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.
The funds are invested in both equity and debt financial securities leading to diversification of investments.
Balanced funds regularly rebalance the portfolio based on market conditions & asset allocation limits. An investor is, thus, saved the hassle of manually re-balancing the portfolio
Balanced funds are less risky compared to pure Equity funds. Equity portion will provide the capital appreciation through stock prices appreciation and dividend income. Whereas, Debt portion can provide stability through interest income and appreciation in Bond prices.
Balanced funds have debt component in their asset allocation. Due to this they may suffer lesser losses during market downturns when compared to Equity funds.
These funds can be a better bet for first-time equity investors. These are also suitable for the investors who want to protect the downside during market downturns and want to benefit during market upswings. Remember that balanced funds may not out-perform the Equity funds during market upswings (Bull run).
Balanced funds can be a useful investment option to meet critical Financial Goals like Retirement Planning, Kid’s Higher Education etc.,