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2022

Balanced Funds Market

Balanced Funds Market By Investor Type (Institutional and Individual) and Distribution Channel (Banks, Financial Advisors/Brokers, Direct Sellers, and Others): Global Opportunity Analysis and Industry Forecast, 2022-2031

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Author's: Sourabh Ekre| Kanhaiya Kathoke | Vineet Kumar
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Balanced Funds Market Outlook – 2031 

The global balanced funds market was valued at $5,545.9 billion in 2021, and is projected to reach $25,499.0 billion by 2031, growing at a CAGR of 16.8% from 2022 to 2031. 

Balanced funds, also called hybrid funds, are mutual funds that own both debt and equity. Balanced funds maintain a balance between both the asset classes, giving investors the best of both debt and equity. Furthermore, balanced funds have recently started gaining popularity, because of their unique ability to provide safety of capital and better returns compared to pure debt funds. Furthermore, while equity returns are higher compared to other funds, the biggest drawback of these funds is that the returns are highly volatile. However, while the returns on equity funds may vary, balanced funds mostly have stable and consistent returns for a long period of time.

	Balanced-Funds-Market,-2022-2031

Balanced funds allow investors to withdraw money periodically without upsetting the asset allocation. Furthermore, balanced funds rarely have to change their mix of stocks and bonds, they tend to have lower total expense ratios (ERs), which represent the cost of the fund. In addition, because they automatically spread an investor's money across a variety of types of stocks, market risk is minimized if certain stocks or sectors underperform. Therefore, these are some of the factors propelling the balanced funds market growth. 

However, balanced fund controls the asset allocation, not the investor, which might not match an investor's tax planning strategy. In addition, investors cannot use a bond laddering strategy for buying bonds with staggered maturity dates to adjust cash flows and repayment of principal according to their financial situation. Therefore, these are some of the major factors limiting the balanced funds market. On the contrary, rise in number of first-time investors, who do not have much knowledge about investing in equity market and are usually highly risk averse. Balanced funds can be a great investment instruments for first-time equity investors. Therefore, due to this high number of first-time investors, the balanced funds market size is expected to increase significantly in the coming years. 

On the basis of investor type, the institutional segment attained the highest growth in 2021 in balanced funds market forecast. This is attributed to the fact that institutions execute a substantial percentage of transactions on major exchanges and have a significant effect on the values of securities since they move the largest positions and are the main force behind supply and demand in securities markets.

North America attained the highest balanced funds market share in 2021, owing to development in technologies in the region in the banking sector. In addition, investment managers are interacting with their customers in ways that were previously not possible. Moreover, Asia-Pacific is attributed to grow at a significant rate in balanced funds market outlook attributing to the aware customers which are active savers, and the percentage of their income spent on savings has increased over time in this region. Rather depending on basic savings accounts or time deposits, customers are increasingly adopting mutual funds as their primary saving technique.

The report focuses on growth prospects, restraints, and trends of the balanced funds market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the balanced funds market.

Balanced Funds Market
By Investor Type
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Institutional segment will dominate the market throughout the forecast period

Segment Overview

The global balanced funds market is segmented into investor type, distribution channel, and region. By investor type, the balanced funds market is bifurcated into institutional and individual. On the basis of distribution channel, it is segregated into banks, financial advisors/brokers, direct sellers, and others. Region wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. 

Balanced Funds Market
By Distribution Channel
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Financial Advisors/Brokers segment will maintain the lead during the forecast period

Competitive Analysis 

The report analyzes the profiles of key players operating in the balanced funds market such as Axis Mutual Fund, Canada Life Assurance Company, Citigroup Inc., Charles Schwab, Goldman Sachs, JPMorgan Chase & Co., Nippon Life India Asset Management Limited, Scotiabank, Tata Mutual Fund, and the Vanguard Group Inc. These key players have adopted various strategies, such as product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations, to increase their market penetration and strengthen their foothold in the balanced funds market.

Balanced Funds Market
By Region
2031
North America 
Europe
Asia-Pacific
LAMEA

Asia-Pacific region will exhibit the highest CAGR of 21.4% during 2022 - 2031

COVID-19 Impact Analysis

The economic and social shocks caused by COVID-19 have elevated the importance of the difficulties that balance funds face. The global pandemic had a significant impact on the financial markets, including areas such as equities, bond, and commodities markets. Mutual funds are the preferred investment option for risk-averse investors, and they have been adversely impacted by recent healthcare problems. Negative returns have been seen in equity-oriented strategies. Despite the fact that the sector has seen a significant surge in new investors, it is possible that this is due to the widespread notion that actively balance funds always outperform the market and provide greater returns to investors.  

Top Impacting Factors

Stable and Consistent Returns Offered By Balanced Funds

Balanced funds rarely have to change their mix of stocks and bonds, they and tend to have lower total expense ratios (ERs), which represent the cost of the fund. In addition, when investors say they are seeking safety, they often mean that they want stability in price or minimized value fluctuation. The types of mutual funds for stability will usually be balanced advantage funds or target-date retirement funds, which are mutual funds that invest in a balance of stocks, bonds, and cash, or other mutual funds, within one fund. 

Hence, customers tend to choose best balanced advantage fund to avoid losses or debts. Sometimes called "funds of funds," balanced funds can diversify the holdings in such a way that losses are rare, but long-term returns are higher than most bond funds. This lower relative volatility is achieved through diversification and higher allocation to low-risk assets, like such as bonds, and lower allocation to high-risk assets such as stocks. Therefore, balanced funds provide stable and consistent returns, which acts as a major factor propelling the growth of the balanced funds market across the globe. 

