Balanced Funds

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Balanced funds also known as the hybrid funds wherein, the corpus accumulated is invested in combination of common stock, preferred stock, bonds, and short-term bonds. The balanced funds provide the investors with an opportunity to invest in a single mutual fund that offers growth and income at the same time.

The Balanced Funds in India are structured and regulated by the Association of the Mutual Funds of India (AMFI). Further, AMFI functions under the Securities and Exchange Board of India (SEBI).

The Balanced Funds came into being in the Indian Capital market after the economic reforms effected during the early 1990s. The Indian financial market got a major boost from the reforms. The mutual funds market in India also experienced substantial expansion.

Definition and features of the Balanced Funds:

Balanced funds also known as the hybrid funds wherein, the corpus accumulated is invested in combination of common stock, preferred stock, bonds and short-term bonds. In other words, it is a combination of many stocks and bonds, which is structured to strike a balance of income and capital appreciation. This combination is essentially done to minimize the risk involved in such investments. Thus, the balanced funds provide the investors with an opportunity to invest in a single mutual fund that offers growth and income at the same time. The stocks meet the growth requirements and the bonds meet the income requirements. Further, this combination helps to negate any fall in the value of the stocks in the financial market.

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Last Updated 06/30/2011

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