Are you working hard to keep everything in your life BALANCED? I am sure, who does not want to lead a balanced life.. Staying balanced in the midst of your life is a true feat.
A well balanced life is very much essential for personal effectiveness, peace of mind and living well. We all would like to maintain a balance between professional and personal life. Both are equally important to lead a successful, happy and healthier life. We need to have a right and well-balanced diet to be healthy and fit.
Investing in Balanced Mutual Funds is not much different. Balanced funds are also known as Hybrid Mutual Funds. Personally I prefer investing in balanced funds to achieve my medium and long-term goals. I am a strong advocate of Balanced Funds. (Read : My Mutual Fund Portfolio)
Whether you are a new or an experienced investor, investing in balanced funds can be fruitful. They can give you Diversified Equity funds like Returns but with a lower risk profile.
Last year in the month of June (2016), I had published an article on ‘ Best Balanced Mutual Fund Schemes ’. One year gone by, so let’s review the performance of these top performing balanced funds and let’s have a look at the new list. But, before that, let’s discuss on the basics of Balanced Funds.
What are Balanced (or) Hybrid Mutual Funds?
Mutual funds are broadly classified as either Equity or Debt,based on where the funds are invested.
- Equity funds primarily invest in stocks/shares.
- Debt funds primarily invest in Bonds, Government securities and Fixed interest bearing instruments. (Related reading : ‘Types of Debt Funds‘)
- BALANCED FUNDS invest in both equity and debt instruments.
What are different types of Balanced Funds?
Balanced mutual funds can be Equity oriented or Debt oriented hybrid plans.
If the average equity exposure of a balanced fund is more than 60% and the remaining 40% is in debt products then it is treated as an Equity Oriented Balanced Fund. This means major portion of the fund’s assets are invested in equity (stocks).
If the average debt exposure is around 60% and equity is 40% then these funds are treated as Balanced funds – Debt oriented. (These proportions can vary among different balanced fund schemes).
As per my last review on Top performing Balanced Funds, I had earlier suggested below schemes ;
- HDFC Balanced Fund
- TATA Balanced Fund
- ICICI Prudential Balanced Fund
- Birla Sun life Balanced ’95 Fund
- SBI Magnum Balanced Fund
- HDFC Children’s Gift Fund
As HDFC Children’s Gift Fund may not be suitable to everyone, so I have included a regular balanced fund in its place, which is L&T Prudence. (Last year, I have suggested to keep an eye on L&T Prudence’s performance.)
If you have invested in any of the above Funds, you may continue with your investments in them.
Top Performing & Best Balanced Mutual Fund Schemes & Returns Analysis
Below are the top and consistent performances under Balanced (Equity oriented) category ;
- There are around 61 Balanced (Equity oriented) Schemes. The Category’s average returns have been around 12% for the last 5 years.
- HDFC Balanced fund has been one of the best consistent performer under ‘Hybrid-Equity’ fund category. The fund’s last ten year record is as good as some of the best pure Equity funds. This fund generally allocates 70% of its corpus to Equities and the remaining balance is invested in Debt Securities. The fund’s investment strategy has been aggressive when it comes to allocation of corpus to mid/small stocks, when compared to its peers. This fund has a very low portfolio turnover (Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers). The last 5 and 10 year returns are 19% and 16% respectively.
- Birla Sunlife’s Balanced Fund (’95) is one of the oldest available balanced funds and has also been a consistent performer. This fund has an allocation of around 71% (May 2017) of its corpus to Equities and around 19% has been invested in Debt oriented securities. Around 23% of its Equity allocation has been invested in Banking & Financial Services sector.
- L&T Prudence Fund, though relatively a new entrant in this category, it has been performing really well for the last few years or so. It has beaten its benchmark and peers by impressive margins over the last four years. The Fund’s risk grade is ‘below average’ and return grade is ‘above average’. It has an allocation of around 69% to Equities. The fund’s investment strategy has been a ‘multi-cap’ approach with slightly higher allocation to Mid/small cap stocks. Whereas, it does not take much risk with Debt securities and primarily allocates debt corpus to less risky bets like Sovereign Debt, Bonds & Treasury investments. We need to see how this fund performs in a bear market (as this fund has been launched in 2011 only).
- ICICI Prudential Balanced Fund has an Equity allocation of around 65% and around 28% of its corpus is invested in Debt securities. Its performance during the last 5 year period has been quite impressive.
