What is Balance Funds?
Balance funds are the funds that provide safety of capital by maintaining a balance between its exposure to debt and equity, while providing better returns compared to pure debt funds. In simple words, balance fund provide best of both worlds.
How Balance funds work?
Balance funds, as the name suggests, balance your exposure to the debt and equity market by optimizing fund’s exposure between debt and equity market.
Similarly, if on the other hand, if the fund manager thinks that the market is overvalued and the correction (decline in price) is long due, he can reduce the exposure to equity funds and allocate majority of funds in debt instruments.
This not only safeguards investors from market volatility, it also provides fixed returns to investors till the market becomes attractive to invest back again.