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. All doctors suggest us to eat a healthy balanced diet.
Investing in Balanced Mutual Funds is not much different. Balanced funds are also known as Hybrid Mutual Funds. In this post let us understand more about types of balanced funds and investment returns from these funds (especially equity oriented 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.
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 a Balanced Fund – Equity oriented. This means major portion of the fund’s assets are invested in equity.
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 funds).
Top performing Equity Oriented Balanced Funds
Systematic Investment Plans (SIPs) Returns of Balanced Equity Oriented Funds
The above table gives us idea about the SIP returns. I have assumed the monthly SIP amount as Rs 1,000.
Again, HDFC’s Children Gift Fund (Inv plan) tops the table with annualized returns of around 22% in the last 5 years. One more observation we can make on some of the very old funds. Example – HDFC’ s Prudence fund which was launched way back in 1993. This fund has generated SIP returns of around 23.18% in the last 15 years. The same fund tops the list in 10 year category, with returns of 18.95%.
The above past returns prove that investors will benefit if they stay invested for long periods of time.
What are the average returns of Balanced funds category?
The Below table gives us overall idea about the average returns generated by all balanced funds as a category.
The interpretation of data can sometimes be very tricky. For a different set of time periods, balanced funds might have given lesser returns. If our expectations are reasonable then I am sure balanced funds will deliver. I believe returns of 10% and above from a balanced fund (equity oriented) is a bonus.
Everything in life..has to have balance. It applies to investments too. I am sure you agree with me. Do you hold any balanced mutual funds? Share your views..Cheers!
(All the above plans are indirect plans, returns > 1 year are annualized and are Growth plans. Kindly keep in mind, past performance is no guarantee of future results- Image courtesy of Jeroen van Oostrom at FreeDigitalPhotos.net)
This post was last modified on July 10, 2023 11:47 am
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Thanks for the helpful article..
I'm new to this.. And I wanted to do some investment in ELSS..
I want to keep it invested for around min 10 yrs or maybe more
I had chosen the following funds to invest Total Rs 20,000/-
HDFC Balanced Fund - Rs 5000
Axis Long Term Equity Fund - Rs 5000
ICICI Prulife focused blue chip fund - Rs 5000
HDFC Top200 - Rs 5000
I have a few questions:
1. Are these funds Ok to invest in? If it is wrong please suggest some other fund but total 20000 has to be invested.
2. If I do Lump Sum this month and then can I start a new SIP in the same fund from April 2015?
3. If I choose a SIP of Rs 1000 pm in any fund and after paying for 5 months can I stop paying and let it be invested for 10 years??
4. To start these funds, whom or where do I go? I mean should I go to HDFC Bank or some other place??
PLEASE HELP!!
Dear Platine,
The funds that you have shortlisted are good ones. Do you want to invest in ELSS funds only? (in your comment, you mentioned that you want to invest in ELSS).
In the listed funds, only Axis long term equity is ELSS. Hope you are aware of it..
1-All funds are ok. Since you are new to MF investments, do not get worried when you see negative portfolio returns. Ready to accept and understand the volatility.
2-Yes you can start SIPs in the same funds
3-Yes, you can pause/stop the SIPs (more features are available based on the distribution /online platforms you opt for..)
4- If you want to invest DIRECTLY, visit the websites of each Mutual fund house and invest directly. The returns on Direct plans are lit bit higher than regular funds. You can also consider other options like - icicidirect.com, fundsindia.com etc., (Online brokerage houses like icicidirect may charge you fee based on each SIP, whereas fundsindia.com do not charge their clients)
Let me know if you need more details. All the best!
Thankyou very much for your quick response.
I did not know that the others are not ELSS, then what are they called??
I had gone to HDFC Bank to ask them about HDFC balanced growth and they told me something about HDFC ProGrowth Plus with premium of Rs 25000 yearly.. Now when I was reading at home I came to know that is a ULIP Plan.. So can I stop it?? They already did the transfer but I have to still give them my documents.. There is some free look period right?? Will I get the full 25000 back??
