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Best Balanced Mutual Funds

Balanced mutual funds are a type of hybrid mutual funds. Hybrid mutual funds invest in both debt and equity instruments. The purpose of this fund is to achieve maximum diversification and get good returns. Such a fund is an ideal choice for beginners as well as core experienced investors.

Hybrid funds are typically equity-oriented as they invest about 50% to 70% of the portfolio in equities and the rest in debt instruments. Hybrid funds often balance the ratio of risk-reward and optimise the return on investment. In short, hybrid funds are a combination of equity and debt segments.

Advantages of Best Balanced Mutual Funds

Balanced mutual funds offer a higher degree of diversification in comparison to equity based mutual funds. Also, an investor is not required to analyse a particular mutual fund. The fund manager performs all duties on behalf of the investors. Since a balanced mutual fund is a strategic mix of debt and equity instruments, the fund is less vulnerable to market volatility. The equity component of the fund generates capital appreciation while the debt component provides protect against market volatility. In a balanced fund, the fund manager can easily switch between equity and debt instruments without incurring a tax liability for investors. If an investor decides to switch between funds, he/she would be subject to capital gains tax.

Disadvantages of Balanced Mutual Funds

Like all mutual funds, hybrid mutual funds are not completely immune from stock market volatility. Diversification and resource allocation depends on the fund manager and not the investors. You cannot customize the fund on your own.

Tax on Balanced Mutual Funds

  • Equity oriented balanced funds: Equity-oriented balanced funds comprise of 65% equity. This places them in equity asset class for taxation purposes. If you withdraw within 1 year of purchase, there will be a flat 15% tax on short-term capital gains (STCG). If you withdraw post 12 months, you will be subject to 10% on long-term capital gains (LTCG) if the gains exceed Rs. 1 lakh.
  • Debt oriented balanced funds: Debt-oriented balanced funds are subject to LTCG if the funds are held for more than 36 months. The STCG is taxed at 20% with indexation benefits.

Balanced mutual funds have better risk-adjusted returns in the long run compared to equity returns.

Fund Category 5-year Rolling Return Risk-Based Standard Deviation
Balanced funds 13.20% 2.9
Large-cap funds 12.90% 3.47
Mid-cap and large-cap funds 13.96% 3.82
Diversified funds 14.91% 3.96

List of Top Performing Balanced Mutual Funds

Aditya Birla Sun Life Equity Hybrid '95 Fund

  • Type: Hybrid - Aggressive Hybrid
  • Benchmark: CRISIL Hybrid 35+65 Aggressive
  • Investment Objective: Generate long term growth of capital and current income, through a portfolio investing in equity, debt and money market securities. The secondary objective is income generation and distribution of dividend
  • Risk: Moderately High
  • Fund Manager: Mahesh Patil, Pranay Sinha, Dhaval Shah
  • Return Rate: 1 Yr 5.31%
  • Return Rate: 3 Yrs 6.26%
  • Return Rate: 5 Yrs 7.62%
  • AUM:Rs. 11,608 crore (As on Oct 31, 2019)

Principal Hybrid Equity Fund

  • Type Hybrid: Aggressive Hybrid
  • Benchmark: CRISIL Hybrid 35+65 Aggressive
  • Investment Objective: Provide long term capital appreciation and current income by investing in a portfolio of equity, equity related securities and fixed income securities
  • Risk: Moderately High
  • Fund Manager: Bekxy Kuriakose, Ravi Gopalakrishnan, Ashish Agarwal
  • Return Rate: 1 Yr 2.36%
  • Return Rate: 3 Yrs 9.81%
  • Return Rate: 5 Yrs 8.90%
  • AUM: Rs. 1,578 crore (As on Oct 31, 2019)

ICICI Prudential Regular Savings Fund

  • Type Hybrid: Conservative Hybrid
  • Benchmark: NIFTY 50 Hybrid Composite Debt 15:85
  • Investment Objective: Generate regular income through investments in debt and money market instruments. As a secondary objective, the Scheme also seeks to generate long term capital appreciation from the portion of equity investments
  • Risk: Moderately High
  • Fund Manager: Rajat Chandak, Manish Banthia
  • Return Rate: 1 Yr 10.85%
  • Return Rate: 3 Yrs 8.88%
  • Return Rate: 5 Yrs 9.30%
  • AUM: Rs. 1,673 crore (As on Oct 31, 2019)

SBI Debt Hybrid Fund

  • Type Hybrid: Conservative Hybrid
  • Benchmark: NIFTY 50 Hybrid Composite Debt 15:85
  • Investment Objective: Provide the investors an opportunity to invest primarily in Debt and Money market instruments and secondarily in equity and equity related instruments
  • Risk: Moderate
  • Fund Manager:Dinesh Ahuja, Ruchit Mehta
  • Return Rate: 1 Yr 9.75%
  • Return Rate: 3 Yrs 5.45%
  • Return Rate: 5 Yrs 7.77%
  • AUM: Rs. 1,093 crore (As on Oct 31, 2019)

Edelweiss Arbitrage Fund - Regular Plan

  • Type Hybrid: Arbitrage
  • Benchmark: NIFTY 50 Arbitrage
  • Investment Objective: Generate income by predominantly investing in arbitrage opportunities in the cash and derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in debt and money market instruments
  • Risk: Moderately Low
  • Fund Manager: Dhawal Dalal, Bhavesh Jain
  • Return Rate: 1 Yr 6.44%
  • Return Rate: 3 Yrs 6.17%
  • Return Rate: 5 Yrs 6.69%
  • AUM: Rs. 3,854 crore (As on Oct 31, 2019)

HDFC Balanced Advantage Fund

  • Type Hybrid: Dynamic Asset Allocation
  • Benchmark: NIFTY 50 Hybrid Composite Debt 65:35
  • Investment Objective: Provide long term capital appreciation / income from a dynamic mix of equity and debt investments. There is no assurance that the investment objective of the Scheme will be realized
  • Risk: Moderately High
  • Fund Manager: Prashant Jain
  • Return Rate: 1 Yr 6.14%
  • Return Rate: 3 Yrs 7.96%
  • Return Rate: 5 Yrs 7.40%
  • AUM: Rs. 44,110 crore (As on Oct 31, 2019)

ICICI Prudential Balanced Advantage Fund

  • Type Hybrid: Dynamic Asset Allocation
  • Benchmark: CRISIL Hybrid 50+50 Moderate Index
  • Investment Objective: Provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments
  • Risk: Moderately High
  • Fund Manager: Dharmesh Kakkad, Sankaran Naren, Rajat Chandak, Manish Banthia, Ihab Dalwai
  • Return Rate: 1 Yr 11.98%
  • Return Rate: 3 Yrs 9.73%
  • Return Rate: 5 Yrs 9.01%
  • AUM: Rs. 28,287 crore (As on Oct 31, 2019)
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