I am thinking of investing in balanced mutual fund please give me some insight abou
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Re: I am thinking of investing in balanced mutual fund please give me some insight
As the name indicates, balanced fund investment main motive is to get both growth and income. In this type of fund, the fund is usually made in equity and debt securities. It helps an investor a long term growth through its equity components along with income procured through the investment portfolio debt securities. It’s a good option for you, if you are looking for long term growth. You can check out with the financial houses such as reliance mutual fund, HDFC mutual fund, DSP black rock and others and pick some investment plan for you.
As the name indicates, balanced fund investment main motive is to get both growth and income. In this type of fund, the fund is usually made in equity and debt securities. It helps an investor a long term growth through its equity components along with income procured through the investment portfolio debt securities. It’s a good option for you, if you are looking for long term growth. You can check out with the financial houses such as reliance mutual fund, HDFC mutual fund, DSP black rock and others and pick some investment plan for you.
Re: I am thinking of investing in balanced mutual fund please give me some insight
Totally bad idea.
What balanced fund gives you is a high percentage of debt so that the returns are not as volatile as a pure equity fund. Because the debt will presumably continue to grow, only the 50-60% that is allocated to equity will be volatile, but the debt returns will mask that volatility to some extent. However, it still does not protect your money if the equity were to fall significantly. Even the HDFC Prudence funds which is recommended by someone and is one of the better balanced funds has many negative quarters.
You can implement the balanced fund yourself by investing 30-40% in cash market (bank FD, bonds, MIPs) and 60-70% in equity funds (HDFC top 200, HDFC Equity, Fidelity Equity and so on).
Advantage of splitting it yourself even though it is more work
#1 Rebalancing for better growth ... check your portfolio every quarter and if one investment has grown rapidly as compared to other, redistribute some of the funds.
For example you start by investing 40% pure debt and 60% equity. After 3 months equity has given good returns and now you are 30% debt and 70% equity ... it is time to take some profit and move some funds into debt. Alternatively assume equity has fallen and now you are 50% debt and 50% equity ... again use the same model and move some funds from debt to equity. Overall long term returns will be much much better. (Do not do this balancing every day, choose a medium term adjustment based on your comfort)
#2. If you need to take money out in an emergency, at least one segment (debt or equity) will be healthy that you will not regret selling at a loss. In balanced funds, if equity is down, this reflects in the overall NAV and you can not control what profits you book and what you do not.
Basically ... do an asset allocation and allocate into pure asset classes rather than hybrid assets such as balanced funds.
Totally bad idea.
What balanced fund gives you is a high percentage of debt so that the returns are not as volatile as a pure equity fund. Because the debt will presumably continue to grow, only the 50-60% that is allocated to equity will be volatile, but the debt returns will mask that volatility to some extent. However, it still does not protect your money if the equity were to fall significantly. Even the HDFC Prudence funds which is recommended by someone and is one of the better balanced funds has many negative quarters.
You can implement the balanced fund yourself by investing 30-40% in cash market (bank FD, bonds, MIPs) and 60-70% in equity funds (HDFC top 200, HDFC Equity, Fidelity Equity and so on).
Advantage of splitting it yourself even though it is more work
#1 Rebalancing for better growth ... check your portfolio every quarter and if one investment has grown rapidly as compared to other, redistribute some of the funds.
For example you start by investing 40% pure debt and 60% equity. After 3 months equity has given good returns and now you are 30% debt and 70% equity ... it is time to take some profit and move some funds into debt. Alternatively assume equity has fallen and now you are 50% debt and 50% equity ... again use the same model and move some funds from debt to equity. Overall long term returns will be much much better. (Do not do this balancing every day, choose a medium term adjustment based on your comfort)
#2. If you need to take money out in an emergency, at least one segment (debt or equity) will be healthy that you will not regret selling at a loss. In balanced funds, if equity is down, this reflects in the overall NAV and you can not control what profits you book and what you do not.
Basically ... do an asset allocation and allocate into pure asset classes rather than hybrid assets such as balanced funds.
Re: I am thinking of investing in balanced mutual fund please give me some insight
See the track record of HDFC prudence !!! The asset allocation is needed. but dont try to out perform the fund manager. it s possible but 1 percent of the crowd can do that.
Balanced fund is a must in everyone s portfolo
regards
Vignesh
See the track record of HDFC prudence !!! The asset allocation is needed. but dont try to out perform the fund manager. it s possible but 1 percent of the crowd can do that.
Balanced fund is a must in everyone s portfolo
regards
Vignesh
Re: I am thinking of investing in balanced mutual fund please give me some insight
I am not talking about asset allocation in general. I do not recall the split of equity vs cash ... I think HDFC balanced and HDFC prudence had small variations and I am not inclined to look them up to illustrate a point.
Let us say Prudence has a split of 65% equity and 35% cash or debt. It can vary but they will have some illustrative range. So if you have 1 Lac to invest ... put 65 K in a top of the line equity fund, and put 35 K in fixed deposit / cash market. if crisis happens (in your personal life ... requiring immediate cash ... but not selling all your holdings), you will know where to pull the money from, as either the equity or the cash side will be doing much much better than the other.
I am not talking about asset allocation in general. I do not recall the split of equity vs cash ... I think HDFC balanced and HDFC prudence had small variations and I am not inclined to look them up to illustrate a point.
Let us say Prudence has a split of 65% equity and 35% cash or debt. It can vary but they will have some illustrative range. So if you have 1 Lac to invest ... put 65 K in a top of the line equity fund, and put 35 K in fixed deposit / cash market. if crisis happens (in your personal life ... requiring immediate cash ... but not selling all your holdings), you will know where to pull the money from, as either the equity or the cash side will be doing much much better than the other.
Re: I am thinking of investing in balanced mutual fund please give me some insight
I agree your points.. But if one is not active to do the rebalancing can go for balanced fund.
One advantage of balanced fund is - no long term capitall gain as like any other equity MF... In pure debt funds u have to pay capital gain tax
In my portfolio i do the 30-70 rebalncing.. In the equity side (i.e 70%), still i keep one balanced fund...
I agree your points.. But if one is not active to do the rebalancing can go for balanced fund.
One advantage of balanced fund is - no long term capitall gain as like any other equity MF... In pure debt funds u have to pay capital gain tax
In my portfolio i do the 30-70 rebalncing.. In the equity side (i.e 70%), still i keep one balanced fund...
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