While the inflow in the fund category has been the highest in the month of May, primarily triggered by stock indices performance, the fund is certainly a good bet for first time investors who are risk averse and at the same time try to take advantage of market upswings with a hybrid investment bet. Any downturn in the fund NAV due to exposure in equity class is offset be debt holdings.
Asset allocation in balanced funds
With over 65% of funds allocated to equity class, there is certainly a risk element in the mutual fund category which is balanced by the debt holding in the portfolio to an extent. So, retired folks and other individuals who abhor stock markets volatilities who have now taken on this undicovered investment path are doing at their own risks.
The long-tenure balanced funds provide superior returns due to regular asset allocation attribute for which investor needs to book profits on an ongoing basis to maintain equity and debt ratio close to 65:35 as the required benchmark is for the scheme to qualify as the equity oriented scheme to take tax advantage.
So, with the tax advantage when it comes to the debt component of the balanced funds plus the superior returns of over 15% which have been fetched by these funds in last one year, these can be good investment options for first time equity investors who cant take in huge price crashes in their valuation but are certainly not risk free.
Furthermore, as a novice investor, you can consider investing in few of the balanced fund schemes which have been rolled out in recent time with lesser volatility exposure. So together with growth, wou can expect safety from your investment in balanced funds scheme