By Rajesh Naidu
The balanced funds category of various mutual funds has generated higher inflow per folio account than equity schemes (growth) in the past three and five years amid abundant liquidity. An ETIG analysis of data from Sebi shows that the category attracted the highest inflows beating even equity growth schemes.
In FY17, inflow of 1,03,157 per folio was generated in the balanced funds category compared with 46,364 in FY15. The equity growth category received 17,236 per folio, lower than 22,413 two years ago.
Interestingly , a greater amount of flow in the balanced category is generated by lesser number of folio accounts. This is reflected from the data on number of folios. In FY17, equity growth schemes had 4.1 crore folio accounts, while balanced fund schemes had 0.4 crore.
The high-ticket investment in balanced fund schemes can be attributed to several reasons. Since April 2016, fund houses increased the frequency of declaring dividends in the balanced schemes to monthly and quarterly from annually . For investors, a key advantage is that dividend from equity schemes attracts no tax.
Also, the risk-reward ratio has been favourable in case of the balanced funds. The balanced schemes, which invest 5570 per cent of the portfolio in equity and the remaining in debt, have delivered superior returns than equity large cap schemes and fixed deposits. As opposed to fixed deposits return of 7 per cent and equity large cap returns of 1315%, the balanced funds have given 13-16 per cent in the past three-five years.Given the advantages, high-net worth individuals have invested more money in balanced funds rather than in equity growth schemes.
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Via:: Economic times – Wealth