Best Balanced Funds for 2018 – 2019
Upwardly presents to you the Top 5 balanced mutual funds for 2018 – 2019
|Rank||Fund Name||Returns (5YRS)||Growth of ₹1 lakh in 5 years*||Invest|
|1||Principal Hybrid Equity Fund||16.40%||₹ 2.14 lakhs||Invest|
|2||SBI Equity Hybrid Fund||15.89%||₹ 2.09 lakhs||Invest|
|3||Reliance Equity Hybrid Fund||16.02%||₹ 2.10 lakhs||Invest|
|4||L&T Hybrid Equity Fund||16.57%||₹ 2.15 lakhs||Invest|
|5||Sundaram Equity Hybrid Fund||11.50%||₹ 1.72 lakhs||Invest|
Upwardly has handpicked 5 Balanced Funds that are best for investing in 2018.
Principal Hybrid Equity fund has been the best performing balanced fund in the last 3 years. The fund invests in companies that the manager believes are undervalued. It buys stocks with a long-term investment perspective. The fund has outperformed its category by 6% in 1, 3 and 5-year returns. The fund gave 11.6% p.a. returns since its inception in 2000. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.61 lakh now.
Earlier known as SBI Magnum Balanced fund, SBI Equity Hybrid Fund is a popular fund with assets over ₹20,000 crores. It maintains a steady state 75-25 equity-debt mix. The fund manager invests a part of assets in mid-cap stocks to boost returns. In the debt portion, the fund invests both in G-secs and corporate bonds for higher accrual income. The fund has outperformed its category by 2% – 6% in the 1, 3 and 5-year returns. The fund gave 16.07% (annualized) return since its inception in 2005. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.35 lakh now.
Reliance Equity Hybrid Fund aims to maintain a large-cap portfolio with tactical exposure to emerging leaders. It focuses on generating high accrual income through investments in high-quality debt instruments with moderate duration. The fund has outperformed its category by 2-6 percentage points in the 1, 3 and 5-year returns. The fund has given 13.9% p.a. returns since its inception in 2005. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.40 lakh now.
L&T Hybrid Equity Fund was earlier known as L&T India Prudence Fund. The fund is managed by L&T Mutual Fund CIO S.N. Lahiri with others. The fund has gathered assets of over ₹10,000 crores in just 7 years from launch showcasing its popularity. The equity portfolio is dominated by large-cap stocks. On the debt side, It maintains a high credit quality portfolio without aggressive duration calls. The fund has outperformed its category by 3%-7% and its benchmark by 1% – 4% in 3 and 5-year returns. The fund gave 13.97% (annualized) return since its inception in 2011. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.41 lakh now.
Sundaram Equity Hybrid Fund is the perfect fund for those who are seeking growth with stability. It has an optimally diversified portfolio of about 45 stocks. The equity part of the portfolio predominantly invests in large-cap and smaller allocation to mid-caps. Fixed Income portion of the portfolio comprises of investment in highly rated corporate bonds, with the objective of providing an attractive yield with a high credit quality portfolio. The fund has outperformed its category by 2%-4% in 3 and 5-year returns. The fund gave 12.6% (annualized) return since its inception in 2000. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.13 lakh now.
Balanced Mutual Funds
Balanced mutual funds invest in a combination of equity and debt. They are relatively less volatile than pure equity schemes that invest their entire corpus in stocks. They earn the “balanced” moniker by keeping the balance between the two asset classes pretty steady, usually placing about 65% of their assets in stocks and 35% in bonds.
Let me explain with an example why balanced funds are better in volatile market conditions:
Assume a balanced fund invests 65% in equity and rest 35% in debt instruments. If the investment amount is Rs 1 Lakh, it invests Rs 65,000 in equity and Rs 35,000 in debt. Assume the stock market returns 15% in the bull run and 5% in the bear run. The debt is a safe instrument, we will assume returns of 6% in all conditions.
You will get around 12% returns in the bull market (65,000*12% + 35,000 *6%)
You will get approx 5.35% returns in the bear market (65,000*5% + 35,000*6%)
As you can see the downside risk is reduced compared investing purely in equity.
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*These funds have an exit load of 1% if withdrawn before 1 year. We recommend investing in equity schemes for long-term.
Updated on 24th July 2018