Balanced Hybrid Funds

Balanced mutual funds are single portfolios combining debt instruments and equities. These funds usually keep a constant allocation, say 60-40% in equities and 60-40% in debt.

With the fund manager's experience, balanced mutual funds seek the stability of bonds and the capital appreciation prospects of stocks.

Balanced mutual funds invest in a hybrid mix of asset classes, majorly equity and debt. This strategy can depend on the fund manager's philosophy and experience. However, the composition will always be equity and debt.

Here, the fund manager will maintain a specific asset allocation (40-60%) in equities and 40-60% in debt. While the equity portion will focus on capital appreciation, the debt will provide stable income and reduce volatility.

When needed, they may also rebalance the portfolio to maintain this balance over time.

Investors can choose to invest in Balanced mutual funds if they:

• Seek Moderate Risk Exposure: Ideal for those looking for a middle ground between high-risk equity funds and low-risk debt funds.
• Desire Diversification: Investors aiming to diversify their portfolio without managing multiple funds.
• Have Medium to Long-Term Goals: Suitable for financial objectives with a horizon of 3 to 5 years or more.
• Prefer Simplified Investment: Those who want a single fund that offers both growth and income potential.

Planning to invest in Balanced Mutual Funds online?

Anand Rathi offers a secure and seamless platform for investing in these hybrid funds – in 5 simple steps.

Sign up in minutes on the Anand Rathi platform or the AR Invest app.

Enter your bank details through quick, paperless KYC.

Go to the "Invest" tab, and browse through the list of Balanced Mutual funds that balance growth and stability.

Lastly, start a SIP or go with a Lump sum for one-time investing.

Through our intuitive, sleek dashboard, track your mutual fund investments anytime – all at one place.

Invest now!

Before investing in balanced mutual funds, consider the following:

• Asset Allocation: Understand the equity-to-debt proportion in this fund and ensure that it matches with your risk tolerance level and investment goals.
• Fund Performance: As a core ethic, reviewing the fund's historical performance helps to understand its record and NAV (Net Asset Value) growth. But it's also necessary to understand that past performance is not indicative of future results.
• Expense Ratio: Lower expense ratios can enhance net yield.
• Fund Manager Philosophy and Expertise: Since the fund involves percentage allocation (into equity and debt), the experience and philosophy of the fund manager can influence fund performance.

Taxation of balanced mutual funds in India depends on the equity exposure:

• If the Equity exposure is more than 65%:
• Short-Term Capital Gains (STCG): If units are sold within 12 months, gains are taxed at 20%.
• Long-Term Capital Gains (LTCG): For units held longer than 12 months, gains up to ₹1.25 lakh are tax-exempt. Gains exceeding ₹1.25 lakh are taxed at 12.5% without indexation benefits.
• If the Debt exposure is more than Equity:
• For balanced funds purchased after April 1, 2023, the capital gains are taxable at the investor's income slab rate, irrespective of holding period.