Apr 03, 2017 3 min read

Does Balanced Fund Provide Regular Income?

If you want to know the major traits of balanced funds, then this blog is a must read for you.
Do you get afraid with the market moves? Are you looking for a safe investment in mutual funds? Opt for a balanced mutual fund. It is the most reliable and productive investment strategy which is best suited to the first-time investors who are looking for regular income and capital growth funds without compromising on their invested money. So let us take an evaluative insight into the features of balanced funds, to decide whether or not they are the fund of your choice.

Before we go further in understanding the concepts, we would want to share the answer to the question, i.e., “Does balanced funds provide regular income”? The answer to the question can be yes or no, both. The balanced fund invests in the equity and debt instruments on a simultaneous basis and provides the benefits of both the worlds.
One can earn regular income from debts and appreciation in capital from the equity investments. It provides security to the funds as the money is not exposed towards the equity too much which consequently result in managing the market volatility. The returns offered by the schemes falling in its category can be regular depending on the portfolio concentration and fund manager’s techniques which result in providing the desired results. One must make sure that the scheme one has selected aims to provide the expected returns and tend to generate recurrent income.

The major features to be considered by every investor about the best balanced funds investment are:

Higher Returns-

The top funds falling in this category have offered highest possible returns in the past few years. Birla Sun Life 95 Fund (G) is among the best schemes in this category which is offering annual returns at the rate of 24.30 percent in its one-year investment. The hybrid schemes perform well at times when the stock markets suffer a difficult phase because they have a cushion of debt. With this, they are equipped to withstand shocks of the falling markets. Accordingly, investors gain the benefit of regular income even when the market declines. Moreover, the rebalancing techniques used by the fund managers are helpful in managing the money without compromising on the fund’s security.

The Benefit of Debt-Oriented Plans-

The schemes falling in the debt-oriented balanced fund's category allocate 5-25% of the total assets in the debt instruments. These funds are noteworthy from the returns point of view as some of the plan falling in the class have offered returns more than 10% in the past. The pressure of market moves in these funds is overhauled due to the majority of the funds being put in debt instruments which ain’t volatile to market moves. The primary benefit of these plans is that they offer regular payouts. So one must choose a fund which has a consistent dividend payout record.

Maintaining the Right Balance-

Managing the funds in the right proportion is the most challenging though important task for the investors. Although equities and debts are known to share an inverse relationship, there occur the times when they are positively correlated, especially when market cycles turn. There have been times when the debt investments in the balanced scheme have generated two digit returns in the past just like equities. It all depends on the portfolio concentration of the schemes that you have opted for. As per your risk appetite, you must make the best choice.

The Tax Benefit-

The equity-oriented balanced funds offer the tax benefit as well to the investors. The income earned in the form of a dividend from the equity investments are tax-free in India, and thus one gains the power of saving taxes as well if they invest at least 65% of their capital in equities in their balanced fund investment.

So if you have the desire to earn a good income for a productive and safe portfolio, then Balanced Funds can be the best option for you. You must park your money in them to gain the dual benefits of capital growth and regular income in one go.

MySIPonline and team will surely help you in making your investment worthwhile. Avail our free advisory services to let your money work for you in a better way.