Balanced / Hybrid Funds
These are mixed equity and debt funds.
Depending on the objective these funds can be further classified as
1. Balanced funds
2. Monthly Income Plans (MIP)
3. Asset allocation funds
Balanced funds
The most popular among the hybrid category, these funds were supposed to be investing equally between equity and fixed income securities. However, in order to benefit from the provisions of the prevailing tax laws, these funds invest more than 65% of their assets into equity and remaining in fixed income securities.
These funds are preferred by investors who seek the growth through investment in equity but are not very comfortable with the volatility associated with pure equity funds.
Monthly Income Plans (MIPs)
This category of funds invests predominantly in fixed income securities with marginal exposure to equity. The fixed income component provides stability to the portfolio, whereas equity provides capital appreciation over long periods of time. Generally, 80% of the scheme corpus is invested in fixed income securities and the balance 20% in equity. However, the allocation could be different from the above. Recently, some fund houses have also launched schemes under this category that invest in equity, fixed income and gold.
These funds are ideally suitable for any investor who wishes to have steady growth of capital with the ability to beat inflation over long periods of time.
Asset allocation funds
Asset allocation is a very important part of the investment plan. Advisors have a choice of either constructing portfolios for their clients through careful selection of components. Alternately, they can also look at ready made solutions available in the form of “Asset Allocation Funds” launched by certain mutual fund companies. These funds are designed with certain investor profiles in mind and most of the fund houses also offer tools to match the investor profile with the various options under these funds.
Balanced funds
The most popular among the hybrid category, these funds were supposed to be investing equally between equity and fixed income securities. However, in order to benefit from the provisions of the prevailing tax laws, these funds invest more than 65% of their assets into equity and remaining in fixed income securities.
These funds are preferred by investors who seek the growth through investment in equity but are not very comfortable with the volatility associated with pure equity funds.
Monthly Income Plans (MIPs)
This category of funds invests predominantly in fixed income securities with marginal exposure to equity. The fixed income component provides stability to the portfolio, whereas equity provides capital appreciation over long periods of time. Generally, 80% of the scheme corpus is invested in fixed income securities and the balance 20% in equity. However, the allocation could be different from the above. Recently, some fund houses have also launched schemes under this category that invest in equity, fixed income and gold.
These funds are ideally suitable for any investor who wishes to have steady growth of capital with the ability to beat inflation over long periods of time.
Asset allocation funds
Asset allocation is a very important part of the investment plan. Advisors have a choice of either constructing portfolios for their clients through careful selection of components. Alternately, they can also look at ready made solutions available in the form of “Asset Allocation Funds” launched by certain mutual fund companies. These funds are designed with certain investor profiles in mind and most of the fund houses also offer tools to match the investor profile with the various options under these funds.
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