1. A balanced fund is a type of mutual fund which has exposure to the two primary asset classes, equity (usually at least 65%) and debt (usually up to 35%).
2. Balanced funds are treated as equity oriented funds for purposes of income tax, and offer a better post tax return than combining equity and debt funds in the same proportion.
3. The equity allocation provides long-term growth and the debt exposure reduces the volatility of the returns thus offering the benefits of asset allocation in a single product.