What are Balanced Advantage Funds? Should You Invest In It?

If you are interested in mutual fund schemes, you must have known that the past couple of years brought great recognition to balanced advantage funds. Also known as dynamic allocation funds, these balanced advantage funds are reported to have inflows of more than 3000 crores. So what exactly are these funds? Aren’t they subject to market volatility? Do they keep your money safely growing? Let’s discuss all these topics in detail to understand why balanced advantage funds have become the talk of the town and why you should be investing in the same.

What are balanced advantage funds?

The concept of dynamic allocation of funds is actually related to the criteria of hybrid mutual funds. In this pitch, the fund managers would take your money to invest between two different types of asset classes, i.e. debt and equity funds. The concept is pretty simple, the dynamic allocation works depending on the market condition. When the equity market is up, they will sell equity funds and manage the portfolio between equity and debt instruments.

The objective is to minimize the downsides or dynamically manage the investment portfolio to ensure higher gains for the investors.

What are the benefits of investing in balanced advantage funds?

Most balanced advantage funds work on the asset re-balancing model. Depending on the market condition the allocation moves between debt and equity. There are multiple reasons that investors choose this scheme:

• Protected investments: We all know that higher gains in the mutual fund market are linked to higher risks. However, in hybrid mutual funds, your funds remain protected because portfolio management is done by taking the decision power of choosing the asset class from the investor. When the equity market is up, your investment can grow and when the equity market is not doing great, you don’t have to worry about losses because the fund allocation re-balances with the debt class.
• Tax efficient returns: Another reason behind the unmatched popularity of balanced advantage funds is that you get tax efficient returns similar to equity funds
• Disciplined investment: Investors don’t have to take the decision of asset allocation, thus by seizing the power of picking the assets, investors can make the most informed decision based on the expertise of the fund manager.

How long should you invest in balanced advantage funds?

Needless to say, debt securities somewhat minimize the vulnerability of your portfolio from the equity market risks. Still, you need to be mindful of the fluctuating NAVs and have to wait for a minimum of 3 years to reap huge returns. Experts recommend that an investment period of around 3-5 years can get you good returns.

How to pick the best balanced advantage funds?

Balanced advantage funds are great for your medium to long term financial goals. For tax efficient returns in the next 3 to 5 years, you get to choose among the various funds available in the market. If you are clueless about the best performing balanced advantage funds in the contemporary market, it is recommended to contact an investment advisor.

Some examples to Balanced Advantage Funds are - Edelweiss balanced advantage fund, kotak balanced advantage fund, tata balanced advantage fund, nippon india balanced advantage fund, icici balanced advantage fund direct growth.

However, if Balanced Advantage Funds are onboarding your portfolio in near future by any chance to you are looking out for the in-depth knowledge, you can anytime connect with the executives at Lakshmishree Investments. You can also check out this blogs of Everything You Need to Know About Mirae Asset Balanced Advantage Fund to learn more.

Open your Demat Account with Lakshmishree and join our telegram channel or search us on Telegram named - "Lakshmishree Group" to check out daily calls that motivates profitable trading.

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