Published Article Details

5 smart things to know about balanced mutual funds

Posted by: Uma Shashikant on Feb 06, 2017, 06.30 AM IST

1. A balanced fund is a type of mutual fund which has exposure to the two primary asset classes, equity (usually at least 65%) and debt (usually up to 35%).

2. Balanced funds are treated as equity oriented funds for purposes of income tax, and offer a better post tax return than combining equity and debt funds in the same proportion.

3. The equity allocation provides long-term growth and the debt exposure reduces the volatility of the returns thus offering the benefits of asset allocation in a single product.

4. The fund manager manages the allocation to equity and debt in a dynamic manner and so the investor does not need to keep track of the asset allocation of the fund and does not have to carry out the rebalancing at his end.

5. Rebalancing happens without any tax implication to the investor who would have otherwise paid tax if he managed the asset allocation himself through different funds.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.) This article appeared in Economic Times dated Feb 06, 2017, 06.30 AM IST

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