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Best Balanced Fund to Invest for 2014-15

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Before investing in balanced fund we need to know what balanced fund is.
Balanced fund invests in both debt and equity (stocks).


What is debt?
In lay man words debt are fixed income instruments like bank FD, Government security bond etc.


Who should invest in Balanced Fund?
See there is no exact answer for this. However if you are risk averse and have fear for equity fund but still want to take a flavor of equity return in long run (more than 5 year) then probably this is a fund for you.
I would say this is the best way to outsource your asset allocation….By investing in balanced fund you are asking mutual fund to do asset allocation between equity and debt ..


Who decides how much of the fund should be in debt and how much on equity?
The respective fund manager decides this.
Example:
HDFC Balanced Fund invests 71 % in equity and 26 % in debt.

How Taxation works on this?

As per regulation it was defined that the fund which invest 65 % or more in equity is a equity fund.
  • If your balanced fund is investing 65% in equity then taxation will be as per equity rule. The short-term capital gains fall under the tax rate at 15%, while the long-term capital gains attract no tax.
  • If your balanced fund is investing less than 65% then taxation will be as per debt fund rule.For detail click here

Also consider entry and exit load as mentioned on form.

Let me directly jump to individual funds for comparisons:

Selected below funds for their consistency return over last 15-20 years. I considered the Regular, Growth mode for comparison.

  1. HDFC Balanced Fund
  2. HDFC Prudence Fund
  3. ICICI Prudential Balanced Fund
  4. Tata Balanced Fund

Comparison of Funds YoY basis





Return since Inspection and AUM


Almost all the funds are good .However if you see above analysis one thing is evident that HDFC Prudence Fund looks attractive for below reasons:

  1. It is giving at par return on YoY basis while comparing to best fund in that category.
  2. This fund has highest AUM.
  3. Oldest among all. It has 20 years of track record.
  4. Fund has seen all the political instability and 3 major market crashes of India and 1 global recession .
  5. Fund has highest return since inspection.

Disclaimer :
I am planning invested in below fund . Hence my analysis may be biased.Please do your homework before investing.This is my personal view from educational point of view and not a investment recommendation.



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