MySIPonline, an online investment platform in India recently analyzed the growth in AUM of Balanced Funds and the results are no doubt shocking. The AUM on 31st March, 2017 was Rs. 84,763 Crore which increased to Rs. 1,80,648 Crore in March, 2019. The balanced funds have shown steep increase in the past two years.

Balanced Funds is a category of mutual fund that diversify the assets in a combination of debt and equities. Thus, providing an opportunity to the Indian investors to achieve superior returns in the long term. The basic idea behind the investment philosophy is to provide stable returns even during market fluctuations. Even if the equity market collapse in the future, then also the debt instruments can be used to provide stable returns to the investors. The balanced fund comes with a mandate that they have to invest at least 65% of the corpus in the equities.

Mr. Virendra Ranawat, the CEO of MySIPonline believes that the investors learned a good lesson from the market volatility of 2018. The bearish nature of the market diverted the focus of investors towards balanced funds. The previous year was a doomsday where many top performing pure-equity funds underperformed and generated negative returns. This was the time when balanced funds gained their due popularity. In short, it is the safest port to park the ship in storm.

2019 being an election year in India again played a major role due to which the investors started to shift their capital in the balanced funds. According to the financial gurus, elections always bring along with them a lot of commotion in the mutual fund market, and the same is expected in this year as well. In search of a category of mutual fund that can cushion them from the market turbulence, more and more people have started their SIP in such funds.

However, the growth and performance of the mutual fund is dependent not only on the internal factors but on external factors as well. The on-going US-China trade war has recently created quite a buzz in the global economy. The finance market of India is currently showcasing downward volatility with share prices reaching the new low. In such scenario, balanced funds are a good pick for Indian investors to ride the short term volatility.

“Balanced Funds being a tax efficient mutual fund is again an appealing reason behind the growth in AUM.”, says a financial expert of MySIPonline. Diversifying the larger portion of assets in the equity market makes it eligible to be taxed as equities rather than debt instruments. The LTCG tax levied on the debt instruments is 20% while on the balanced funds it is 10%. Moreover, LTCG tax is exempted on the gains of up to Rs. 1 Lakh.

Furthermore, the fund manager of balanced funds increase the percentage allocation of assets in the equities during market rally for surging exceptional gains which again makes them the top recommended mutual funds during market uptrend. For this, MySIPonline shook hands with 22 top AMCs in India to provide better investment solution to the investors.

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