What are Balanced Funds in Mutual Funds?

A balanced mutual fund is a single portfolio that offers an amalgamation of stock component, bond component, and money market component. Typically, this mutual fund is a combination of both equity and debt segments in a certain ratio. 

This mutual fund is steered towards investors looking for both income and protection with moderate capital appreciation. 

Overview of Tata Balanced Fund

The Tata Group has launched a tata equity hybrid fund that seeks both steady income and growth opportunities through a mix of investments in equity, debt, and arbitrage segments. 

It predominantly invests in equity related instruments with debt and other money market instruments. The known equity to debt ratio in this scheme is 70 to 30. Investors interested in income generation for medium to long term with mid-risk can invest in this tata balanced fund monthly dividend. 

Let’s understand the benefit of a balanced mutual fund in detail. 

Advantages of Balanced Mutual Funds

• Risk Mitigation

Investing in funds that are purely dominated by the equity and stock markets can be highly risky for investors. It may cause them to incur huge losses in case the market fluctuations went against them. 

Thus picking a hybrid fund can help mitigate the risk effects to a good extent by balancing through the investment in debt funds. 

• Taxation Benefits

This hybrid scheme has the facility to switch between equity and debt without putting a complete tax burden on the investors. If investors manage it without the fund managers, they are subjected to taxation under the capital gains. 

The taxation can escalate up to 30% of investors completely withdraw from the debt funds within 36 months of investment. 

• Diversification of Investment Portfolio

A balanced scheme is one of the best mutual funds to buy for its provision of diversification. It provides investors with an avenue to maximize their returns along with a safety net against market-related risks. 

It enables them with the ideal option to restrict their liabilities. 

• Re-balancing of Funds

Hybrid mutual funds re-balanced according to the benefit of the investor depending upon the market conditions. There are times when equity is overvalued compared to the debt market and vice-versa. 

It can be allocated to a focused equity fund that delivers the best returns through investment in high-performing equity. Moreover, the whole thing can be reversed between the two asset classes. 

• Protection Against Inflation

In balance mutual funds, a part comprises the debt assets that can serve as an inflation hedge. If funds are invested in international bonds, it gives protection against inflation through countries that are not influenced by it. 

With asset diversification, investors are also privileged to take money periodically without alteration to asset allocation. 

Bottom Line

Before investing in balanced mutual funds, ensure that your investment objectives are in sync with this mutual fund category. You can even check out the mutual fund planner related to the investment in this specific category. 

For more information and assistance, get in touch with the fund managers who are experts in handling such portfolios.