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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
Balanced funds offer an optimal mix of equity and debt investments, providing both growth potential and stability. These funds are ideal for investors seeking moderate risk and steady returns. Understanding their features, working, and taxation rules can help you make informed decisions. If you plan to diversify or achieve long-term goals, balanced funds serve as a reliable investment option. Investors often face the dilemma of choosing between the high returns of equity investments and the stability of debt returns. Relying exclusively on one can limit growth potential or expose you to higher market volatility. Moreover, managing separate equity and debt portfolios requires continuous monitoring and expertise, which can be time-consuming for many. This is why balanced funds are gaining popularity among investors.
What is balanced fund? It is an investment scheme, often referred to as a hybrid mutual fund, that allocates money across both equity and debt instruments. The balanced fund meaning lies in its ability to ensure growth through equity investments while reducing risk with debt components. Such funds are ideal for investors seeking moderate risk exposure while aiming for consistent returns.
The best balanced funds come with distinct features that make them an attractive investment avenue for many.
Balanced funds function by pooling investor money and distributing it across equity and debt markets. Fund managers actively manage the portfolio to maximize returns and minimize risks. Equity-oriented funds usually allocate at least 65% of their assets to equities, while debt-oriented funds allocate more to debt securities. The balanced approach ensures that the portfolio benefits from market uptrends while remaining protected during downturns.
Investing in a balanced mutual fund requires careful planning and consideration of financial goals.
Balanced funds are a preferred choice for investors seeking an all-in-one solution.
Taxation rules of balanced mutual funds vary depending on the fund’s orientation (equity or debt) and can significantly influence your net returns. Details regarding the taxability of such funds can help you optimize your tax liabilities.
Equity-oriented balanced funds are taxed like equity funds. If held for more than one year, they attract a Long Term Capital Gains (LTCG) tax of 10% on gains exceeding ₹1 lakh. Short-term gains (held for less than a year) are taxed at 15%.
Debt-oriented funds are taxed like debt instruments. Gains from investments held for less than three years are taxed as per your income slab, while those held for over three years attract a 20% tax with indexation benefits.
While balanced funds simplify investment decisions, a few critical aspects often go unnoticed. For instance, understanding the fund management fees and exit loads is crucial as these costs can directly impact your net returns. Additionally, investors should consider the frequency and strategy of portfolio rebalancing, which ensures the fund stays aligned with its intended allocation and risk profile.
Beyond selecting a fund, regular monitoring and reviewing of your investment can help you adjust to changes in market conditions or personal financial needs. For investors looking to diversify further, combining balanced funds with other investment plans, such as a ULIP plan, can enhance returns and provide additional benefits.
1
A balanced fund is an investment scheme that allocates assets between equity and debt to achieve growth and stability.
2
It invests in both equity and debt instruments, with fund managers actively managing the portfolio to optimize returns while minimizing risk.
3
Generally, equity-oriented funds allocate at least 65% to equities, while debt-oriented funds have a higher allocation to fixed-income securities.
4
Balanced funds are ideal for investors seeking moderate risk exposure with steady returns and capital growth potential.
5
They offer portfolio diversification, risk mitigation, consistent returns, and convenience for managing investments in a single fund.
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2. Hybrid Mutual Funds: Understanding What is a Hybrid Fund?
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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