Balanced funds are a combination of debt and equity mutual funds. They keep the investment in a 60-40 ratio where 60% of the money is kept in stocks, and the remaining 40% is invested in debt instruments.

Pros:

  • Balanced funds are apt for people who are ready to invest a smaller part of their income every month.
  • This type of fund enables the investor to make regular withdrawals while retaining appropriate asset allocation.

 

Cons:

  • Balanced funds are not completely risk-free. A lot of investors tend to believe that less volatility equals to low risk. However, this is not true.
  • In case of balanced fund, the choice of funds lies not with the investor, but with the expert who manages them.