Dear Platine,
ELSS funds have 3 year lock-in period. You can not redeem mutual fund units allotted under ELSS before 3 years. ELSS funds are tax saving plans, you can claim these ELSS investments as tax deduction under section 80c.
The other funds (HDFC balanced, ICICI Focused & HDFC Top200) are just Equity oriented funds.
The good thing that you have done was - 'you came back home and did research, and realized that it is ULIP.' Yes, it is an Unit Linked Insurance Plan.
Did you submit the proposal form? How can they transfer the funds without you submitting the required documents?
You have 15 days free look period (15 days from the date of receipt of policy bond/document). You can terminate/cancel the policy but they may deduct nominal charges and return you the premium.
If your requirement is MF investments, suggest you not to buy an ULIP plan. (Meanwhile, take photocopy/screen prints of the fund transfer).
(You may read my article on this topic. I published this post very recetnly.."Banks as Insurance agents - Is it a good idea?)"
Hi,
These HDFC people are crazy.I have told them i want to invest in ELSS still they kept telling me about HDFC pro growth plus and forced me to take it.
I told them straight,I will strictly follow what i have decided.I do not need HDFC pro growth plus now.I may think of it next year.When those two agents tried everything to convince me and it seemed to them am not convinced.They started saying Sir its about our performance if you can please invest in this one you will get tax relief also why you are going for ELSS :P I said them again please help me in investing in the ELSS i have already finalized i do not need your plan now.
They can surely issue a refund to you.Complain to Branch Manager and explain how they forced you and if not solved you gonna go for police complain.
Sreekanth,
I have invested in Axis long term equity (Growth ) - 12000 lumpsum and Reliance tax saver(Growth)-6000
Let me know if it was a right decision.And Sreekanth is this HDFC life pro growth plus is of any use really?I mean worth the investment if compared to Reliance Tax Saver or Axis or other good performing Equity Mutual funds.
For the financial year 14-15 i am eligible for refund of all the TDS deducted from my salary.Will be submitting ITR for the same.
Thanks
Dear Karan,
Yes mis-selling is very rampant at banks. Thank you for sharing your experience. (You may read my article on - " Banks as insurance agents / brokers")
HDFC Life Pro-Growth Plus is an ULIP (Unit Linked Insurance Plan). It is better to invest in ELSS funds.
I will definitely stop the Ulip.. They made me to sign of those papers, but I have not given them Pan Card Photo, Nothing,. I was suppose to give tomorrow.. and after 2 hrs i got a sms stating 25000 was transferred. How much approx is this nominal charge??
Thanks Will keep you updated on what happens..
Dear Platine,
If possible let them know that you wanted to buy Mutual funds and not an insurance plan, let's see what they had to say..escalate this issue.
These charges will generally be very nominal (charges towards - stamp duty, courier,administration etc).
This is a classic case of banks misselling an unwanted insurance plan.
Yes and I even mentioned the name of HDFC Balanced Fund and she told me that there are 5 that I can choose from and without I choosing anything they just do a transfer of the amount.. I will surely escalate this to the higher authority. I really feel cheated.. I went for something and they trapped me in something which I just don't like..
Dear Platine,
When she (Bank staff) meant '5', she may be referring to the fund options that are available under HDFC ProGrowth Plus ULIP.
Yes, you have the right to escalate it. How can they take their customers for granted?
Hi,
Be it any fund (Equity/Debt/Balanced), what is the minimum period we need to hold on to it before redeeming it so that the maturity or final fund value will be TAX FREE ?
I would like to have clarity.
Balanced funds' and equity funds' capital gains are tax free if they are held for more than 1 year. Debt mutual funds/Gold funds/Fixed Maturity Plans (all non-equity funds) should be held for 36 months to get tax free returns. (Equity Funds are the funds which have atleast 65% exposure to Equity).
Quite informative. Thank you very much.
Thank you sir. Kindly share the post with your friends too.