Looking for the best balanced advantage fund? Yes, we’ll tell you that, and we’ll also give you the top 5 balanced advantage funds as of August 2022 in this piece. However, let’s quickly rush through the basics.
A balanced advantage mutual fund is a hybrid fund, one that invests your money in both debt and equity segments without any set restrictions on asset allocation. When it comes to these kinds of funds, you cannot expect a fixed threshold of equity and debt pertaining to a class of assets.
Based on market fluctuations and conditions, a balanced advantage mutual fund can change its allocation of assets. For example, when equities are performing well and trading at a high, fund managers may opt to increase allocation towards the equity segment.
When the markets are on a downward spiral, fund managers may opt to reallocate the stock accordingly. This kind of mutual fund is characterised by its ability to switch among asset categories synchronously and is hence also referred to as dynamic asset allocation funds..
As discussed above, this class of mutual funds has an intrinsic strategy whereby fund managers can rebalance funds between the equity and debt segments based on market fluctuations. When the stock market witnesses a surge, most investors opt for the equity segment to make the most of this rise and maximize their profits.
However, when the markets become volatile and hit a downward spiral, most investors prefer fixed-income instruments (safer). Before investing in a balanced advantage mutual fund, you must take cognisance of the following points:
The stock market can prove to be very volatile, and balanced advantage mutual funds utilise this volatility to further grow your corpus. If you wish to build your wealth, here is why a balanced advantage mutual fund can prove to be your best bet:
However, if in case market forecasts predict a downward spiral, this exposure to debt can be further augmented. Also, arbitrage comprises hedged equities, which churn out a profit based on the disparity in the cash and futures market.
Dynamic asset funds have the capability of fluctuating between various classes of asset investment, keeping in mind market fluctuations. This re-adjustment capability ensures investors receive the maximum possible returns (from equity) while remaining shielded from market volatility (from debt).
You should invest in a balanced advantage mutual fund, if:
Note: This list is for explanatory purposes only. Investors are advised to conduct thorough research and compare arbitrage funds before investing in one. This data is as per 20 July, 2023.
Balanced advantage mutual funds offer you a good mix of returns, as well as safety, by diversifying your investment across equity, debt, and arbitrage segments. If you are looking to invest in the same, the Fi Money app offers the easiest and most convenient way to choose and begin your investment journey. Making use of Fi for your investments, you can avail of a wide range of benefits, including seamless account set-up, zero commission, flexible SIPs, no penalties for missed SIPs, and a whole lot more.
Fi is a platform that aims to help you manage your money better – a financial application with an in-built zero-balance savings account. With the help of Fi, you can further build your corpus of money and better organise your funds.
A balanced advantage mutual fund works by investing your corpus across three market segments – equity, debt, and arbitrage. This helps you receive the maximum returns possible (via equity) while also toning down your risks (via debt).
Consider balanced advantage funds for a long-term investment with lower volatility compared to pure equity funds. These funds effectively manage downside risks and provide decent returns with reduced volatility.
The HDFC Balanced Advantage Fund(IDCW) provided the highest dividend returns at 64.55% and distributed approximately 57 dividends between February 2018 and February 2023.