Transcript: Two reasons.
- Automatic rebalancing by the fund: This makes your job easier. You don't have to decide when and how to rebalance. Also, this re-balancing does not carry any tax implications. This is not the case when you do the rebalancing yourself, between debt and equity funds.
- Favourable tax treatment: A balanced fund is treated as an equity fund for tax purposes despite having up to 35% of its corpus in fixed income. This 35% in fixed income is tax-free which would otherwise be taxable. On the other hand, holding the debt fund for less than 3 years will attract short-term capital gains tax.