Advantages of Mutual Funds
This fund is good for people with low risk profile and also good for people into a higher age bracket. It is good for people who is saving money to meet a near term goal. It is not recommended for people who want to get a high equity exposure. For them pure equity schemes can be suggested.
Balanced Mutual Funds are a special type of mutual fund that invests in both equity and debt instruments. The advantages and disadvantages of such funds are discussed below.
A balanced mutual fund invests about 45 percent to 55 percent in equities and rest in fixed income securities. They have a equal proportion of debt and equity.
In case of a falling equity market, the debt component gives much higher returns and compensates for the loss suffered by the equity component. In case of a rising equity market and falling bond prices, the equity component compensates for the same.
The advantage of this type of mutual fund is that it gives moderate returns but it assures the safety of capital to a large extent.
The flip side is that incase of rising equity market it is unable to get maximum returns due to its low percentage of equity allocation.
The advantage of this fund is that it minimizes the risk of investment in a capital market. Careful investors who want to get exposure to a substantial amount of equity and also want to protect their capital on the other hand can opt for this sort of scheme.
This fund is good for people with low risk profile and also good for people into a higher age bracket. It is good for people who is saving money to meet a near term goal. It is not recommended for people who want to get a high equity exposure. For them pure equity schemes can be suggested.
Thus balanced fund is a good fund that provides moderate risk, capital protection alongside with a percentage of equity exposure also.
