Striking a fine balance

In 2016, balanced schemes' assets under management rose over 50 per cent

Balanced mutual funds have been the flavour of 2016. Investors chose these schemes, which invest in a mix of equity and debt, and, hence, provide both income and safety. In 2016, balanced schemes‘ assets under management (AUM) rose over 50 per cent. The investor count went up 24 per cent and they got cumulative net inflows of Rs 21,000 crore. In comparison, equity-oriented schemes have seen AUM growth of just 15 per cent. The average return for these schemes, so far this year, stands at 10 per cent even as benchmark indices have remained flat. Fund houses have been pushing sales of balance funds as they provide downward protection when equity markets fall. Also, they have tweaked the schemes by introducing the concept of dynamic asset allocation funds. These funds proactively change the mix between equity and debt depending on the underlying market conditions. Three years ago, these funds were quite small. Sector players expect balanced funds to gain more prominence, going ahead.