81% over the last 1 year and 17.52% over the last 5 years.

8. DSP BlackRock Balanced Fund 

dsp blackrock balanced fund

DSP BlackRock’s balanced fund gave a return of 26.55% over the last 1 year and 15.73% over the last 5 years which is respectable.

9. ICICI Prudential Balanced Fund 

icici prudential balanced fund

This balanced fund by ICICI Prudential gave a return of 24.29% over the last year and 18.32% over the last 5 years.

10. HDFC Balanced Fund

hdfc balanced fund

This balanced fund by HDFC is a 5-star rated fund. In the last 5 years, it has given a return of 19.45% per annum which is very good for a balanced fund.

Disclaimer: the views expressed here are those of the author. Mutual funds are subject to market risks. Please read the offer document before investing.