Ask Value Research

Why do you recommend balanced funds?

Dhirendra Kumar explains the advantages of balanced funds and when they are better investments than pure equity funds

Research Desk

Why do you recommend balanced funds? And can you suggest a few balanced funds?

The Reasons

Markets are cyclical. Equity funds have done very well in the recent past. But choosing equity funds on this basis alone will not get you great returns in the future.
Balanced funds invest 25% of their corpus in fixed income. This gives more stability to the fund.
Balanced funds are tax-free after 1 year.
The fund manager rebalances the balanced fund daily. This is great in range-bound markets because one is able to adjust the weights in accordance with shifting equity and debt valuations.

Which balanced funds

Firstly, investors should invest through SIPs and not as lump sums.

In terms of specific funds, I would suggest Tata, ICICI, Reliance or Franklin India's balanced funds.

This article was originally published on June 27, 2017.

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