Balanced Advantage Funds (BAF) are indeed a special category of mutual funds that are actively managed to maintain a dynamic balance between debt and equity investments. The primary objective of these funds is to offer investors a way to potentially achieve better returns than fixed deposits while also minimizing the downside risk. Here are some key points about Balanced Advantage Funds:
1. Historical Performance: As you mentioned, BAFs have historically delivered attractive returns when compared to bank fixed deposits. However, it's essential to note that past performance is not indicative of future results, and the performance of these funds can vary based on market conditions and the fund manager's decisions.
Performance as on 25th Nov 2023:
2. Dynamic Asset Allocation: BAFs are known for their ability to adjust their asset allocation between debt and equity based on various market conditions. This dynamic approach allows them to take advantage of opportunities in both asset classes and reduce risk during market downturns.
3. Fund Manager's Role: The fund manager plays a crucial role in determining the appropriate debt-equity ratio for the fund. Some managers may use valuation metrics, economic indicators, or other fundamental factors to make these decisions, while others may rely on technical analysis and trendline data.
4. Downside Protection: One of the primary objectives of BAFs is to protect investors from significant losses during market corrections or bear phases. The fund manager's ability to reduce the equity exposure when markets are expensive can help in achieving this goal.
5. Upside Enhancement: BAFs also aim to capture potential gains when markets are performing well. The flexibility to increase equity exposure during bullish phases can lead to higher returns compared to traditional fixed deposits.
6. Suitable for Long-Term Investors: BAFs are often favored by investors with a long-term horizon, typically spanning 10-15 years, who seek to build a substantial corpus with a relatively lower level of risk compared to pure equity investments.
Note : HDFC balanced Advantage is not taken here for performance match because of its very high Risk grade in the portfolio. Though the returns are very high in HDFC Balanced Advantage Fund but they typically do not fall under Balanced Advantage scheme profile. Also, we have not taken the schemes like Franklin Templeton balanced advantage fund here in the comparison because it has not completed 3 Years of its operations.
Out of our distributed schemes, all have performed well beyond our expectations , except Aditya Birla Sun Life Balanced Advantage Fund
Hence we have issued a Sell call on these two schemes of Aditya Birla Sun Life Balanced Advantage Fund
Similar is the story in Equity Hybrid category also, hence we have issued a sell call on Aditya Birla Sun Life Hybrid 95 also !
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Infinity Finserv (P) Ltd is a commission based MF distributor whose key objective is to motivate the customer for better savings and provide options for better investment opportunities best suitable to their Risk profile. We also keep reviewing the personal portfolio every quarter and issue adhoc alerts on non performing schemes, if any. We only share the available information to the best of our knowledge and understanding. Customers have to take their final call if they agree and understand the communication.
Investors considering BAFs should assess their risk tolerance, investment goals, and time horizon before investing. It's also advisable to consult us for any help in selecting a suitable BAF that aligns with their financial objectives and risk profile. Additionally, investors should stay informed about the fund's investment strategy and monitor its performance over time.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.