Best SIP to invest in 2019 from Balanced Mutual Funds Category

click here Best SIP to invest in 2019 - balanced mutual fundsBest SIP to invest in 2019 – Balanced Mutual Funds


Stock Markets continue to be volatile in India. While investing in equity mutual funds could be the best bet in medium to long term, there is an element of risk for short term to medium term. Here come Balanced mutual funds. Balanced Mutual Funds also called as Hybrid mutual funds invest up to 80% in equity stocks and balance in debt instruments in India. These are best to beat the volatile markets. Which are the Best SIP to invest in 2019 from Balanced Mutual Funds category? Which are the Top 5 SIP Mutual Funds to invest in 2019 from Hybrid Mutual Funds?

Also Read: Best Largecap Funds to invest in India 2019

follow site What are Balanced / Hybrid Mutual Funds?


If you are already aware about Balanced mutual funds, you can skip this section.

Balanced Mutual Funds would invest up to 80% in equity stocks and the balance in debt instruments. Hence, when stock markets are up, you can expect good returns and when stock markets are down, you can still expect some returns as it invests part of its investment in debt instruments that provide fixed income. In extreme stock market corrections, you can see negative returns in such funds.

How we picked Best SIPs to invest from Balanced Mutual Funds Category in 2019?


Here are some of the key parameters we used to filter these balanced mutual funds. One should note that due to re categorization of mutual fund schemes as per direction from SEBI last year in 2018, some of the parameters considered may not be 100% accurate.

1) These are picked up based on highest returns given through SIP in last 5-10 years.

2) These are picked based on highest annualised returns in the last 5 and 10  years.

3) Value research rated these mutual funds as 5 star, 4 star and 3 star.

5) AUM (Assets under management) > 100 Crores. This proves investor confidence among these top 10 mutual funds.

6) Some of the funds might be a repetition from my earlier recommendation. Some of these fund names have changed from last year after reclassification done by SEBI.

Top#1: ICICI Prudential Equity & Debt Fund


Fund Objective: The scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent.

follow site Fund Performance: This fund has beaten its benchmark and provided 16% annualised returns in last 10 years, 14% annualized returns in the last 5 years and 13% annualised returns in the last 3 years. If you have invested Rs 1,000 per month through SIP for 10 years, your total investment would have been Rs 1.2 Lakhs and your investment value would have now grown to Rs 2.5 Lakhs.

Why to invest: This fund performed well in last 10 years and given 16% annualised return comparing to Value Research balanced fund category of returns of 12%. It gave highest SIP returns in last 10 years. Crisil Ranks it as Rank-3, Value Research Ranks as 4 Star (4 out of 5) and Morning Star rates this as 5 Star Fund. This fund invests upto 80% in equity and 20% in debt instruments. This is one of the best SIP to invest in 2019 from aggressive balanced mutual funds category.

Top#2: SBI Equity Hybrid Fund


enter Fund Objective: The mutual fund scheme aims provide investors long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high growth companies and balance the risk through investing the rest in fixed income securities.

Fund Performance: This fund has beaten its benchmark and provided 15% annualised returns in last 10 years, 14% annualized returns in the last 5 years and 11% annualised returns in the last 3 years. If you have invested Rs 1,000 per month through SIP for 10 years, your total investment would have been Rs 1.2 Lakhs and your investment value would have now grown to Rs 2.33 Lakhs. This is second highest return through SIP in the balanced mutual fund segment.

Why to invest: This fund performed well in last 10 years and given 15% annualised return comparing to Value Research balanced fund category of returns of 12%. It gave 2nd highest SIP returns in last 10 years. Crisil Ranks it as Rank-3, Value Research Ranks as 4 Star (4 out of 5) and MorningStar rates it as 4 Star Fund. This is one of the Top SIP to invest from balanced mutual funds in 2019.

Top#3: Canara Robeco Equity Hybrid Fund


Fund Objective: The MF scheme objective is to build a balanced portfolio, which would provide a combination of high annual return and capital appreciation.

