Balanced funds are the most ideal and best option for first time mutual fund investor and also for the investor with moderate appetite for risk. Over a long time balanced fund have succeed to pay excellent return and helped them to achieve there long term goals.
These funds are essentially Hybrid fund with both equity and debt fund in its portfolio risk. These funds typically hold at least 65% in equity based securities whereas remaining part in fixed income securities.
Balanced fund act as attractive investment for individual looking for regular income. Especially if they are willing to have a longer time horizon and a reasonable risk appetite. Not only the dividend received is tax free for investor but there is possibility of an upside in returns expected.
Balanced funds offer best of both the potential of higher returns from the equity component and stability of the debt component. This makes fund less volatile. The returns generated by this type of fund are risk adjusted depending on how fund manager allocates the asset.
The taxation applicable to balanced funds is the same as it is for equity funds. Long term capital gains are tax free if the holding period is at least one year. Whereas, short term capital gain are taxable as per the income tax slab rate of the individual.
From a broader view, Balance fund fulfills all the benefits of the investors from the stock market as well as fixed income options. It represents a sensible long term investment option that can give steady and promising capital appreciation.
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