Compared to any other mutual fund category, balanced funds are known for giving stable and higher returns in the long term. And, can even outperform some of the well managed long-cap mutual funds.
Balanced funds, also known as dynamic funds or hybrid funds, invest in a mix of both equity and debt to balance the risk-reward ratio. An equity oriented-balanced fund invests up to 75% in equity stocks and the rest 25% is invested in debt securities. Whereas, the debt-oriented balanced fund invests 75% of its asset in debt and the rest in equity-related securities.
Let’s look at some of the best-balanced funds to invest in 2020 based on 5 years returns.
- SBI Equity Hybrid Fund
- Mirae Asset Hybrid Equity Fund
- ICICI Pru Equity & Debt Fund
- Canara Robeco Equity Hybrid Fund
- DSP Equity & Bond Fund
- ICICI Prudential Regular Saving Fund
SBI Equity Hybrid Fund
One of the funds with the highest returns in the category and since its inception in 31st Dec. 1995, the fund has given an annualised return of approximately 16%.
The fund has invested 70% of its assets in equity stocks of both large-cap and mid-cap, with the majority in the financial sector. The debt portfolio consists of both G-Secs and corporate debt papers. The fund has very little exposure to low rated debt paper, thus reducing the risk of any default or write-off.
|Returns % (3y/ 5y/ 10y)||12.25/ 9.43/ 12.60|
Mirae Asset Hybrid Equity Fund
It is an aggressive hybrid fund, with 70% of its asset is invested in equity, especially investing in large and mid-cap stocks. The debt portfolio of the fund consists of both corporate debt paper and G-Secs of different maturity. The fund’s debt securities are all rated A1+ and above.
|Returns% (3y, 5y, 10y)||10.49 / -/ -|
ICICI Pru Equity & Debt Fund
The fund over 5 to 10 years have consistently generated returns in double-digit and is one of the top-ranked funds in the category.
The equity investment of the fund is close to 70%, with the majority of the part invested in financials and energy stocks. The fund’s debt holding consists of both long term corporate debt paper and G-Secs of different maturity.
|Returns % (3y, 5y, 10y)||7.29/ 8.07/ 13.44|
Canara Robeco Equity Hybrid Fund
The fund has generated an above-average return in the long term with a below-average risk grade. The equity portion of the fund is 67% and the rest consists of debt and cash & cash equivalent.
The fund only invests in high-rated debt instruments and the majority of the equity exposure is in financials and technology space.
|Returns% (3y, 5y, 10y)||11.61/ 9.41/ 13.01|
DSP Equity & Bond Fund
DSP Equity & Bond Fund is a kind of aggressive hybrid fund and has consistently outperformed its benchmark. The fund has the highest exposure towards equity in the category at around 75% and debt portfolio is only 24% of the fund’s total asset.
|Returns% (3y/ 5y/ 10y)||10.64/ 10.01/ 11.74|
ICICI Prudential Regular Saving Fund
It is a conservative hybrid fund that invests almost 80% of its asset in debt securities of different maturities. And, has only 16% of its asset invested in equity securities. Since its inception in March 2004, the fund has given a return of approximately 10% and has consistently outperformed its benchmark. The average maturity of the fund’s debt portfolio is 3.53 years, which indicates reduced risk of volatility.
|Returns% (3y/ 5y/ 10y)||8.89/ 8.69/ 9.99|
Balanced mutual funds or hybrid funds are an ideal investment instrument for risk-averse investors, those who want to take advantage of the market movement but is not comfortable with the volatility. And, in the long term, a well managed hybrid funds can beat returns of a long-cap equity mutual fund.