Caught Off Balance

Market volatility and the dividend distribution tax have made balanced funds less lucrative as an investment option

In the world of investment, a favourite of investors today may not remain popular tomorrow. A similar fate has befallen balanced funds. Shrinking inflows into this category of mutual funds is evidence of this: it stood at Rs 1,482 crore in June 2018 compared with Rs 7,458 crore the same month last year, according to Association of Mutual Funds in India (AMFI) data. The decline had begun from April when the dividend distribution tax, or DDT, came into effect. DDT, coupled with low returns in the immediate past due to market uncertainty, has negatively affected investments in balanced funds. What should investors do in this scenario?

VOLATILE MARKET AND LOW RETURNS