First of all you need to ask yourself why you need a balanced fund and an equity fund. You could invest in two balanced funds as well. These funds invest around 60-80 per cent of their assets into equities and rest in debt. The rise in these funds may not be as high as equity funds but they will also not tumble like a pack of cards during the market turbulence. The debt portion brings stability in the fund's return and provides a cushion during market downside.
In 2008, the category of balanced funds on an average lost 43 per cent while Sensex lost around 52 per cent. But at the same time you will also have to be content with muted returns during market rallies. In 2009, balanced funds on an average gained 61 per cent while Sensex gained 82 per cent.
However, the tax efficiency and the automatic rebalancing is an advantage with these funds. Balanced funds are a tax efficient way of having a debt exposure. These funds are treated like equity funds for taxation. Dividends from these funds are tax free and there is no tax on long-term equity gains. Also, you don't need to worry about rebalancing the assets, as it is managed by the fund manager.
Both, HDFC Balanced and Reliance Equity Opportunities, are top performing funds in their respective categories with long-term track record. Both are five-star rated in their respective categories.