Fund Performance: This fund has beaten its benchmark and provided 15% annualised returns in last 10 years, 14% annualized returns in the last 5 years and 12% annualised returns in the last 3 years. If you have invested Rs 1,000 per month through SIP for 10 years, your total investment would have been Rs 1.2 Lakhs and your investment value would have now grown to Rs 2.3 Lakhs now. This is 3rd highest return through SIP in the balanced mutual fund segment.

Why to invest: This fund performed well in last 10 years and given 15% annualised return comparing to Value Research balanced fund category of returns of 12%. It gave 3rd highest SIP returns in last 10 years. Crisil Ranks it as Rank-4 and Value Research Ranks as 4 Star (4 out of 5) and MorningStar rates it as the 4 Star Fund. This is one of the Good SIP to invest in 2019 from balanced mutual funds category.

Top#4: DSP Equity & Bond Fund


Fund Objective: The fund seeks to generate long-term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities.

Fund Performance: This fund has beaten its benchmark and provided 14% annualised returns in last 10 years, 14% annualized returns in the last 5 years and 11% annualised returns in the last 3 years. If you have invested Rs 1,000 per month through SIP for 10 years, your total investment would have been Rs 1.2 Lakhs and your investment value would have now grown to Rs 2.1 Lakhs.

Why to invest: This fund performed well in last 10 years and given 14% annualised return compared to Value Research balanced fund category of returns of 12%. It gave 4th highest SIP returns in last 10 years. Crisil Ranks it as Rank-3 and Value Research Ranks as 3 Star (3 out of 5) and MorningStar rates it as the 3 Star Fund. This is one of the Top Performing Mutual Funds to invest through SIP in 2019 in balanced funds.

Top#5: HDFC Hybrid Equity Fund


Fund Objective: The Scheme seeks to generate capital appreciation / income from a portfolio, predominantly of equity & equity related instruments

Fund Performance: This fund has beaten its benchmark and provided 17% annualised returns in last 10 years, 14% annualized returns in the last 5 years and 12% annualised returns in the last 3 years. If you have invested Rs 1,000 per month through SIP for 10 years, your total investment would have been Rs 1.2 Lakhs and your investment value would have now grown to Rs 1.94 Lakhs.

Why to invest: This fund performed well in last 10 years and given 17% annualised return compared to Value Research balanced fund category of returns of 12%. It gave 5th highest SIP returns in last 10 years. Value Research Ranks as 4 Star (4 out of 5). It is one of the Best Mutual Funds to invest through SIP in 2019 in balanced funds.

Here is the summary of Top 5 Balanced Mutual Funds to invest through SIP


Best SIP to invest in 2019 from balanced mutual funds category

How Balanced Mutual Funds are taxed?


You might be thinking about how balanced mutual funds are taxed in 2019-2020. All the ones which I recommended here are equity oriented balanced mutual funds. These are taxed like any other equity mutual funds.

1) Returns from Balanced Mutual Fund’s < 1 year – The income tax rate of short-term capital gain (STCG) on is 15%.

2) Returns from Balanced Mutual Fund’s >=1 year – The long-term capital gain (LTCG) on such funds is 10% if it’s exceeding Rs 100,000 income tax exemption.

One should note that each SIP is treated as one investment. Hence if you are selling in one shot, you need to treat them separately whether STCG or LTCG would be applicable and pay income tax to that extent.

What are the advantages of investing in balanced mutual funds?


Here are the main advantages of investing in balanced funds in India.

1) Investing in equity stocks are always considered as high risk. These balanced funds invest 60 to 80% in equities thereby reduces the risk to some extent.

2) Fixed Income provide stability to the fund to provide constant returns. It invests upto 35% to 40% in fixed income options which provides stable returns.

3) Good for conservative and moderate risk takers.

Here are the main disadvantages of investing in balanced funds in India:

1) These may not provide superior returns in bull run as the equity is limited to 8%.

2) These invests some extent in fixed income options including NCDs, Bonds, etc., which are high risk.

