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
Hi Srikanth!! I have below funds as part of my portfolio.
1. Axis Focussed 25 - growth (Multi cap)
2. ICICI prudential balanced - growth (balanced)
3. Franklin India Smaller Cos Fund(G) (Small cap)
4. Reliance Small Cap Fund(G) (small cap)
I want to invest Rs. 2000 more in SIP. Please let me know if I should choose L&T India Value Fund-Growth ( Mid cap) or any balanced fund from the list in your article.
My investment horizon is long 10-15 years and my current SIP is Rs. 10000 / month. Thanks!!
Dear Nikhil,
I believe that there are better consistent performers under 'Multi-cap' fund category than Axis 25 fund.
You may add one Mid cap fund to your portfolio (or) consider increasing your allocation to Mutli-cap fund.
Kindly read :
Best Equity MF Schemes
How to select right mutual fund scheme?
Thanks Sreekanth for your valuable insights. Based on the blogs which you mentioned, I will be investing in below funds for this year:-
1. ICICI Prudential Value Discovery Fund-Growth (multi cap)
2. ICICI prudential balanced – growth (balanced)
3. Franklin India Smaller Cos Fund(G) (Small cap)
4. Reliance Small Cap Fund(G) (small cap)
5. L& T value fund
Also for my short/medium term horizon, I will be investing in Birla Sun Life Monthly Income Plan II Wealth 25 Plan-Growth.
Please suggest if this looks ok to you.
Thanks,
Nikhil
Dear Nikhil,
Portfolio is Ok.
Can you define your short-term horizon?
In case if your short term timeframe is less than 2-3 years, advisable not to consider Birla MIP fund.
Read : Best MIP Funds..
Thank you so much Sreekanth for your suggestions!!
Hi! i am looking for assistance in building up my investment portfolio. As of now, I am investing 5k in DSP tax saver. I have about 5-7k per month to invest for tax saving. Apart from tax saving i am considering investing in diversified equity or balanced. DSP tax save-a large cap ELSS, I am thinking of investing in mid or multi-cap elss. It would be favorable if you list some.I am interested in tax saving and investment, more of investment. I have thought of carrying investment for 5-6-7yrs time frame. Thanks.
Dear Nisha,
You may consider Birla Sun life ELSS funds.
Kindly read : Best ELSS funds..
But, do kindly note that funds' portfolios can change over a period ..
Hi Sir - I am currently doing following SIP, i need your inputs if this is good for long term investment 7-10years
BSL Manufacturing fund - 2000SIP
SBI Magnum mid cap fund - 2000SIP
HDFC Balance fund - 2000SIP
Canara Robeco Emerging - 2000SIP
ICIC PRU Focused Blue chip - 1000SIP
L&T India value fund - 1000SIP
your suggestion would be helpful....
Apart a general asking is can i expect always good return in long term from any of the fund or I need to review in yearly basis, but what are the parameters like peer comparion or benchmarks??
thanks/Mona
Dear Mona,
Given a choice, I will switch from BSL Manufacturing fund to HDFC balanced fund and ICICI Focused bluechip.
You may have review your portfolio performance periodically.
Kindly note that it is next to impossible to be with the best or STAR performers for longer period. What matters is consistency. Its ok to be in top 10 if not in top 3 best funds.
Do track your overall portfolio returns, in case if any fund is not doing well, compare its returns with its fund category average returns, benchmark returns and peers returns. Do not churn your portfolio based on short term bad performance , give the funds some time and then you may decide to replace it or not.
Kindly read :
How to pick right mutual funds scheme?
MF portfolio overlap analysis tools
How to create a solid investment plan?
My MF picks
Dear Sir,
thanks for your inputs.......... I also have RD (5000 per month - done @ 9.25%) - 4yrs gone for 10 years horizon, on 10th year I will get approx 9.30lacs .
I want to shift the money towards Equity & need your advice if
- I stop this RD & put lumpsum amount which is accumlated till now - approx 3lacs (which fund pls??)
- start SIP of 5k
For a horizon of 10years??
do you think it's good idea OR should i stick back with RD only since ROI is good as debt product..... I already having Debt amount in PPF & already doing SIP as per my previous question from last 2years & time horizon is 10years
thanks in advance!
tks/Mona
Dear mona,
9.5% is a decent return, but kindly check what would be your real-rate of return after adjusting for taxes..
Kindly read : Why it is not advisable to invest in FDs/RDs for longer period?
The mutual fund schemes mentioned here really useful for the person who are looking for financial management. Thanks for sharing this blog. I think HDFC balanced fund could be beneficial and trustworthy.
