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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