Balanced funds' assets more than double in FY17

'Mixed' investing in vogue: Rising popularity of balanced mutual funds among Indian investors

Balanced funds, mutual fund schemes that invest in a mix of equity and debt, saw their assets more than double to Rs 84,800 crore in 2016-17 from Rs 39,100 crore a year ago, becoming the fastest-growing segment in the industry.

The mutual fund industry’s overall asset growth was 42 per cent in 2016-17.

Net inflows into balanced funds in 2016-17 were Rs 36,610 crore, up 85 per cent from a year ago. The segment also added over 1 million investors, with the total folio count in March climbing to 3.54 million from 2.49 million a year ago.

Typically, balanced schemes invest 65-70 per cent of their corpus in equities and the rest in debt. In the last few years, “dynamic allocation”, which switches between debt and equity daily, has gained traction among these schemes.

“Indian investors care more about limiting losses than generating high returns. These schemes help meet that objective,” said Nimesh Shah, managing director and chief executive officer, ICICI Prudential Mutual Fund.

 

The ICICI Prudential Balanced Advantage Fund saw its asset base grow to Rs 18,000 crore in March from Rs 10,000 crore a year ago.

"New investors should opt for balanced funds, which have in-built risk mitigation capabilities. These funds keep changing their allocation, which helps them navigate market volatility," said Dhirendra Kumar, chief executive of fund tracking firm Value Research.

Other balanced fund schemes include HDFC Balanced Fund, L&T India Prudence Fund, SBI Magnum Balanced Fund and Tata Balanced Fund. Most schemes in this segment have returned 17-20 per cent per annum over the last five years.

Experts said balanced funds worked best in a volatile market and could underperform if the market saw a secular up move.