Dhaval Kapadia, Director, Portfolio Specialist, Morningstar Investment Adviser (India) answers queries in The Financial Express, from where the below has been taken.
Is there any chance where I can increase the equity exposure of my balance funds as the markets are growing now after some time?
— Prahlad Sharma
Balanced funds typically maintain an allocation of between 65% and 75% to equity with the remainder in debt. The minimum 65% allocation to equity is to ensure that the fund qualifies for equity taxation.
The discretion to vary the allocation lies with the fund manager based on his or her market views.
As an investor, in case you would like to manage the asset allocation you could invest in a mix equity funds or shares or ETFs, debt, etc. and rebalance the portfolio according to your views. But you should also consider the cost-benefit implications including transaction costs, taxation, etc. of frequent re-balancing.
An annual review and re-balancing of one’s portfolio is normally considered adequate.