- SBI Magnum Balanced Fund has been inconsistent until 2011 (with patches of bad and good performances). However, this fund has been performing well since 2011-12. This fund typically maintains a 75-25 equity-debt mix. The equity part is multi-cap, with 50% allocation to Large cap stocks and 50% allocation to mid/small cap stocks. In the Debt portion, about 50% is invested in G-Secs.
- TATA Balanced fund has been one of the star performers under Balanced Funds category. However, its performance has not been up to the mark for the last 1-2 years. The fund’s three and five year returns have beaten its benchmark by around 10% and its category by 5% points. But the margin of out-performance has narrowed in the last 1 -2 years. Its standard deviation has been slowly inching higher. Nevertheless, it is still one of the best consistent performers for the last 10 years or so. Its 10 year returns have been around 14%, next best to HDFC Balanced fund.
- Two more balanced funds to watch out for are Franklin India Balanced Fund & DSP Blackrock Balanced Fund. Let’s keep a track of their performances.
Best Equity Oriented Balanced Mutual Fund Schemes & Risk Ratios
Let’s have a look at the Risk ratios of these top performing & best Balanced Mutual Fund Schemes;
(Sorted based on overall ‘Fund Risk Grade’) (Source : Valueresearchonline.com)
In case, you have to pick a balanced fund out of these top performing balanced funds as per your requirements, you need to give importance to both returns and measures of volatility. You may analyze various ratios as given in the above image and select the one which is the best for you.
Ideally, the fund should have lower Standard Deviation, low Beta, high Alpha and so on..
Suggest you to kindly go through my article ‘how to pick right mutual fund scheme?‘ for the detailed explanation on various types of risk ratios.
The main benefits of investing in a balanced fund are;
- Diversification : The funds are invested in both equity and debt financial securities leading to diversification of investments.
- Asset Allocation & Re-balance : Balanced funds regularly re-balance the portfolio based on market conditions & asset allocation limits. An investor is, thus, saved the hassle of manually re-balancing the portfolio. But it is prudent not to remain invested in these funds till your reach your Financial Goal target year. You may have to switch to safer investment avenues as you reach your target year. (Related reading : ‘List of best Investment Options‘)
- Low volatility : Balanced funds are less risky compared to pure Equity funds. Equity portion will provide the capital appreciation through stock prices appreciation and dividend income. Whereas, Debt portion can provide stability through interest income and appreciation in Bond prices.
- Long Term Capital Gains : In terms of taxation, the balanced mutual funds that invest at least 65% in equity (Equity oriented) attract no tax liability on Long Term Capital Gains. The units of these funds should be held for more than 12 months. (Related Reading : ‘Capital Gains on Mutual Fund & Tax implications‘)
- You can consider balanced funds for your medium to long-term goals like Retirement Planning or for Kid’s Higher Education goal planning.
Have you invested in any of the balanced mutual fund schemes? Do you believe that one should include a balanced fund in his/her long term MF portfolio? Kindly share your views. Cheers!
(References : moneycontrol.com, valueresearchonline.com, morningstar.in & freefincal.com) (Post Published on : 19-June-2017)
This post was last modified on July 11, 2023 6:46 pm
View Comments
Hey Sreekanth ,
I have made one portfolio for my Mother too !!
1) SBI bluechip : 2000pm
2) ICICI Pru Balanced : 1000pm
3) Principal Emerging Bluechip / HDFC Mid Cap : 1000pm
4) Franklin India High Growth Company Fund : 1000pm
ELSS:
Birla Tax Relief 96 fund : 5000pm
Tata India Tax Saving / Franklin Tax Shield : 5000pm
Please advice if any corrections needed
Investment horizon is around 10-12 Years
and For How long we must continue ELSS funds (each SIP) for a decent return
Dear Bharat ..Looks fine..Kindly check their portfolios overlap %s..
After reading your blog and 2-3 interactions with you...I have made this Portfolio for me (My age :22 years)
Birla Frontline Eq Fund-G : 3000pm
HDFC BALANCED FUND : 1000pm
SBI MAGNUM MULTICAP :1000pm
Mirae Emerging Blue Chip : 1000pm
Franklin small company fund : 1000pm
ELSS :
Franklin India Tax Shield : 5000pm
Axis long term Equity : 5000pm
Overlapping are more among Large-Multi , Large-ELSS , Large-Balanced but that still less than 40%
For rest combinations , it is below 20% overlap. Please suggest if i should change any fund
Time horizon is more than 15 years.