Who can invest in Balanced Mutual Fund Schemes?


If you are the moderate risk taker and willing to invest for 5-10 years through SIP, you can invest in balanced mutual funds. These are not for high risk invetors. If you are high risk taker, you can invest in some of the top performing midcap funds or some of the best small cap mutual funds in India.

Happy Investing in Best SIP to to invest in 2019 from Balanced Funds category !!!

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Suresh

Best SIP to invest in 2019 from Balanced Mutual Funds Category

11 comments

  • Revathy kannan

    Thank you for this nice article.Its very informative.

  • Pradeep

    Balanced funds are not very attractive ever since LTCG was brought in last year. Why should anyone pay equity taxation if your fund carries 20-35% debt allocation?
    Second issue is the expense ratios which could be increased in these funds as the income falls from some of the other big funds in the fund houses due toSEBI order on reduction of expense ratios.
    Better to go with separate equity and debt funds.

  • Deepak P

    Hi Suresh,

    I have to invest 25k every month, m finacial planner have perovided below portfolio, could you please weigh in?

    Large Cap Axis Bluechip Fund – Growth ₹3,750
    Mid Cap Motilal Oswal Midcap 30 Fund – Growth ₹5,000
    Index IDBI Nifty Index Fund – Growth ₹6,250
    MidTerm Corp Bond L&T Resurgent India Bond Fund – Growth ₹3,750
    GILT IDFC Government Securities Fund – Investment Plan – Growth ₹3,750
    Commodities Aditya Birla Sun Life Gold Fund – Growth ₹1,250
    ShortTerm Corp Bond UTI Short Term Income Fund – Growth ₹1,250

    Appreciate your support!

    • Hi Deepak, First I would like to know the objective of your investment and risk appetite. There are 3 funds in your portfolio which are debt funds, 1 gold fund, 1 fund in large cap segment, 1 in midcap and 1 in index category. The portfolio looks moderate to low risk taker. You can expect annualized returns of 6% to 10% overall. Is this what you are looking for? I would advice further for individual fund wise details based on the objective + risk appetite.

      • Pradeep

        I think his portfolio is alright. Among the 3 equity funds he is holding, he has allocated 60% of his total investment with 20% in midcap fund. 35% in debt component and 5% in gold as a hedge means that’s a decent asset allocation of 60-40. He could get 10-12% returns long term provided the allocation is maintained.

        • But why investing in gold unless there is purpose? Hence I have been putting few questions. One should not invest blindly with some asset allocation. This should depend on the risk appetite and tenure.

          • Pradeep

            Some financial advisors does advise a small percentage in gold or real estate. It may or may not come off but we have seen gold prices shoot up in a short time especially when there is recession or some geo-political concerns. Both these events cannot be ruled out to not happen. So gold investment may not be the worst especially just 5% of portfolio.

  • Kamal Garg

    What will be the tax treatment if the equity component, including arbitrage component, falls below 65% in the fund or has fallen below 65% during any time/month during the financial year. The minimum mandate, in case of ICICI Equity & Debt Fund at 50% for equity component makes it tax litigatable and unfriendly tax treatment.

    • Hello Kamal, In such case it would fall under Debt funds segment and taxation rules which are applicable to Debt fund would apply here too.

      • Kamal Garg

        But, Sir, the Capital Gains Statement sent by AMCs do not bifurcate my fund holding under “Equity” and “Debt” category separately. They just send the Capital Gains Statement. Now, how to find out whether the equity holding during the year or at the end of the year fell below 65% or not.
        In my view, there should be strict guidelines by SEBI for categorisation of funds under “Equity” and “Debt” so that litigation with tax authorities can be avoided.
        My request to you is that you can take up this matter with SEBI as a reistered financial adviser and analyst.
        This would be immense help to we all investors.

        • I agree. Every one would say it is the responsibility of the investor to segregate them and pay necessary tax as STCG or LTCG. Note that I am not SEBI registered financial advisor.

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