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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Hello
In MF return why the return on 1yr or 2yr is higher than 5yr? Does it mean we can redeem and exit from MF after 2yrs to get higher return in % .
Dear Shunny,
Are you talking about last two years performances?
Dear sreekant,,
My age was 29. and i have sueplus 100000/- so i want to invest it for 10 yrs. In this time when NAV was very higher i invest lumsum in a balance fund or wait some time..... pls suggest me...... i have to sip with uti equity-1000, and hdfc midcap-1000 from march 21015...
pls answer my quiry in my mail id.......
Dear Prem,
If your investment horizon is 10 years, any time is good time to invest in mutual funds. Kindly do not try to TIME the market.
Go ahead and invest in a good balanced fund.
Hi Sreekanth,
Thank you for providing complete financial information and helping us in our investments.
Listed below are my current investment with a time horizon of 20-25 years. Wanted to know whether continue with below funds or need modification.
1 ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND – REGULAR PLAN – GROWTH Rs. 5000
2 RELIANCE EQUITY OPPORTUNITIES FUND – GROWTH PLAN – GROWTH OPTION Rs. 5000
3 UTI OPPORTUNITIES FUND GROWTH Rs. 5000
4 HDFC MID CAP OPPORTUNITIES FUND – GROWTH Rs. 5000
5 IDFC PREMIER EQUITY FUND – REGULAR PLAN – GROWTH Rs. 5000
6 AXIS EQUITY LONG TERM – ELSS FUND Rs. 3000
Thanks and Regards
Anil
Dear Anil,
You may continue with your SIPs.
Only one suggestion, consider replacing one midcap fund with a balanced fund. (You may replace IDFC premier with HDFC Balanced fund / HDFC Prudence fund).
Thank you Sreekanth for your quick and valuable response.
Thanks and Regards
Anii
Hi Mr Srikanth,
I just gone through your blog and found informative. My age is 37 years. I am new to Mutual Funds and studying about mutual funds by reading some articles online. I want to invest through SIP for my retirement and Children education. As of now i can invest monthly Rs. 10000/. My preferences are like this -
1. HDFC Balanced Fund - Rs. 4,000
2. Franklin India High Growth Company - Rs 3,000
3. ICICI Focused Blue Chip - Rs 3,000.
Please advise can I go ahead.
Thanks
Dear Stany,
The selected funds are good ones. You may choose one mid-cap fund if your investment horizon is > 10 years.
Suggest you to go through my artilces - "Calculate how much to save for kid's education" & "How much you need to save for your retirement?"
Revert to me if you need any guidance.
Hi sreekanth,
I am new in mutual fund investment.
I started 3000 rs sip in hdfc top 200growth and 2000 in axis mid cap growth since last month....please suggest is this mf OK?
Also my planning is to get around 5 lack after 3 years and after 15-18 years around 1cr......
Please suggest how much more I have to invest in sip and which plan to achieve my goal.....
Thanks
Hi Sreekant ,
I have listed on Monthly plan of 40K , Planning for Long period , close to 15 Years .Kindly have a look and revert back if it is correct.
PLAN
1 FRANKLIN INDIA BLUECHIP (G) 4000
2 ICICI PRU FOCUSSED BLUE CHIP (G) 4000
3 FRANKLIN INDIA PRIMA PLUS FUND (G) 4000
4 ICICI PRU DYNAMIC FUND (G) 4000
5 HDFC MIDCAP OPP FUND (G) 4000
6 RELIANCE EQUITY OPP FUND (G) 4000
7 HDFC BALANCED FUND (G) 4000
8 ICICI PRU BALANCED FUND (G) 4000
9 PPF 5000
10 RD 3000
Kindly guide me with your inputs. And wanted to know "Now any funds which you can suggest specific to initiatives taken by Govt related to railways,roadways , air , sector .
Thanks
Sumit Ghosh
9168116444
Dear Sumit,
All most all the funds are decent ones.
But i believe you have picked two funds from each fund category, which can be avoided.
You may choose either 1 or 2, 3 or 4, 5 or 6, 7 or 8.
Dear Santosh,
Kindly read my articles - "calculate future value of your investments" & "Retirement planning in 3 simple steps".
If you are new to mutual funds, consider investing in a good balanced fund.
Want to invest 150000 lumpsum for long period . Currently i have elss sip of icici tax plan (g) .
Hi Sreekanth,
Thanks a lot for this blog!
I have a query.... Suppose I invested 1 lakh in balanced (equity oriented) fund in 2014 - 2015 which has completed a year. Now for this 2014-15, amount of 1 lakh (deposited amt) and the return (whtever comes) will be completely tax free right? So I mean, i shoudlnt consider this 1lakh which calculating IT returns for 2104-15? Please confirm
Dear Rushabh,
The taxes come into picture when you redeem the units.
If you have held the units of equity mutual funds (including equity oriented balanced funds) for more than a year, the maturity amount is exempted from taxes. Long Term capital gain taxes are not applicable.
You can ignore the notional profits while filing your Income Tax Returns.
hi Sreekanth,
I have to invest 8000 per month in two MF,
i m looking forward to equity based MF
a) franklin tax saving/reliance tax saving
&
Second investment
b)which is something more sure/secures like debt or balanced.
Suggest me which fund in both a) & b) are better to invest 4000 each as SIP.
Expected Time horizon for 5yrs & 10yrs.
Suggest me time horizon with preferred funds also & also tell which of them are EEE (tax exempted)
please help me.
Dear Manjit,
You may consider Franklin Taxshield fund (10 years horizon).
You may opt for HDFC Balanced fund (5 to 10 years).
All equity funds are eligible for EEE (if units are held for more than a year).
Thanks a lot Sir,
Will be investing & look forward to your guidance.You are doing great job thanks
hi,
From franklin tax saver vs reliance tax saver , which one is better for time horizon of 10 years?
Dear Manjit,
I would prefer to invest in Franklin taxshield.
dear, I retired in the year 2014 at the age of 58. I will complete 60 years in 2016. I would like to invest in Balance fund equity oriented. I am new in MF. I would like to invest at once some of the amount for minimum 3 years. Pl advise me.
Dear Pratap,
Kindly do not opt for balanced funds if your investment horizon is 3 years. Kindly let me know about your financial goal and time frame..
Dear sreekant,,,,For my child education I have selected 3 fund icici focused bluecheap,mirae India opportunities and hdfc midcap with horizon of 15 year .but I seen your article' Best Balance fund' in that hdfc children gift fund was best,,my question is should I start investing in above said three fund or in Hdfc children gift fund?my investment amount 7000 per month
Dear Neeraj,
All three funds are good ones. If you want to add little bit of balance to your portfolio then consider ‘HDFC Gift fund.’