Best Balanced Mutual Funds in India

by Manshu on March 30, 2011

in Mutual Funds

A balanced mutual fund is a fund that invests in both equity and debt, and within equity it invests in large cap, mid cap, and small cap shares as well. These type of funds are meant to diversify away a little of your equity risk by exposure to debt, while maintaining decent returns as well.

In this post I look at some good balanced funds present in the Indian space, and the way I’ve gone about making this list is to select mutual funds that have been around for at least 5 years or longer, and have performed near the top of their category in that period.

Like the post on best ELSS mutual funds – this one is not in any particular order of returns, but I thought I’d order it according to expenses, and that’s only for my own ease while preparing it.

It doesn’t mean the first one is the best, and the last one worst  – there’s really no way to tell (as far as I know) what fund is going to perform the best in the next few years, and in absence of that you have to narrow down your options and then choose what appears the best to you.

With that said, here is the list of some of the best – balanced mutual funds in India.

Fund 3 Year Return (%) 5 Year Return (%) Inception Date Expense Ratio
HDFC Prudence 18.13 17.02 Jan-94 1.82%
DSPBR Balanced 11.48 14.13 May-99 2.08%
HDFC Children’s Gift-Inv 17.04 12.08 Feb-01 2.10%
HDFC Balanced 16.67 13.7 Aug-00 2.15%
Reliance Regular Savings Balanced 16.04 16.06 May-05 2.22%
Birla Sun Life 95 14.49 15.54 Feb-95 2.33%
FT India Balanced 7.78 11.85 Dec-99 2.35%
Canara Robeco Balance 11.49 11.57 Jan-93 2.39%
Principal Conservative Growth 6.32 13.32 Aug-01 2.50%
Tata Balanced 11.21 12.75 Oct-95 2.50%

All data from Value Research.

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{ 20 comments… read them below or add one }

Atul March 30, 2011 at 7:30 pm

Hi Manshu,

Thanks for sharing the informatio!

Regards

Atul

Reply

Manshu March 31, 2011 at 6:11 am

Thanks for your comment Atul.

Reply

dr rajeev March 30, 2011 at 9:25 pm

hi manshu,
can you please tell what is the tax levied on this sort of funds is it same as of equity diversified fuds or is there any difference

Reply

Manshu March 31, 2011 at 6:12 am

Hi Dr. Rajeev – A fund is treated as an equity fund for tax purposes if it holds more than 65% assets in equity which these funds do.

Before getting into a new fund you can check out how much equity it has by looking it up on the major allocation section.

Reply

Manshu April 17, 2011 at 12:08 pm

Dr. Rajeev – I was researching this some more today, and found that not all these funds hold more than 65% in equity. The DSPBR Balanced Fund does but the HDFC Children’s Gift investment plan doesn’t.

So, although I earlier said all of these funds do – that’s not right, and you will have to look at each fund individually to find that out.

Reply

Lokesh March 30, 2011 at 9:33 pm

thank you for this info…

I’d like you to put up an article on Index Mutual Fund [even include ETF] as an instrument for Long term savings.

thank you.

Reply

Manshu March 31, 2011 at 6:14 am

Hi Lokesh,

I have written about index funds that track Nifty earlier, and it can be found here:

http://www.onemint.com/2010/05/04/nifty-index-mutual-funds/

Are you looking for funds that track a particular index or commodity or something?

Reply

Ramesh April 1, 2011 at 12:59 am

excellent Manshu.

I personally prefer HDFC Prudence and Reliance Regular Saving Balance. In equity diversified I prefer HdFC top 200 and for tax saving HDFC tax saver. four mutual funds are enough I feel. however this makes too many from one house HDFC. any suggestions. I am 68.

awaiting your article on Best Equity Diversified Funds keenly.

Reply

Manshu April 1, 2011 at 7:01 am

I have not given this issue as much thought as I’d like to but in trying to think whether there is a counter party risk in mutual funds I can’t think of any.

I guess there could be fraud, but since MFs hold equivalent amount of underlying stock – other than that investors should be okay.

Reply

Manickkam April 1, 2011 at 3:17 am

Hi Ramesh,

If you feel if you relying too much on HDFC, I would recommend DSP BlackRock Top 100 Growth instead of HDFC Top 200.

HDFC Top 200 and HDFC Prudence and maintained by the same fund managers except that HDFC Prudence has less equity exposure. HDFC Prudence is one of the best balanced mutual funds in the market and there is no doubt about that.

Regards,
Manickkam.

Reply

Ramesh April 1, 2011 at 10:46 pm

thanks.

maybe another worry in buying all mutual funds from one counter is the same style of management in each; thus missing the benefits from other excellent management teams and not diversifying the risk of their mistakes!

Reply

Partha April 3, 2011 at 9:41 am

Hi Mangshu, Thank you very much for your valuable inputs. They have widened my understanding on these areas.
I invest Rs 2000/ pm in HDFC Top 200 (Growth) and Rs 1000 pm in HDFC TOP200 (Dividend) through SIP. Shall I further invest another Rs2000/pm in HDFC Prudence or go for something else? I also invest equal amount in SBI Magnum Taxgain. (growth and dividend) Could you suggest me whether I am on the right track? Besides, I need to build a corpus of 25 lacs for the education of my children in next 18 years. I would look forward to your suggestion.

Regards

Reply

Manshu April 3, 2011 at 3:39 pm

Sorry Partha – I don’t advise people on their portfolios because one has to understand the portfolio quite well, and then know your financial goals as well in order to provide any useful advice. I neither have the competence nor the bandwidth to do that.

Reply

Ramesh April 4, 2011 at 2:05 am

thanks Manickkam.

Reply

chandan May 1, 2011 at 3:37 am

In your table you mentioned 3Year return.
eg. For top on for HDFC it is 18.73 for 3 Year, does this means it is 6% per annual return that is less than the FD interest rate.

I think there is some twist here, Please explain?

Thanks,
Chandan

Reply

Manshu May 1, 2011 at 12:11 pm

Yes, your observation is correct – these are annualized returns so you don’t need to divide by the number by 3 but treat it as return that you would have made every year if you were to stay invested for 3 years.

Reply

Ramesh May 7, 2011 at 10:21 am

I am doing SIP in HDFC top200 and HDFC Prudence and want to do another SiP in one more balanced fund. can anyone suggest.

Reply

rinita menon June 19, 2012 at 5:10 pm

Thanks a lot, I been searching allover for a proper informative blog on balanced fund, and i finally found this. Thanks a lot though i have one question which is most important question a investor should ask himself, should that be the expense ratio or the past performance of that fund???? when selecting one of HDFC funds you have listed in your article.

hoping for a suggestion.

Reply

Krishan kurra March 7, 2013 at 9:27 am

Hi sir. I personally prefer hdfc prudence fund one of the best fund .thanks for sharing this.

Reply

Manshu March 7, 2013 at 6:17 pm

Why is that sir?

Reply

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