Final answer:
Investing in mutual funds that rebalance between equity and debt offer professional management, liquidity, and diversification, which can lead to more stable returns and reduced risk for clients.
Step-by-step explanation:
Investing in mutual funds that automatically rebalance the portfolio between equity and debt can be beneficial for your client. These funds are professionally managed, which saves investors time and reduces the need for them to have in-depth financial knowledge. As markets fluctuate, these funds adjust the asset allocation to maintain the desired risk level, potentially leading to more consistent investment returns. Liquidity is another advantage of mutual funds; shares can be easily sold, providing access to cash when needed. Furthermore, diversification is inherent in mutual funds, spreading risk across a variety of stocks or bonds to increase expected returns without significant risk exposure, although fees associated with this can be higher.