Balanced Advantage funds | Types of Hybrid Funds

Описание: In this Investor Education original video, we’ll talk about Balanced Advantage funds.

To check out other types of Hybrid funds, watch -
   • Balanced Hybrid funds | Types of Hybrid Funds  
   • Conservative Hybrid funds | Types of Hybri...  
   • What are Aggressive Hybrid Funds?  | Types...  

In balanced advantage funds, investment in equity or debt is managed dynamically. It can be anywhere between 0% and 100% in equity & equity-related instruments; and the same in Debt instruments. The fund manager has complete discretion to decide how much they want to invest in which category at any point. Due to this dynamic nature, it is also called Dynamic Asset Allocation fun.

Who should invest in Balanced Advantage Funds?

We always suggest that one should know their risk appetite before investing. But if you are not able to decide that you can outsource the decision to the fund manager of the balanced advantage fund. The fund manager will ensure that he or she invests your money as per market conditions so that you earn the best possible returns.

First-time investors or those looking to pare their losses in case the market falls can consider BAF. The Fund manager has no regulatory restriction about minimum or maximum limits. These funds are also less volatile and hence suitable for those looking for stable returns.


Benefits of Balanced Advantage Funds

1) Balancing the losses
BAF compensates the losses in one asset class with another asset class. That's why BAF tends to perform better during market bloodbaths as the debt exposure makes up for the losses in equities. Similarly, when interest rates are lower, the debt exposure can be lowered so that you can get benefit from higher equity exposure.


2) Taxation in Balanced Advantage Funds
The gains made in balanced advantage funds are taxed as equities. Short-term capital gains are taxed at 15% if you sell your investments within one year and long-term capital gains are taxed at 10% after one year. There is an exemption of Rs 1 lakh tax-free profits on long-term gains.

How to choose a balanced advantage fund?
Past performance is different periods
Credibility of the fund house & fund manager
Expense ratio
Portfolio construction

If you haven’t already, start your investing journey on Kuvera - your safe space to invest. Click on the link below to get started.

https://bit.ly/3JTbcJq