Opportunity Gate-crashes!..: HDFC Balanced Fund - Growth of Equity with the stability of Debt

Thursday, September 24, 2015

HDFC Balanced Fund - Growth of Equity with the stability of Debt

Balanced Fund as the name suggests offers asset allocation, by investing both in equities and debt instruments, thereby striking a balance between risk and return. It aims to deliver returns which are greater than debt funds but less volatile than equity funds thereby offering best of both worlds.

Balanced funds are tax efficient, if invested in schemes having equity exposure of more than 65% and held for more than one year, the capital gains would be tax free. An add to the icing dividends received from balanced funds are tax free in the hands of the investors.

HDFC Balanced Fund currently invests approximately 65%- 75% in equity assets and the rest in debt. The fund has a track record of over 15 years. A multi cap approach to equity investing and an actively managed debt portfolio gives you an ideal investment option to take advantage of both markets simultaneously.

Improving growth prospects of the economy, especially of the capex cycle, improving margin outlook of corporates, likely lower interest rates and reasonable valuations lead to a positive outlook for equity markets over the medium to long term. On the debt front, in view of benign outlook on inflation, gradual fiscal consolidation and a sharp improvement in current account deficit, there is reasonable room for yields to move lower in the medium term. We maintain our view that interest rates should continue to move lower in the medium term.

Against the backdrop, we believe HDFC Balanced fund offers a decent investment opportunity by way of Lumpsum or SIP.