Tax Efficiency Associated with Balanced Funds  

Any fund that invests more than 65% money in stocks is treated as an equity fund for taxation. Even the debt portion is taxed like equity. In a debt fund, short-term capital gains are added to the income and taxed as per the person's tax slab, while long-term capital gains (after three years) are taxed at 20% with indexation. Indexation allows investors to be taxed on returns over and above the inflation rate by adjusting the purchase price of securities for inflation. In equities, long-term capital gains (after one year) are not taxed. Short-term gains are taxed at 15%. 

However, when fund managers move between the two asset classes as a part of their routine rebalancing, they need not pay these taxes because of the way the balanced fund is structured. Furthermore, even after the rebalancing, the tax treatment of the fund continues to remain equity-oriented, which is ultimately beneficial for investors, as equity funds pay a lower tax rate as compared to debt funds. Not only do balanced funds make asset allocation automatic, but they also do it in a more tax-effective manner than what investors can do at an individual level. Therefore, balanced funds are proved to be tax-efficient, which significantly contributes toward the growth of the global balanced funds market.

Less Control Over Decision-Making

One of the major disadvantages of investing in a balanced fund is that investor do not have authority over choice of funds. In other words, they cannot make a decision on how much investment in what sort of equity or bonds should be made. All such decisions are to be made by the professional fund manager who is managing the fund. Therefore, this is a major factor hampering the growth of the balanced funds market.

Key Benefits For Stakeholders 

  • This report provides a quantitative analysis of the balanced funds market segments, current trends, estimations, and dynamics of the balanced funds industry analysis from 2021 to 2031 to identify the prevailing balanced funds market opportunity.
  • The market research is offered along with information related to key drivers, restraints, and opportunities.
  • Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
  • In-depth analysis of the balanced funds industry segmentation assists to determine the prevailing market opportunities.
  • Major countries in each region are mapped according to their revenue contribution to the global market.
  • Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the balanced funds market players.
  • The report includes the analysis of the regional as well as global balanced funds market trends, key players, market segments, application areas, and market growth strategies.

Balanced Funds Market Report Highlights

Aspects Details
Balanced Funds Market By Distribution Channel
By Distribution Channel
  • Banks
  • Financial Advisors/Brokers
  • Direct Sellers
  • Others
Balanced Funds Market By Region
By Region
  • North America  (U.S., Canada)
  • Europe  (Germany, France, UK, Italy, Ireland, Netherlands, Rest of Europe)
  • Asia-Pacific   (China, India, Japan, South Korea, Hong Kong, Australia, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
Balanced Funds Market By Investor Type
By Investor Type
  • Institutional
  • Individual
Key Market Players
Key Market Players

Goldman Sachs, Citigroup Inc., Canada Life Assurance Company, Axis Mutual Fund, Charles Schwab, Scotiabank, JPMorgan Chase & Co., Nippon Life India Asset Management Limited, The Vanguard Group Inc., Tata Mutual Fund

Analyst Review

Balanced fund is a one-stop investment option that offers exposure to both equity and debt securities. The main intention of these mutual funds is to balance the risk-reward ratio and optimize the returns on the mutual fund investment. Thus, balanced or hybrid mutual funds are ideal for investors who are looking for capital appreciation at minimum risk. Moreover, these mutual funds are designed to automatically re-balance an investor’s portfolio in the event of extreme market fluctuations. Re-balancing even allows fund managers to sell equity mutual funds to maintain the fund’s performance and vice versa. 

Investments in pure equity funds attract significant risk as the equity market can slump greatly in extreme situations. Thus, the debt component in balanced funds helps investors to balance out the risk posed by the equity component. In addition, equity mutual funds follow variable asset allocation according to the market conditions. Balanced funds have the edge over equity funds as they strictly adhere to their line of asset allocation rules and never exceed the mandated exposure norms. This is the reason why balanced funds generate higher returns from their equity component during bullish markets. 

Furthermore, aggressive hybrid funds (formerly known as balanced funds) and balanced advantage or dynamic asset allocation funds are the most popular in the hybrid funds category. Many investors like to participate in dynamically managed equity funds, which is why the balanced advantage funds category has had constant inflows over the last six months.
 

Author Name(s) : Sourabh Ekre| Kanhaiya Kathoke | Vineet Kumar
Frequently Asked Questions?

The Balanced Funds Market is anticipated to grow at a CAGR of 16.8% from 2022 to 2031.

The Balanced Funds Market is projected to reach $25,499.0 billion by 2031.

To get the latest version of sample report

Balanced funds allow investors to withdraw money periodically without upsetting the asset allocation etc. boost the market growth.

The key players profiled in the report include Axis Mutual Fund, Canada Life Assurance Company, Citigroup Inc., and many more.

On the basis of top growing big corporations, we select top 10 players.

The Balanced Funds Market is segmented on the basis of investor type, distribution channel, and region.

The key growth strategies of market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.

Asia-Pacific region will grow at a highest CAGR of 21.4% during the forecast period.

Financial Advisors/Brokers segment will dominate the market during 2022 - 2031.

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Balanced Funds Market

Global Opportunity Analysis and Industry Forecast, 2022-2031