Dear Sreekanth,
Thanks a ton for for the valuable and continuous articles on personal finance. I am 32 and have an unavoidable fixed deposits/debt based investments of 13K/month and accordingly want to invest in Equity. My aim is long term wealth creation and I have zeroed on to below portfolio. Pls comment/recommend necessary changes:
1. Axis Long term Equity Fund - Growth/Direct - 5000/month.
2. Mirae Asset Emerging Bluechip Fund - Growth/Direct Plan - 5000/month.
3.ICICI Prudential Value Discovery Fund - Growth/Direct Plan - 4000/month.
Dear Sunny,
2 & 3 are fine.
Axis LTE is it for your tax saving too?
No, Axis LTE is not for tax savings. Sec 80(C) is already crossing without mutual funds. Please comment on Axis LTE . I also request you to recommend me 1 additional fund(apart from the above mentioned three funds) for Rs.5000/month SIP.
Dear Sunny,
If so, instead of Axis fund you may add one more diversified equity fund or a mid-cap fund. Ex: Franklin High growth companies fund or HDFC Mid-cap opp.
And one equity oriented balanced fund to your portfolio.
Hi Sreekanth,
After taking your advice and a little bit of study, I have short-listed following 5 funds for long term (>15 years) wealth creation:
Diversified:
1. Motilal Oswal Focused Multicap 35 Fund-G/D - 5000/month.
2. ICICI Prudential Value Discovery Fund-G/D- 5000/month.
Mid Cap
3. Mirae Asset Emerging BlueChip-G/D – 5000/month.
4. Franklin India Prima Fund-G/D- 5000/month.
Small Cap
5. DSP Black Rock Micro-Cap Fund-G/D- 5000/month.
I have an unavoidable debt related investments of 13K/month(PPF etc). I request you to kindly re-assess and recommend any modifications in the above mentioned plan-A for 25K/month in pure equity funds. Separately, I also request you to remove any one of the above funds for a Plan B for 20k/Month.
Thank you.
Dear Sunny,
All the listed funds are good ones.
The new investments in DSP micro cap fund have been temporarily suspended. Alternatively, you may consider Franklin Smaller cos fund.
You may add one equity oriented balanced fund instead of small cap or one mid-cap fund.
Kindly read :
MF portfolio overlap analysis tools
Dear Sreekanth,
Thank a ton for the valuable guidance and advice :)
Hi Sir,
Thanks for giving these helpful details, I have prepared a folio for long horizon (5+years), can u please suggest t if this is fine.
1. UTI Mid Cap Fund - Direct Plan (G) -Rs 2000
2. ICICI Prudential Value Discovery Fund - Direct Plan (G) - Rs 1500
3. ICICI Prudential Top 100 Fund - Direct Plan (G) -Rs 3000
4. ICICI Prudential Mid Cap Fund - Direct Plan (G) - Rs 1500
5. HDFC Mid-Cap Opportunities Fund - Direct Plan (G) - Rs 1500
I am planning for HDFC balanced fund to add in folio with Rs 4000. Is this correct decision?
If any changes are required please suggest. Thanks for your help.
Dear Gourav,
You may drop UTI mid-cap fund.
ICICI Value discovery + HDFC Balanced fund + one large cap fund can be considered. (Ex : SBI Bluechip / Birla Frontline equity)
Thanks for suggestion,
So should i need to go with only 3 funds in portfolio as suggested and remaining (UTI Mid cap + ICICI Prudential Top 100 + ICICI Prudential Mid Cap + HDFC Mid-Cap Opportunities) need to stop. If Need to stop then can i leave money in them or should redeem.
Regards,
Gourav
Dear Gourav,
I have assumed that you are yet to invest in these schemes..
Too many funds especially from same fund category can be avoided..Kindly read :
MF Portfolio overlap analysis tools
How to pick right mutual fund schemes?
No Sir, i have already invested in these except HDFC Balanced Fund.
Dear Gourav,
Since you have time-frame of around 5 years, suggest you to retain only one mid-cap fund (preferably HDFC mid-cap) and may allocate higher amount to Large cap & balanced funds.
Thanks Sir
So if i need to continue other invested mid cap funds then tenure should be 10+ years?
Dear Gourav,
When you’re invested for the long term, your average return becomes much more stable over time and it’s less likely that you’ll lose money. Various studies show that as we lengthen our investment horizon, the average annual rate of return over that timeline becomes less variable.
