Understanding Balanced Advantage Mutual Funds
Balanced advantage funds invest in both equity and debt asset classes. However, they shift the allocation according to the market situation for optimal returns. Balanced advantage funds provide active rebalancing and diversification and are also known as dynamic asset allocation funds.
These funds use various models to change their allocation depending on market conditions.
Tax efficient with over 65% of equity allocation.
Suitable for investors with 3+ years investment horizon.
Top schemes of Balanced Hybrid Mutual Funds
| Fund Name | Returns | Actions | ||
|---|---|---|---|---|
| 1 Year | 3 Year | 5 Year | ||
Returns calculator
Total Invested : ₹ 6,00,000
Profit : ₹ 56,200,000
Current value : ₹ 1,16,20,000
Frequently Asked Questions
Which is the best-balanced advantage fund?
You can select the best-balanced advantage fund based on its performance (rolling returns, risk ratios, etc.), expense ratio, fund manager's expertise, AUM, and fund house's track record.
What are the drawbacks of balanced advantage funds?
While BAFs invest in equity and debt, there are some drawbacks:
Underperformance in bull runs: BAFs reduce equity exposure during bull runs and miss out on higher returns.
Complex investment strategy: BAFs use proprietary models to decide allocations, but not all the funds execute them efficiently.
Volatility: Despite investing in debt instruments, these funds are not immune to volatility.
What is the average return of a balanced advantage fund?
The average returns of a balanced advantage fund are as follows:
1 year: 6.08
3 years: 10.63
5 years: 15.13
10 years: 9.23
Since inception: 9.71
Source: Advisorkhoj, as of 31st March 2025
Is it safe to invest in the HDFC Balanced Advantage Fund?
HDFC Balanced Advantage Fund is one of the most popular funds with a proven track record. It has provided great risk-adjusted returns and ranked among the top. But it has been more volatile than the category average.
Remember that mutual fund investing is subject to risk. Consider your goals, risk tolerance and time horizon before investing.
What is the difference between a balanced fund and a balanced advantage fund?
Balanced funds invest in equity and debt instruments in fixed proportions. Around 60% of the money is allocated to one asset class, the remaining to equity or debt.
You can adjust the allocation to 20%. The fund manager should stay in the 60-40 split. Balanced advantage funds also invest in equity and debt instruments. However, there is no restriction on the asset allocation.
The fund manager can change it according to the market conditions.
How good is the SBI balanced advantage fund?
The inception date of the SBI balanced advantage fund was in 2021. It is too early to comment on its performance. However, being a low-volatility fund, it has provided better risk-adjusted returns.
Is a balanced advantage fund taxable?
Yes, balanced advantage funds are taxable. However, their taxation depends on the equity proportion.
1. If the fund has 65% or more equity exposure, it will follow equity fund taxation.
2. If the exposure is less than 65%, it will follow debt fund taxation.
Is a balanced advantage fund good for lump-sum investment?
Balanced advantage funds can be good for lump-sum investments
They are tax-efficient
Offer active rebalancing
Less volatile than pure equity funds
Who should invest in a balanced advantage fund?
A balanced advantage or dynamic asset allocation fund is for someone who:
Tax-efficient investors looking for alternatives to debt funds
Want lower volatility compared to pure equity funds
Lump-sum investors
Beginner equity investors
Hold for 3+ years