Balanced funds are getting more attention from investors as their assets has surged to R61,107 crore in October 2016 from R37,682 crore in the same month a year ago. Riding on the popularity of balanced funds, IDFC Asset Management Company (AMC) on Monday announced launch of IDFC Balanced Fund.
Balanced mutual funds offer a good mix of equity and debt, thus attracting investors who are wary of risk but do not want to forego returns, say industry experts. IDFC Balanced Fund will be open between December 12 and December 26 and will reopen for continuous sale and repurchase from January 2, 2017.
This fund will restricts equity exposure to 60% while allocating the balance to fixed income instruments. “The IDFC Balanced Fund is aimed at investors who want growth as well as stability in returns for their hard-earned money at the same time. The 60/40 allocation is well-accepted as an optimal asset mix for a Balanced Fund. It will be attractive for investors who do not want to risk reading market direction, especially given current market volatility. We believe this should be a core product in a customer’s long term portfolio,” IDFC AMC CEO Vishal Kapoor said.
In the past 12-18 months, balanced funds as a category has seen huge interest from retail investors as it has given better returns than better returns compared to large-cap or multi-cap funds. According to the data from Value Research, hybrid-equity oriented funds have on an average given returns of 7.26% in the last one year, while large-cap and multi-cap have given average returns of 3.73% and 5.44%, respectively.
Many financial planners and distributors suggest first time investors to start investing in mutual funds through balanced mutual funds as they are less volatile compared to other equity diversified equity schemes. “We have seen many first time investors are starting with balanced funds returns have been very positive for one year, three year and five year, respectively. I think this category will continue to grow as its likely to give better returns than broader markets in longer duration,” said the marketing head of leading fund house. Having a strong run in the past few years, balanced funds can continue to remain important and integral part of investors portfolio, irrespective of bull or bear markets, suggest market participants.