Hai, I am 28 Years Old, i am recently starting SIP following Funds:
1) Axix LT Equty Fund Growth – 1500 (Present Hold Value 9ooo)
2) HDFC Mid-Cap Opportunities Fund Growth – 1000 (Present Hold Value 8000)
3) ICICI Prudential Value Discovery Fund Growth – 1000 (Present Hold Value 10000)
4) Birla Sun Life MIP II – Wealth 25 Plan – Growth – (Present Hold Value 2000) Stopped
5) Franklin India Smaller Companies Fund - Growth - 500 (Present Hold Value 1500)
6) SBI Blue Chip Fund - Growth - - 500 (Present Hold Value 1500)
7) Tata Retirement Savings Fund - Moderate Plan - Regular Plan - Growth- - 500 (Present Hold Value 500)
8) Reliance Small Cap Fund - Growth - 2000 (Daily Rs.100) (Present Hold Value 800)
9) BNP Paribas Balanced Fund - Regular Plan - Growth (10000 Lupsum Hold in Stating Price NAV Rs 10.00)
My investments horizon is long of apx 20 – 25 years. this Fund is Ok are any changes in Fund.
Presently My Monthly SIP 7,000/-
recently i am seeing Axis Nifty ETF - after open the fund i am seeting this returns aprox 850% above is it true.
and
presently Axis MF offer Axis Dynamic Equity Fund - can i invest this fund (Rs.10,000)
Dear Chiranjeevi,
Investing in too many funds may not be really beneficial.
Kindly go through below articles :
MF portfolio overlap analysis tools
How to pick right mutual fund scheme?
What are large/mid/small cap funds?
Best Equity funds
can you suggest which funds are continue
and
which are stopped.
Dear Chiranjeevi ..Did you go through above suggested articles? You may kindly analyse the portfolio overlap and may revert to me with your analysis.
Hi, I have invested in following funds:-
Franklin India Prima Plus Growth Direct - 2.50L
HDFC Mid Cap Opp Fund - 1.50L
Franklin Build India Fund-1.50L
ICICI Pru Multicap Fund- 2.50L
Additionally for debt, I invest 1.5L every year in PPF. I still have around 10L to invest in lumpsum. Should I continue in the above funds or go for new funds.
Dear sourav ..May I know your investment time-frame??
Hi Srikanth,
Thanks for your valuable suggestions. I want to invest 1,50,000 lump-sum amount in mutual funds for my child future. Present my child is 5 years old and I want to continue fund for 10 years.
1. Please suggest best mutual funds for 10 years period.
2. shall I invest in two or three funds or single fund is sufficient?
Thanks in advance,
Mahesh
Dear Mahesh,
You may consider a diversified equity fund + Mid cap fund + Balanced fund.
Kindly read :
Best Equity funds
How to pick right mutual fund scheme?
Kid's education goal planning Calculator
I have started i-sip for wealth creation.
1) Mirae Asset India opportunities - 10k
2) SBI Blue Chip - 10k
I have another requirement to invest 5 to 7 lakhs lumsum for 1 year. Which fund gives atleast decent return? I expect atleast 8%, after tax. Can you suggest.
Ram,
Hi Shreekanth,
Sorry I have wrongly mentioned i-sip funds. Please see below right ones
1) SBI Blue Chip Fund - Direct Plan - Growth - 10k
2) Mirae Asset Emerging Bluechip Fund-Direct Plan - Growth-Growth - 10tk
Please suggest for i-sip and lumpsum requirement
Ram,
Dear Ram ..Both the funds are good. For lump sum investment, you may consider an Arbitrage fund and can hold the investment for just over 12 months, as the capital gains (if any) on Arbitrage fund is tax-exempt after 12 months.
Kindly read : What are Arbitrage Funds?
Hi Shreekanth,
I have started SIPs in
1. Birla Sunlife 95 balanced fund (Dec 2016)
2. ICICI Prudential balanced fund (From Dec 2016)
Now from this month I am planning to invest Rs 10000 SIP in Reliance Pharma
Also I am planning to invest in lumpsum
1. Rs 1 lac in Reliance Pharma
2. Rs 1 lac in birla advantage balanced fund
Please suggest
Dear Richa ..If you are aware and ok with high risks associated with Sector/Thematic oriented funds, you may go ahead.
You may check portfolio overlap among the balanced funds.
Hi Sree,
I have a query related to investment. As of now, I am new to mutual fund and yet to start investing. Planning to invest with SIP of 10 -12 K monthly. I am salaried , aged 32. Hence I can increase investments in next years. I have invested in PPF for last 4 years with 50-60K per year and plan to increase more. Have home loans till 2024
Financial goal:
1. To accumulate 5-6L in next 4 years. (MID TERM)
2. Long term (15-20 years) to accumulate good amount
Please suggest:
1. Should i start with Equity oriented, Debt or balanced MF or mixture of all for both the goals
2. In case of equity, which type would you prefer: large, mid, small, diversified.
Dear Iftikar,
Suggest you to kindly go through below articles, can give you some idea on investment planning, you may revert to me with more queries ;
How to create a solid investment plan?
Retirement goal planning & calculator
How to pick right mutual fund scheme?
What are large/mid/small cap funds?