Invest In Balanced Mutual Fund (Hybrid funds)
Why Balanced Mutual Funds:
Equity stock + Bonds + Money market (Sometimes)
If you are afraid of investing all your money in equity funds, as they are high-risk funds but still looking for good returns, then try investing in a balanced mutual fund.
A balanced mutual fund is also called a hybrid fund, as the money is invested in both stocks and bonds. These types of mutual funds are ideal for those people who are looking for a mixture of safety, income, and modest capital appreciation for a long-term goal.
In these funds, the money is invested in a mixture of both debt and equity segments in specific ratios. Investors can invest around 60% of their assets in stocks and 40% in bonds, maintaining balanced growth with moderate risk on the returns.
People often ask, is it worth investing in a balanced mutual fund for the long term? A balanced mutual fund is good to invest in for long-term growth because it is a mixture of equity stocks and bonds, providing fixed income while reducing the risk for investors.
It is a great option for retirement planning; therefore, always choose the best balanced mutual fund for retirement. The mix of mutual funds may shift over time or it may be fixed.
Tax Implications:
Equity-oriented:In most of these investments, about 65% or more is invested in (equity funds) stocks and qualify for taxation as equity funds. If the investment is for less than 12 months, then 15% taxation applies on its short-term capital gains (STCG), and if it is more than one year, the long-term capital gains (LTCG) are taxed at the rate of 10%.
The above tax regime is only applicable when the gains exceed Rs. 1 Lakh in total for the investment in a balanced mutual fund.
Debt-oriented: When it comes to debt-oriented funds, they are taxed under the regime for debt assets. Only if the investment is kept for more than 36 months are the gains considered long-term and taxed at 20% after the indexation benefit.
If the investment is done for less than 3 years/36 months, then the capital gains are treated as short-term and taxed at normal rates.
Advantages and Disadvantages of Balanced Mutual Funds:
When we compare balanced mutual funds vs. equity funds, balanced mutual funds are safer compared to equity funds as they protect capital by their investment in debt, so you can expect well-balanced fund returns.
Risk Reduction as these funds invest around 40-60 percent of their assets into equities and the rest in debt.
There’s no lock-in period for the investment. The investment can be withdrawn at any time, but if redeemed before a certain period, an exit load is deducted, set by the mutual fund company.
How to Invest in Balanced Mutual Funds: You can invest by directly visiting the company website. If you face an issue in choosing the right funds for you, then try using third-party apps for direct investment like Coin by Zerodha, ET Money, MyCAMS, and other apps.
Balanced Mutual Funds:
| Fund Name | 1-Year Return | 3-Year Return | 5-Year Return | Fund Size (₹ Crores) | Expense Ratio |
| HDFC Balanced Advantage Fund | 20.20% | 19.81% | N/A | 95,521.37 | 0.75% |
| Baroda BNP Paribas Balanced Advantage Fund | 13.30% | 16.11% | N/A | 4,220.83 | 0.77% |
| Edelweiss Balanced Advantage Fund | 11.77% | 15.08% | N/A | 12,428.49 | 0.52% |
| Tata Balanced Advantage Fund | 11.98% | 13.99% | N/A | 10,217.18 | 0.42% |
| Aditya Birla SL Balanced Advantage Fund | 12.33% | 13.14% | N/A | 7,305.25 | 0.72% |
| ICICI Pru Equity & Debt Fund – Direct (G) | 10.73% | 17.78% | 28.78% | 38,507 | 1.02% |
| UTI-Aggressive Hybrid Fund – Direct (G) | 12.45% | 15.91% | 25.08% | 5,633 | 1.24% |
| Quant Absolute Fund – Direct (G) | -0.44% | 13.43% | 30.24% | 1,893 | 0.69% |
| Kotak Equity Hybrid Fund – Direct (G) | 12.70% | 14.02% | 24.45% | 6,324 | 0.50% |
| Invesco India Aggressive Hybrid Fund – Direct (G) | 15.29% | 15.80% | 21.02% | 570 | 0.81% |