Getting started with investing can feel like stepping into a maze without a map. It’s a big world out there with countless options, and it’s easy to feel overwhelmed. Balanced funds are here to simplify things for you. These funds offer a one-stop solution for investors, blending different investments like stocks and bonds.
In this blog, we’ll explore what best balanced mutual funds are and how they can help you reach your financial goals.
What Are Balanced Funds?
Balanced mutual funds, also known as hybrid mutual funds, are investments that combine stocks and bonds in a single portfolio. They’re designed to provide diversification without investors needing to manage multiple investments themselves.
Here’s how they work: When you invest in a balanced fund, your money is spread across a mix of stocks and bonds. For instance, you might choose a fund with 60% stocks and 40% bonds. These funds vary in their asset allocations; some lean heavily towards stocks (equity-oriented), while others have more bonds (debt-oriented). Some might even hold cash for extra security.
How balanced funds can help you achieve financial goals
Balanced funds offer several benefits that can help you reach your financial goals with ease:
- Diversified Portfolio- Instead of managing multiple investments, balanced funds provide instant diversification with just one purchase. This saves you from the hassle of placing multiple trades to keep your portfolio diversified.
- Eliminates rebalancing- Unlike managing your own portfolio, where you may need to rebalance quarterly, you don’t need to worry about adjusting your investments with balanced funds.
- Stable returns- Investing heavily in the stock market can be volatile, leading to panic and selling during downturns. Balanced funds include bonds and other assets to reduce volatility, helping you stay invested for the long term.
- Hedge against inflation- Balanced funds strategically allocate assets, with a portion invested in bonds and government securities offering regular income. This helps hedge against inflation. Additionally, investing in equities helps in capital appreciation over time, potentially surpassing inflation and preserving your investment’s purchasing capacity.
5 Best Balanced Mutual Funds
The best hybrid mutual funds quite popular among investors are-
1. ICICI Prudential Balanced Advantage Fund
| NAV | ₹73.7900 |
| Returns | 13.76% p.a |
| Exit load | 1.0% |
| Lock-in | No Lock-in |
| Min. investment | SIP ₹100 and Lump. ₹500 |
| Risk | Very High |
2. HDFC Retirement Savings Fund
| NAV | ₹38.29 |
| Returns | 17.77% p.a. |
| Exit load | 0% |
| Lock-in | 5 years |
| Min. investment | SIP ₹300 and Lump. ₹5000 |
| Risk | Very high |
3. Quant Absolute Fund
| NAV | ₹430.1 |
| Returns | 18.37% p.a. |
| Exit load | 1.0% |
| Lock-in | No lock-in |
| Min. investment | SIP ₹1000 and Lump. ₹5000 |
| Risk | Very high |
4. Tata Retirement Savings Fund
| NAV | ₹64.41 |
| Returns | 15.85% p.a |
| Expense Ratio | 0.63% |
| Exit load | 1.0% |
| Lock-in | 5 years |
| Min. investment | SIP ₹500 and Lump. ₹5000 |
| Risk | Very high |
5. Canara Robeco Equity Hybrid Fund
| NAV | ₹346.98 |
| Returns | 14.84% p.a. |
| Exit load | 1.0% |
| Lock-in | No lock-in |
| Min. investment | SIP ₹1000 and Lump. ₹5000 |
| Risk | Very high |
Conclusion
Balanced funds, also known as hybrid funds, offer a hassle-free approach to investing by combining stocks and bonds in a single portfolio. With benefits like diversification, stable returns, and protection from inflation, they provide an excellent option for investors aiming to achieve their financial goals effectively.
