The percentage of each of these instruments is set when the scheme is launched. During the launch, usually, the scheme would set a percentage range for its investment in each of the asset classes, and in the regular course, this is not changed. If a balanced fund has higher allotment to equity, say, 65% or more, that fund is a more risky fund than the one which has, for instance, only 50% in equity So, the thumb rule about risks in balanced schemes is that higher the percentage of debt and money market instruments, lower the risks associated with it.
Not all equity funds invest 35% of the corpus in debt. This concept has its origin in the fact that to enjoy tax benefits, equity funds have to invest 65% of the corpus in stocks. For the balance of 35%, the fund manager has the option to invest in debt, money market instruments, and cash. Usually, good equity fund managers remain almost fully invested in stocks, while keeping just a small percentage of the corpus in cash, mainly to meet sudden redemption pressures. Usually, balanced funds invest a larger part of the corpus in debt.
Investment in Mutual funds are Subject to Market Risk, Please read the Offer Documents Carefully Before Investing.