Kindly read : Long Term Investment Horizon : Importance & Benefits | My father’s risky investments! (Real-life examples)
Dear Sir,
I have very less capital of Rs. 80k which i want to invest in Mutual fund for short term goal i.e 1 year and don't go through the Bank since interest rates are very low in bank..
Pl advice some MF'S name as well as category so that i can earn better monetary benefit compare to Bank.
Dear Jayesh,
If you are aware of the risks associated with debt funds (if you can afford to take some risk), you may consider Short term debt fund and/or Arbitrage fund.
Ex : Franklin Low duration fund / ICICI Equity arbitrage fund.
Kindly read :
Types of Debt Funds
What are Arbitrage funds?
Hallo Sir
i am new in the field of Mutual fund , 10 years remain in my service retirement. As per friends suggestion I am investing in
a) SBI blue chip-5000
b) mirae india opportunity fund- 5000
c) DSP blackrock small and mid cap-2500
d) mirae emerging fund-2500
e) motilala oswal most focused multicap 2500
i can invest upto 25000 rs per month. pl advise
regards
bb jha
Dear Mr Jha,
You may pick either of the first two a) or b) under large-cap category, as these fund's portfolios overlap by around 45%.
Kindly read:
How to check mutual fund schemes' portfolio overlap?
What are the different types of fund categories?
You may go ahead with the other investments!
Thanks Sreekanth for the verygood artical/information, please suggest me
my Age 35, owned home, No Loan.
below 19K SIP investing (since 2010 and some started in 2014)
6k (sector fund) - 2k reliance pharma + 2k Reliance Banking + 2k IcICI Technology
5k (ELSS) - 2k Axis Long term + 2k Reliance tax saver + 1k DSPBR Tax saver
2k (balance) - 2k icici Balanced fund
2k (gold) - 2k Reliance Gold Saving Fund
2k (Diverified) - 1k icici discovery fund + 1k Reliance Equity Opportunity
1k (Large cap) - 1k ICICI Focused Bluechip
1k (Divident) - 1k ICICI Dividend YieldnEq. Fund
FD - 5Lac(renew every time)
EPF - 80K/year(my+employer contribution)
PPF - 60k/year
RD - 5K/month
Goal - max possible wealth creation(child education, retirement)
tenure - minimum 15year to max 25 year
Please suggest is it good portfolio or suggest any modification
+ i want to invest 6k/month - which sip i add it or take new sip ?
Dear Bhushan,
Appreciate your long term investment strategy..
I believe that you can trim your portfolio a bit. You may kindly check the portfolio overlap among the funds (except the Gold fund).
You may replace ICICI Div yield fund with any good Mid-cap fund.
Instead of Reliance opp fund you may add one balanced fund to your portfolio.
Kindly read :
How to pick right mutual fund schemes?
Best Equity funds
What is 200 Day moving average?
Dear Sir,
I have been investing 6k per in Mutual fund since last 1.5 years, My portfolio and goal is as below.
Axis Long term equity fund ------ investing 1,000/- per month
Birla Sunlife Manufacturing Equity Fund------ - investing 1,000/- per month
DSP Black Rock Micor Cap Fund----- investing 2500/- per month
ICICI Value Discovery Fund----investing 1,500/- per month
My Current Age is 30 years and i am having on LIC policy with SA of 2 Lakh (Jeevan Anand) & looking for Term Insurance.
Axis Long term equity fund ------ 20 years for retirement
Birla Sunlife Manufacturing Equity Fund------ - 20 years for retirement
DSP Black Rock Micor Cap Fund----- 10 years to get benefit for child education current age is 6 years old.
ICICI Value Discovery Fund----5 years for planning to purchase Motor Car upto the value of 4 Lakh.
I have been working in an insurance industry and earning 25k per month & getting Health insurance from my employer.
Should i continue with my above goal or need to do some changes.
Pl advice and suggest.
Dear Karan,
You may consider investing in an equity oriented balanced fund instead of multi-cap fund for your 5 year goal.
Kindly do understand that sector/thematic oriented funds have high risks, you may consider replacing Manufacturing fund with a good Mid-cap fund instead.
Once you buy a term plan, you may discontinue the existing life insurance policy.
Kindly read :
Best Term insurance plans
Best Equity funds
Traditional life insurance plan - a terrible investment option?
How to select right mutual fund scheme?
Dear Sir,
Thanks for providing such an important information regarding wealth creation.
Should i discontinue with my existing two MF'S and replace with another.
1) Birla Sunlife Manufacturing Equity Fund replace with L&T Business cycle fund
2) DSP Black Rock Micro Cap Fund replace with Franklin India Smaller Cap Fund.
