Investment Objective :
Invest in a mix of equity and debt
"Strive for balance between growth and stability"
A Balanced Fund aims to balance the risk and return of the portfolio as it provides the investor with an option to invest in a single mutual fund scheme which has an optimal blend of equity and debt.
Each asset class serves its own purpose in the portfolio:
Equity: To provide capital appreciation & to endeavor to generate returns above inflation.
Debt: To provide stability in the portfolio, to generate consistent income from coupons to provide investors long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity.
The scheme will invest in a diversified portfolio of equities of high-growth companies and balance the risk through investing the rest in a relatively safe portfolio of debt.
This type of mutual funds invest in government bonds, corporate debt securities, and other similar instruments with a low-risk profile. The funds generate regular steady income and may return long-term capital appreciation. The exposure of conservative funds in stocks is comparatively lower, and any equity investment is predominately in blue chip companies with a stable track record. This ensures that at least the capital is protected while increasing the chances of some capital gain.
The best balanced mutual funds in India maintain a balance between safety, liquidity, and profitability of the investment. These funds may also change the investment strategy based on the macro-economic condition, such as a change in interest rates or inflation. The conservative mutual funds can be ideal for diversification of the portfolio and to add balance to it. During the bear markets, conservative funds are likely to bring steady growth in your portfolio.
One of the most crucial advantages of a conservative fund is that it ensures that there is no threat to the capital and the potential of losses are minimal which could be a possibility in other aggressive funds. The practically risk-free nature of the conservative fund frees you from the need to monitor it continuously and leaves you at ease. This is the biggest advantage for investors who panic during bear markets.