A lot of first-time investors end up investing in funds that are either too risky or low-yield. This is often done in an attempt to diversify the portfolio. However, if you were offered the benefits of both risk mitigation and high returns through a single fund, would you accept it? If yes, then start investing in balanced funds!

What are balanced funds?

As the name suggests, balanced or hybrid funds are those funds that offer equal exposure to the debt and equity market as their assets are invested in both to form a single portfolio. As a one-stop investment option, these funds allow you to enjoy the best of both markets – the low risk of debt instruments and high capital appreciation of equity funds.

Features of balanced funds

The following are the top features of balanced funds –

Risk mitigation

The equity market is highly volatile, and in extreme situations, the risk can exceed your endurance capacity. Since a part of the fund’s assets are invested in stable instruments like debt and other money market instruments, you can easily mitigate the risk involved.

Lucrative returns

If you’re an investor with a moderate risk profile, you would surely not prefer receiving fixed returns from solely debt funds even though they are stable and safe. Since balanced mutual funds invest a portion of their assets in the equity market as well, you can enjoy higher returns and low-risk levels simultaneously.

Protection from inflation

The dual investment nature of balanced funds, with the equity component offering better returns, and the debt component, stable returns, you stay well-protected from market inflation.


If you need a fusion of safety and income and are comfortable with moderate capital appreciation, balanced funds are an ideal investment option. Moreover, if you are a retired individual who wants to invest in growth-oriented yet low-risk funds, you should consider investing in balanced funds.

Additional Read: Should You Invest in Balanced Advantage Fund Now?

Types of balanced funds

Hybrid or balanced funds are of two types –

Equity-oriented balanced funds

These mutual funds invest at least 65% of their assets in the equity market. The remaining assets are invested in debt or other money market instruments to overcome volatile market conditions.

Debt-oriented balanced funds

These funds invest at least 65% of their corpus in debt market instruments such as debentures, bonds, government securities, etc. The rest is invested in equity funds or even cash or cash equivalents for higher liquidity.

Additional Read: 4 Ws of Balanced Advantage Funds

How to invest in balanced funds

You can compare between the most lucrative balanced funds options right where you are! Install Tata Capital’s Moneyfy app and make smart investment choices. Know each fund in detail and assess which ones match your risk profile, investment goals, and other requirements. Invest a lump sum into your future or build a healthy corpus steadily, in instalments with Systematic Investment Plans or SIP. Start your investment journey today!

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