A balanced fund, also known as a hybrid fund, is a type of mutual fund or investment portfolio that combines equity (stocks) and fixed-income securities (bonds) in a single investment. The objective of a balanced fund is to provide investors with a mix of growth (from equities) and stability (from bonds), making it a popular choice for those seeking moderate risk with reasonable returns
Balanced funds operate by maintaining a predefined ratio of equities and bonds. For instance:
Personalization: PMS adapts to individual goals and preferences, offering a bespoke investment approach..
Diversification: By investing across various asset classes and sectors, PMS minimizes risk while optimizing returns.
Fund managers actively adjust the portfolio to maintain the balance based on market conditions. For example, if equity markets perform exceptionally well and increase the fund’s equity exposure beyond the desired ratio, the fund manager may sell equities and invest more in bonds to restore balance.
Balanced funds serve multiple purposes, making them versatile investment tools such as:
Diversification: By including both equities and bonds, balanced funds reduce the risk of being overly exposed to a single asset class.
Simplification: Investors don’t need to separately manage stocks and bonds; the fund does it for them.
Steady Growth: The equity portion provides growth opportunities, while bonds mitigate risk, ensuring smoother returns over time.
Risk Reduction: The dual investment strategy balances risk by offsetting equity volatility with the stability of bonds.