Balancing Act

A balanced approach I am looking for some equity oriented funds that provide decent returns and minimize volatility. Can you suggest some mutual funds that try to manage volatility by various hedging mechanisms? Would balanced funds provide that kind of stability? - Santosh Kumar Sahu If you are looking for equity oriented funds that provide decent returns and minimize volatility, then opting for an equity-oriented balanced fund would be a very smart move. Such funds offer a neat package: Tax efficiency, automatic rebalancing between two asset classes and growth with stability. An equity oriented balanced fund is one that invests in two asset classes - equity and debt, with at least 65 per cent in equity. Such funds are simplicity at its best. You get a ready-made portfolio that allocates between two asset classes. While the actual allocation depends on the fund manager's call on the state of the markets, he is restricted by the mandated equity allocation. So you won't find these funds going 95 per cent into equity, they will operate within the stated band. For instance, just before the market crashed in January 2008, these (equity oriented balanced) funds held 74 per cent of their portfolio in equity (Decembe

This article was originally published on October 19, 2010.