Balanced advantage funds (BAFs) are hybrid mutual funds that invest in equity and debt instruments. They are also known as dynamic asset allocation funds as these funds are dynamically managed based on prevailing stock market conditions. In other words, the asset allocation is decided by fund managers based on market conditions to give optimal returns to investors while mitigating risk with a diversified portfolio. We have curated a list of 15 best balanced advantage funds 2023 or dynamic asset allocation funds that you could consider investing.
With a rebalancing strategy, balanced advantage funds sell stocks at times of high valuations and do the opposite as the market falls. An investor can manage the market volatility smoothly with such a conservative, effective and quick market strategy. Go through the chart below to know about some top-performing mutual funds!
|Balanced Advantage Funds||Annualised Returns in Last 5 Years*|
|HDFC Balanced Advantage Fund-Direct Plan-Growth||13.2%|
|Edelweiss Balanced Advantage Fund-Direct Plan-Growth||12.0%|
|ICICI Prudential Balanced Advantage Fund-Direct Plan-Growth||10.4%|
|Nippon India Balanced Advantage Fund-Direct Plan-Growth||10.3%|
|Sundaram Balanced Advantage Fund-Direct Plan-Growth||10.05%|
|Aditya Birla Sun Life Balanced Advantage Fund-Direct Plan-Growth||9.7%|
|Bandhan Balanced Advantage Fund-Direct Plan-Growth||8.5%|
|DSP Dynamic Asset Allocation Fund-Direct Plan-Growth||8.3%|
|HSBC Balanced Advantage Fund-Direct Plan-Growth||8.0%|
|Axis Balanced Advantage Fund-Direct Plan-Growth||7.9%|
|Invesco India Dynamic Equity Fund-Direct Plan-Growth||7.4%|
|Bank of India Balanced Advantage Fund-Direct Plan-Growth||5.2%|
|Motilal Oswal Balance Advantage Fund-Direct Plan-Growth||5.1%|
|Tata Balanced Advantage Fund – Growth||NA (3Y Annualised Return 19.4%)|
|LIC MF Balanced Advantage Fund – Growth||NA (1Y Annualised Return 8.0%)|
HDFC Balanced Advantage Fund (IDCW) is a hybrid mutual fund scheme launched by HDFC Mutual Fund. The fund invests 63.2% of its corpus in equities, 24.5% in debt and 10.1% in cash. The scheme is ideal for investors seeking exposure in equity and debt markets in a comparatively equal percentage. Here are the scheme details:
Edelweiss Balanced Advantage Fund is a hybrid fund that aims to provide equity-like returns with lower uncertainty. As per Edelweiss Mutual Fund, the fund is suitable for investors having an investment horizon of more than 3 years. Let’s check out the scheme details:
This scheme is suitable for investors who aim to benefit across market conditions by dynamically managing equity and debt allocation. As per the fund house, this scheme is suitable for investors with an investment horizon of 3 years or more. Here are the scheme details:
The scheme aims to capitalise on the potential upside in equity markets while attempting to limit market volatility and potential risks by dynamically managing the portfolio through investment in equity and active use of debt, money-market instruments and derivatives. Let’s check out the fund details:
The fund is suitable for investors with low-risk appetite seeking to generate income and capital appreciation through investments in a scheme that will be dynamically managed in its asset allocation between equity, debt, derivatives and REITs/InvITs. Let’s check out the scheme details:
The primary objective of the scheme is to generate long-term capital growth with relatively lower volatility by investing in a dynamically balanced portfolio of equity and equity-linked investments and fixed-income securities. Let’s look into the scheme details:
This scheme is ideal for investors looking for long-term capital growth via exposure to both equity and debt instruments. The fund tracks market valuation by buying less equity when markets are expensive and more when markets are cheap. Here are some of the fund details:
The fund has 65.61% investment in domestic equities of which 34.31% is in large-cap stocks, 16.51% is in mid-cap stocks, 4.91% in small-cap stocks. The fund has 32% investment in debt, of which 14.38% in Government securities and 17.62% is in low-risk securities. Here are the fund details:
HSBC Balanced Advantage Fund is ideal for investors with an investment horizon of three years or more. The fund aims to give investors exposure to the high-returns potential of the equity market and the low volatility of the debt market. Let’s check out the scheme details:
The scheme aims to give investors exposure to the equity and debt market to diversify their portfolio and facilitate long-term capital growth. This fund is ideal for investors having an investment horizon of 3 years or more. Let’s look into the scheme details.
The scheme is ideal for investors looking for long-term capital growth and having an investment horizon of more than 3 years. The mutual fund aims to give investors a balanced portfolio. Here are the scheme details:
Bank of India Balanced Advantage Fund is a mutual fund scheme that invests in both equity and debt markets. The fund aims to provide a balanced portfolio to investors. Let’s look into the scheme details:
Motilal Oswal Balance Advantage Fund is an open-ended hybrid mutual fund scheme that aims to provide a balanced portfolio to investors via equity and debt market exposure. Let’s look into the scheme details:
Tata Balanced Advantage Fund scheme invests in a mix of equity, hedged equity or arbitrage and debt portfolios and offers long-term capital growth. Let’s check out the scheme in detail:
This scheme is ideal for investors who want to invest in a dynamically managed portfolio of equity and equity-related instruments,debt and money market instruments. Let’s check out the scheme details:
Disclaimer: All data updated on March 31, 2023
Expected return rate (p.a)
Time Period (Years)
Balanced advantage funds work on the basis of dynamic asset allocation, which means such funds dynamically invest in both equity and debt instruments to give investors a balanced portfolio. The asset allocation is managed based on prevailing market conditions. For example, these funds increase equity investments and reduce fixed-income allocations when equity valuations are low. Similarly, these funds lower equity allocations and increase fixed-income investments, when equity valuations are high.