Rest two funds- Axis Long Term Equity Fund & ICICI Value Discovery fund looks fine.
Pl advice and suggest.
Dear Karan,
If you have existing SIPs in DSP Micro cap fund, you may continue with it.
Instead of birla fund you may pick any good mid cap fund for long term. Ex : HDFC mid-cap opp or Franklin Prima fund etc.,
Dear Sir,
I am already having Multi cap fund- Icici Value discover in my portfolio, if i'll choose Franklin Prima fund , there may be chance of Overlapping.
Should i invest in Large Cap fund like Birla Frontline equity or Icici pru focus Bluchip fund etc.
Pl advice.
Dear Karan,
Kindly note that Franklin Prima is a mid-cap oriented fund, whereas Franklin Primaplus is a multi-cap one.
Sir,
Finally i have decided my MF portfolio which is below.
1.)Axis Long term equity fund —— investing 1,000/- per month
2.)Birla Sunlife Balanced '95 Fund—— – investing 1,000/- per month & recalling existing BL Sunlife manufacturing equity fund
3.)DSP Black Rock Micor Cap Fund—– investing 2500/- per month
4.)ICICI Value Discovery Fund—-investing 1,500/- per month
I am looking for another SIP under Large Cap category for investing 1,000/- per month.
Pl suggest....
e
Dear Karan,
You may pick - Birla Frontline equity / SBI Bluechip fund.
Sir,
Should i switch my existing Birla Sunlife Manufacturing Equity fund & utilized 2700 units against Birla Frontline equity.
Pl suggest.
Dear Karan,
Yes, you may consider it.
But kindly do note that SWITCH is also considered as normal redemption, so watch for any Exit load / tax implications (if any)..
Hi Sreekanth,
I am an ardent follower of your blog and have been investing in MFs for close to 2 years now- almost fully basis this blog :)
So, thank you!
I seek your guidance on how often and how to check whether my MF portfolio needs any reshuffling?
Also, in case I do realize there is need to shuffle, how do I go about it- as in how can I move from one fund to another without losing on the benefit of staying invested for long periods?
Thanks!
Gaurav
Dear Gaurav,
Thank you for being a loyal reader!
Ideally, you may review your portfolio's performance once in 6 months, but reshuffling only if it is required may be say in 2 years or more than that.
Personally, once I invest in a consistent performer (MF Scheme), I stick to my conviction and give it a sufficient time (for example I am with UIT midcap for the last few years, though it has been not performing well for the last 1 year) before making a switch.
If switching is required, you may to have redeem the units and re-invest in the newly selected scheme, do watch out for tax and/or exit load implications (if any).
Hi Sreekanth,
Very nice article, I wanted to invest in Balanced fund since long now I can start investing in this category.
However, below is my current portfolio as SIP.
1. Axis Long term Equity (ELSS - 5 years Loc-in) - 2000 RS.
2. Mirae Asset Emerging bluechip (Mid-Cap) - 2000 RS.
I am planning to invest in two more fund category mentioned below, kindly suggest if adding below category funds will be good for my portfolio interms of fund allocation and diversification and how much amount of SIP to be considered for below ?
1. Large cap / Multi cap (Long Term horizon 8-10 years)
a. SBI Bluechip Fund (Large)
b. BSL Frontline equity fund (Large)
c. ICICI Pru focued bluechip Fund (Large)
d. Kotak select focus (Multi)
e. Franklin High growth Fund (Multi)
f. DSPBR Opportunities fund (Multi)
2. Balanced Fund (Medium Term 3-5 years)
a. HDFC Balanced
b. BSL Balanced '95
c. L&T India Prudece
Thanks,
Mittal.
Dear Mittal,
All the listed finds are good ones. You may pick 2-3 funds (Large/Multi/Balanced categories) and plan your investments.
Suggested reading :
What is large/Mid/Small/Multicap fund category?
What is 200 Day moving average?
Hi Sreekanth,
Thanks for your suggestion, I have one doubt about SIP Amount.
SIP amount should be kept same for all the categories or it has to be different for different category funds to diversify the investment.
For example, If I have SIP of RS. 2000 in Mid Cap then do I need to SIP of more than RS. 2000 in Large/Multi or Balanced Fund to balance or diversify the investment.
What do you suggest would be the ideal scenario.
Thanks.
Dear Mittal,
As you have long investment horizon, you may allocate higher amount to diversified and mid-cap funds.