Tipping point: Invest with at least a five-year horizon in balanced funds

Balanced funds, also known as aggressive hybrid funds, which invest 65-80 per cent of their total assets in equities, saw an outflow of Rs 4,932 crore in November. A key reason for investors exiting this category is mis-selling. When equity markets were doing well, investors were sold these funds with the promise that they would pay regular dividends. The dividend option of these funds does try to make regular payouts, but only when the fund generates a surplus. When surpluses disappear, so do payouts. Disappointed investors are hence jettisoning these funds in droves. 

If you want a moderate-risk product, and your fund has a decent track record, there is no reason to exit this category. Invest with at least a five-year horizon.




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