Top 5 Balanced Mutual Funds

Below is the list of best performing balanced mutual funds to invest in India.


Name of Fund 5 Year Returns (p.a.) Scheme Category
Sundaram Equity Hybrid Fund 12.34% Aggressive Hybrid Fund
HDFC Balanced Advantage Fund11.37%Dynamic Asset Allocation
ICICI Prudential Equity & Debt Fund12.78%Aggressive Hybrid Fund
DSP Regular Savings Fund9.22%Conservative Hybrid Fund
Axis Regular Saver Fund9.50%Conservative Hybrid Fund
These funds will give you the growth of equity with the cushion of debt. These funds invest in both equity and debt as per the defined asset allocation.


Define Balanced Funds.

Also referred to as Hybrid funds, balanced funds are mutual funds that invest in the mixture of both equity and debt and enable diversification of the investor’s mutual fund-based portfolio. These are ideal for risk-averse investors looking for maximum capital appreciation from both segments.

Balanced funds are typically equity-oriented as they invest about 65 - 75% of the portfolio in equity and the rest in debt instruments. The equities element assists in preventing the erosion of investor’s purchasing power, whereas the bond component helps in the creation of income stream and neutralizes the portfolio volatility.

Examples include Aggressive Balanced Funds, Child Plans, Conservative Balanced Funds, etc.

What are the benefits of investing in Balanced Funds?

  • Reduced risk – Investing only in equity funds can be a risky affair as things are never certain in equity markets. Thus, to balance out the risks of equity schemes, balanced funds invest a portion of their corpus in debt-oriented instruments. This is because the strategic mix of both equity and debt makes the hybrid funds less vulnerable to market volatility.
  • Diversification –These funds are a viable option when it comes to diversifying the portfolio. Diversification of investment across different asset classes helps in reducing the risk that the investors will otherwise face while investing in a 100% equity funds or 100% debt funds. Hence, investors should analyze and select the right mix of equity and debt, depending on the prevailing market factors. There are funds available in the markets which are equity oriented balanced funds or debt oriented balanced funds.
  • Suitable for first-time investors -Balanced funds are considered excellent investment instruments for first-time investors, who do not have much experience of dealing in equity markets and have a low appetite for risk.
  • Steady returns –Hybrid funds do not invest their entire corpus in equity funds, which makes them less volatile than pure equity funds. Hence, they provide stable returns to investors for a long period.

Top 5 Equity Mutual Funds

Below is the list of best performing Equity mutual funds to invest in India.


Name of Fund 5 Year Returns (p.a.) Scheme Category
Canara Robecco Equity Diversified Fund 17.50% Multi Cap 
Kotak Standard Multicap Fund 14.80%Multi Cap 
ICICI Prudenial Large & Midcap Fund14.90%Large & Midcap Fund
SBI Focused Equity Fund16.65%Focused Fund
L&T India Value Fund18.80%Value Fund
You can invest in equity funds for the growth of your capital. The minimum time horizon required is 3 years.

What are Equity Funds?

Equity funds are the kind of mutual funds that invest a large portion of their corpus in the stocks of different enterprises, with an objective of earning potentially high returns. These are considered riskier than most types of mutual funds due to their dependency on market conditions. And, this is why the investors are advised to invest in equity funds as per their risk appetite.



What are the different kinds of equity funds?

Equity funds are classified into the following –

  1. Large-cap funds – These equity funds invest in top 100 companies in the index as per the market capitalization. Large-cap companies are reputable and trustworthy and generally constitute the top 100 firms in the market. These funds provide lower returns due to less growth potential and are considered stable than mid-cap funds. Examples of such companies are - Reliance Industries, HDFC Bank, ITC, and more.
  2. Mid-cap funds – These are those funds that invest in stocks of companies which is between 101th to 250th in the index as per the market capitalization. Mid-cap firms have better growth potential and deliver higher returns as compared to large-cap funds. Examples include – TATA Global Beverages, Castrol India, Canara Bank, and more.
  3. Small-cap funds – These types of funds invest in small-size companies with a relatively small market capitalization and which comes after 250th place in index as per the market capitalization. While they can generate large returns, small-cap organizations are exposed to high risk due to lack of financial strength to withstand fluctuating market conditions. Alok Industries, Aptech Ltd., etc. are some small-cap firms in India.
  4. Multi-cap funds – As the name suggests, Multi-cap funds are the type of equity mutual funds that invest in stocks of all three segments, i.e., large-cap, mid-cap, and small-cap companies, in varying proportions. In such schemes, the fund manager is responsible for rebalancing the portfolio to match the fluctuating market and economic conditions.

Top 5 ELSS Mutual Funds

Below is the list of best performing ELSS mutual funds to invest in India.


Name of Fund 5 Year Returns (p.a.) Scheme Category
Axis Long Term Equity Fund 14.30% ELSS
IDFC Tax Saver Fund 12.67%ELSS
Franklin India Taxshield Fund12.90%ELSS
DSP Tax Saver Fund13.86% ELSS
Kotak Tax Saver Scheme13.90%ELSS
You can invest in ELSS funds for tax savings u/s 80c of income tax act with a lock in of 3 years.It is one of the best options to save tax with a growth of investment amount.

What are ELSS funds?

Equity Linked Savings Scheme helps you in growing money and save at the same time. It offers tax benefits of 10.4% up to Rs. 1 lakh, according to section 80C of the Income Tax Act. Due to this reason, this scheme is also known as the tax saving mutual fund scheme. However, the only catch here is that it has a lock-in period of 3 years.

What are the main features of ELSS funds?

  • Tax Benefit: ELSS offers tax benefits of 10.4% under section 80C of the Income Tax Act.
  • Long-term savings: It helps in building a habit towards long-term savings.
  • Higher returns: As the scheme is for long-term, it offers inflation-beating returns. This is one of the many reasons why investors have switched from old investment methods to mutual funds.
  • Low Lock-In: ELSS has the lowest lock-in period than other tax saving schemes.
  • No Upper-Limit to Investments: Investor has no bar for the amount of investment in these funds.

Further Reading:

www.mutualfundssahihai.com

www.amfiindia.com

If you have any queries or suggestions, please contact us at bestadvisor2020@gmail.com.

Disclaimer

We do not offer any financial advice/recommendations through this website. This website should be used only for informational/educational/knowledge enhancement purposes.
Investment in mutual funds or any asset class comes with an inherent risk. This is just a web-based tool for getting a rough estimate about the future value of your SIP/lump sum investments. The calculations are based on projected annual returns and periods. The actual annual returns may be higher or lower than the estimated value and it may have a significant impact on the final returns/goals.
So, you are requested to kindly do your own analysis or hire an expert financial advisor/planner before making any investment decision.

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