Please advise correct proportion as I am planning to invest 5 Lacs in debt and equity mutual funds

Good to hear that you are planning to invest in Mutual Funds. It would have been better had we known your age.

You have mentioned investing 50% each between equity and debt. However, one of the common thumb rules for asset allocation is 100 minus your age. That means, if your age is 30 then you can invest upto 70% in equities and 30% in debt. So, that would be a correct proportion to start.

However, we will suggest you to invest in Balanced Funds (Equity Oriented). The balanced funds invest upto 65-70% in equities and rest in debt and keep rebalancing the ratio automatically according to the appreciation in respective fund categories. Therefore, you enjoy the returns of both the assets classes – equity and debt. It has also been found that over long period of time there is very little difference in returns between equity oriented funds and equity oriented balanced funds. Balanced funds are also tax efficient as long term capital gains (investment period of more than one year) from Balanced Funds are tax free. The dividends received from Balanced Funds are also tax free. Also, Balanced Funds are less volatile due to the debt component in it.

You may go through this article to know about the best Balanced Funds - Top and Best 5 Balanced Mutual Funds for investment in 2016

To check the returns of Balanced Fund or any other category of Funds you may use this tool in our research section https://www.advisorkhoj.com/mutual-funds-research/top-performing-mutual-funds