BAFs are one of the best mutual funds in India as it functions to restrict losses when the stock market dips. Besides, investors experience the optimum advantages of both asset classes ─ equity and debt. Know about some other benefits below!
Here are some factors that you should consider before investing in a balanced fund:
These funds have the potential to generate high returns in the long term. Investors must analyse their individual investment horizons before taking any decision to invest in such schemes. Individuals having surplus money which they can park in these plans for 5-8 years, can expect a substantial return on their investments.
Every individual should consider their risk tolerance level before investing in these schemes. A balanced advantage fund invests in a mix of equity and debt instruments. Mutual fund schemes having higher exposure towards equities will have a higher risk. Whereas funds having higher exposure towards debt will come with lower risk.
Therefore, if you have a high-risk appetite and want aggressive returns, you can put your money in balanced schemes having a higher proportion of exposure towards equities. However, if you are a conservative investor, you can invest in debt-heavy balanced funds.
It is the cost charged by fund houses to cover their operating expenses. This includes fund manager’s fees, distribution costs, administrative expenses, etc. It is a percentage charge levied on the NAV. As these charges affect net profitability from mutual fund schemes, you should do a thorough market analysis and choose a fund which comes with a low expense ratio.
All decisions taken by a fund manager determine the profitability of a fund. You should analyse the past performance of the respective fund manager to get an idea about their expertise and objectives.
Balanced advantage funds are taxed as equity funds. When the period of holding of balanced advantage fund units is more than 12 months, LTCG (long-term capital gain) tax of 10% is levied on the gains exceeding Rs.1 lakh. When the period of holding is less than 12 months, 15% STCG (short-term capital gain) tax is levied on the gains earned.
If you are looking for best balanced advantage funds 2023 to diversify your portfolio, make sure to choose schemes that are aligned to your financial goals and risk appetite. Though balanced advantage funds are known to offer a balanced portfolio, the returns are less compared to equity funds. Instead you can park your money in equity funds for better returns while simultaneously keeping the risk low through investments in debt instruments. In case you’re looking for exposure in the equity market without human bias, invest with Navi Mutual fund. Navi offers a wide range of low-cost funds across sectors and geographies. You can start investing with as low as Rs.10!
A balanced advantage fund comprises around 34% debt, 33% arbitrage and 33% equity. Contrarily, a balanced fund consists of nearly 35%-20% debt and 65%-80% equity. BAFs are dynamically allotted, while balanced funds have a fixed allocation (narrow band).
BAFs are multi-dimensional in nature. When a market is overvalued, it inherits the qualities of a hybrid mutual fund scheme, with the ability to minimise equity exposure to up to 30%. Under this scenario, a balanced fund cannot facilitate much protection due to its fixed allocation.
When a market is undervalued, BAFs can raise equity exposure to up to 80 per cent. With this, they can effectively utilise lower valuations and create favourable returns. These funds serve as equity mutual funds in such cases.
A balanced advantage fund, with its arbitrage portion, can perform well even while the market is flat. It is a major benefit over a balanced fund that is restricted to only debt and equity components. An investor may not require to time the market with BAFs.
Yes, ELSS (Equity Linked Savings Scheme) offers tax benefits to its investors. As per Section 80C of the Income Tax Act, 1961, an individual investing in ELSS funds can avail of a tax deduction of up to Rs. 1.5 lakh per annum.
Balanced advantage funds carry less risk than pure equity funds because of their dynamic asset allocation that has a mix of equity, debt and arbitrage instruments. Though SIP investments are preferred, if you think that lump sum investments in a balanced advantage fund is aligned to your investment goals and would help you get better returns in the long-term, you surely can take the lump sum route. Point to note – you should invest in a fund based on your investment goal, investment horizon and risk appetite. Just in case you don’t have the expertise to take a call on where to invest and how much to invest, feel free to consult an investment advisor.
The only difference between a balanced advantage fund and aggressive hybrid fund is asset allocation. While aggressive hybrid funds allocate 60% – 80% of their corpus in equities, balanced advantage funds’ asset allocation is entirely dynamic and is based on equity valuations. This makes balanced advantage funds less volatile than aggressive hybrid funds.
This entirely depends on your investment goals. A balanced advantage fund could help you build a diverse portfolio and can give you inflation-adjusted returns in the long-term.
Balanced advantage funds are less-riskier than pure equity funds, primarily because they are dynamic in terms of asset allocation and invest in both equity and debt instruments. This risk is further mitigated if you have a fairly long investment horizon of 3 years or more.
Here are some of the best balanced advantage funds:
1. HDFC Balanced Advantage Fund
2. ICICI Prudential Balanced Advantage Fund
3. Nippon India Balanced Advantage Fund
4. Aditya Birla Sun Life Balanced Advantage Fund
5. IDFC Balanced Advantage Fund
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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