Union MF Balanced Funds

Union MF Balanced Funds aim at providing investors with regular income and capital appreciation over the medium to long term. Also known as hybrid funds, these schemes invest in stocks as well as fixed income generating securities to provide growth with a relatively stable portfolio. The proportion of asset allocation would depend on the type of balanced fund. The equity allocation of an Aggressive hybrid fund would range between 65%-80% but it can be as low as 10%-25% for a conservative hybrid fund. A multi-asset allocation fund, on the contrary, may take exposure to multiple asset classes like equity, debt gold. Besides, a scheme like an Equity Savings Fund may even take some exposure to derivatives. Before picking a fund, you may consider your financial objectives and invest accordingly.

Union MF Balanced funds carry moderately low to moderately high market risk as compared to equity funds and debt funds. The fund value may go up/down on as and when the price of underlying stocks/debt securities changes. The price of stocks/bonds might be affected by price and volume changes in the stock markets, interest rates, exchange rates, government policies, tax laws and other economic developments. The amount of risk depends on the level of portfolio diversification and exposure to equity as an asset class. A hybrid fund which is heavily invested in equities and long duration bonds will be significantly riskier than a fund which is inclined more towards debt as an asset class. Investors may consider their own risk tolerance before investing in a scheme.

Returns are incidental to the risk assumed by an investor. Within the risk-return continuum, the balanced funds fall in between equity funds and debt funds. The blend of stocks and bonds gives Union MF Balanced funds an edge which enables them to deliver better risk-adjusted returns at relatively low volatility. Historically, these funds have known to deliver average returns of around 10%-12% over a period of 5 years or more. Lately, the returns generated by some of the equity-oriented balanced funds have been equivalent to those delivered by large-cap equity funds. This resulted on account of a higher exposure to mid-cap stocks. However, Union MF Balanced funds do not guarantee assured returns and the fund performance may vary from one period to another.

Union MF Balanced funds are suitable for investors who have a limited tolerance towards volatility. This may help them to keep a tab on the losses on account of dynamic asset allocation. However, if you are an aggressive investor, then you may find equity funds better than balanced funds. In this way, you will be able to realise the full potential of equity. Besides, an investor with a moderate risk appetite having long-term goals like children’s education or retirement planning may invest in balanced funds. In Union MF Balanced funds, the fund manager rebalances the portfolio to take advantage of the market movements. Those investors who want to do away with the stress of portfolio management, may consider investing in these funds.