Investors get excited when equity markets rise; they get worried when they decline. If all you have in your portfolio is debt, you might be relieved to have avoided losses during market downturns and disappointed to have missed out on profits during market peaks. You can have faith in your investment decisions with a Balanced Advantage Fund, even during periods of market volatility.
Get in contact with 7838077767 to manage your entire investment portfolio and discover the balance of both debt and equity investing.
What Is Balanced Advantage Fund?
Investments in a combination of the debt and equity sectors are made using Balance Advantage Funds based on predetermined ratios. They balance the debt and equity segments, providing the best risk-reward ratio and helping to maximize returns on investment. Equities-oriented investments make up between 40 and 60 percent of the balanced mutual fund portfolio. The primary advantage of investing in these funds is that it provides a safeguard against potential risks and ensures capital appreciation.
Features of a Balanced Fund
The main characteristics of Balance Advantage Funds are as follows:
Diversification
Investors can diversify their portfolios by purchasing a range of securities that comprise both debt and equity assets by investing in balanced funds.
Frequently Adjusted Funds
Buying hybrid funds allows the fund manager to adjust the fund's portfolio in reaction to fluctuations in the market.
Rebalance
During notable fluctuations in the market, these mutual funds are designed to automatically rebalance an investor's portfolio.
Low Risks
Balanced mutual funds are considered to be less risky than pure equity funds.
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Should you invest in a Balanced Advantage Fund?
- If you are a beginner, it can give you a balanced exposure to equity investments by actively managing risk.
- If you are an experienced investor, this can increase your exposure to stocks and reduce your risk of losses related to debt exposure.
- More significantly, because of its dynamic nature, it can shield you from adverse changes in the equity markets while assisting you in capitalizing on favorable ones.
- In the long run, it might help you accomplish your financial goals.
- It can help you overcome your behavioral biases when interacting with the equity markets.
Taxation Rules of Balanced Mutual Funds
Equity Funds
If an equity fund's equity-based investment ratio surpasses 65%, it is classified as an equity asset for tax purposes and is subject to a 15% tax on short-term capital gains (STCG) within a year. A 10% tax is applicable to long-term capital gains (LTCG) held for more than a year, but only if gains surpass Rs. 1 lakh.
Debt Funds
Debt-oriented hybrid funds are subject to the debt asset tax regime, which imposes taxes on long-term capital gains only after 36 months and a 20% short-term capital gains tax rate. In general, hybrid funds that prioritize equity offer tax benefits over those that prioritize debt.
Final Thoughts!
You have a fantastic opportunity to invest in stocks without worrying about the risk when you use a Balanced Advantage Fund. It puts you in a win-win scenario where both safety and development are advantageous.
Get in touch with us at 7838077767 if you would like to invest to balance the growth and stability.
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