1. Mutual fund investors with low risk-appetite should consider Balanced funds for long term, and benefit from the automatic re-balancing and protection of gains that these funds offer, by maintaining a mix that suits your risk profile.
2. A natural diversification, as per the fund mandate, within the same scheme itself, also brings it stability by balancing out one type of market movement with the others.
3. The fund manager’s ability to re-balance the equity and debt allocation helps investors as they need not maintain separate portfolios for equity and debt.
4. If the portfolio allocation goes haywire, the fund manager re-balances it, thus saving the investors from incurring costs if they were to do it themselves.
5. This auto-switching in balanced funds also makes investing in them more tax-efficient for investors as they do not need to pay any capital gains tax as they move from one asset class to the other.
6. While all dividends and long-term capital gains are tax-free in the hands of investors upto Rs.1 lakh annually, even the income from the debt component of a balanced fund also remains tax-free in the process, which is otherwise not possible in any other way.
7. Investors should derive comfort from the fact that in adverse equity market conditions, balanced funds are likely to fall less than pure equity funds and are better at containing the downside risk.
8. Since these funds are invested in debt as well as equity, investors should learn to contain their expectations from balanced funds.
9. At the end of the day, although these funds are good bets for first time investors, it is difficult to get a fund in which the equity fund manager as well as the debt fund manager are both very good in their respective areas.
10. For a long-term investor where the investment goes through various market cycles, balanced funds have the potential to outperform even equity funds and are a great tool to achieve long-term goals.
2. A natural diversification, as per the fund mandate, within the same scheme itself, also brings it stability by balancing out one type of market movement with the others.
3. The fund manager’s ability to re-balance the equity and debt allocation helps investors as they need not maintain separate portfolios for equity and debt.
4. If the portfolio allocation goes haywire, the fund manager re-balances it, thus saving the investors from incurring costs if they were to do it themselves.
5. This auto-switching in balanced funds also makes investing in them more tax-efficient for investors as they do not need to pay any capital gains tax as they move from one asset class to the other.
6. While all dividends and long-term capital gains are tax-free in the hands of investors upto Rs.1 lakh annually, even the income from the debt component of a balanced fund also remains tax-free in the process, which is otherwise not possible in any other way.
7. Investors should derive comfort from the fact that in adverse equity market conditions, balanced funds are likely to fall less than pure equity funds and are better at containing the downside risk.
8. Since these funds are invested in debt as well as equity, investors should learn to contain their expectations from balanced funds.
9. At the end of the day, although these funds are good bets for first time investors, it is difficult to get a fund in which the equity fund manager as well as the debt fund manager are both very good in their respective areas.
10. For a long-term investor where the investment goes through various market cycles, balanced funds have the potential to outperform even equity funds and are a great tool to achieve long-term goals.