What is a Balanced Advantage Fund?

Balanced Advantage Fund is a type of Hybrid Fund, that invests in both debt and equity and adopts a dynamic asset allocation strategy.

#InvestmentMeinNoEmotion - A Balanced Advantage Fund ensures that the investment is not hampered by an investor’s emotions or biases. Whether it is investing in equity mutual funds because others are doing it and you don’t want to miss out, or staying away from equity markets altogether because of the risk involved, a Balanced Advantage Fund does its best to ensure the investment is aligned to the best possible growth strategy.

This strategy comprises of actively rebalancing the equity and debt exposure in the portfolio, depending on the market conditions. The blend of diversification and dynamic allocation across equity and debt can provide investors with an opportunity to generate wealth in the long term by navigating through market ups and downs.

How does a Balanced Advantage Fund work?

Upside Management

When equity valuations start rising, the dynamic equity allocation ensures your investment is aligned with equity markets, thereby giving you a chance to take advantage as valuations rise.

Downside Management

The dynamic equity allocation helps the fund to reduce the equity exposure during high valuations, thus managing the downside and reducing the overall volatility.

This actively managed scheme could be a good investment solution for investors who want to invest in Equity for the potential of higher returns while seeking to reduce the risks in case the markets fall.

Why invest in a Balanced Advantage Fund?

Dynamic Allocation

Aims to dynamically manage the equity and debt allocation in the portfolio on the basis of market valuations. This provides an opportunity to benefit from the potential of minimizing the risk and optimizing the potential returns.

Diversified Portfolio

Investment in Fixed Income and Equity can help to diversify the portfolio and benefit from the potential of capital appreciation, thus making the best of both words.

Taxation Benefit

The scheme could benefit from equity taxation if Gross Equity exposure is maintained above 65% at all times.

Overcome Emotional Bias

The appropriate asset allocation of the scheme can help to remove human bias of predicting trends. Thus, investors can focus on their financial objectives without taking irrational investment decisions during uncertain market conditions.

Here are some FAQs about Balanced Advantage Funds

Who should invest in a Balanced Advantage Fund?
  • - First-time Mutual Fund investors who are looking for a long-term investment avenue for wealth creation.
  • - Conservative risk appetite investors who want to invest in Equity for relatively higher returns, while aiming to limit their losses in case the markets fall.
  • -Confused investors who want to invest in a diversified portfolio across equity and debt and leave the active and dynamic asset allocation to a professional team.
  • - Investors who choose to expose a part of their retirement portfolio to dynamic allocation in equity as per their investment goals, could benefit from the potential of earning higher returns and beating inflation in the long term.
  • - You can start a Systematic Investment Plan (SIP). This can be done online.
  • -You can invest a lumpsum amount. This can be done online.
  • -Consult your financial advisor.
  • -Invest by filling up the offline application form.
  • - The fund seeks to manage dynamic allocation towards equity depending on market conditions, thereby making it a fund for every cycle. Hence, you don’t need to time your investments in Balanced Advantage Funds.
- The AUM of Balanced Advantage category is INR 161,393 crores, as on 31st October 2021.